diff --git a/.claude/memory/MEMORY.md b/.claude/memory/MEMORY.md
index b1891785a..9451a0f36 100644
--- a/.claude/memory/MEMORY.md
+++ b/.claude/memory/MEMORY.md
@@ -16,5 +16,8 @@
   - Key point: UDPLink only passes through jwt_token, ultimately used by curl command inside Web Wireshark container to authenticate with GNS3 capture stream API
 - **[Xpra HTML5 Client](./xpra-html5-client.md)** - Xpra HTML5 client menu control parameters for customizing the web interface
 
+### Appliance Management
+- **[GNS3 Appliance Loading](./gns3-appliance-loading.md)** - How GNS3 loads appliance files from builtin and custom directories with priority rules
+
 ### uBridge Permission
 - **[uBridge Permission Issue](./gns3-ubridge-permission.md)** - Docker containers fail to start due to missing CAP_NET_ADMIN/CAP_NET_RAW capabilities on uBridge
diff --git a/.claude/memory/gns3-appliance-loading.md b/.claude/memory/gns3-appliance-loading.md
new file mode 100644
index 000000000..1032f0373
--- /dev/null
+++ b/.claude/memory/gns3-appliance-loading.md
@@ -0,0 +1,20 @@
+---
+name: gns3-appliance-loading
+description: GNS3 appliance file loading mechanism and storage locations
+metadata:
+  type: reference
+---
+
+GNS3 loads appliance (.gns3a) files from two locations with specific priority order:
+
+1. **Builtin appliances directory**: `~/.local/share/GNS3/appliances/`
+   - Stores automatically downloaded devices from GNS3 registry
+   - Maintained and updated by the system automatically
+
+2. **Custom appliances directory**: `~/GNS3/appliances/`
+   - Stores user-customized or modified appliance files
+   - Manually managed by users
+
+**Loading priority**: System loads builtin appliances first, then custom appliances. If both directories contain devices with the same `device_id`, the custom appliance overwrites the builtin one. This design allows users to customize devices without having their modifications overwritten by automatic registry updates.
+
+**Implementation**: See `gns3server/controller/appliance_manager.py` in the `load_appliances()` method (lines 314-351).