diff --git a/ghost-core/Cargo.toml b/ghost-core/Cargo.toml
index 8184d34..5c48782 100644
--- a/ghost-core/Cargo.toml
+++ b/ghost-core/Cargo.toml
@@ -15,6 +15,7 @@ serde_json = "1.0"
 uuid = { version = "1.0", features = ["v4"] }
 toml = "0.8"
 chrono = "0.4"
+yara = "0.28"
 
 [target.'cfg(windows)'.dependencies]
 windows = { version = "0.58", features = [
diff --git a/ghost-core/src/yara_engine.rs b/ghost-core/src/yara_engine.rs
index 1f9dd70..9302e14 100644
--- a/ghost-core/src/yara_engine.rs
+++ b/ghost-core/src/yara_engine.rs
@@ -1,33 +1,28 @@
 use crate::{GhostError, MemoryRegion, ProcessInfo};
 use serde::{Deserialize, Serialize};
 use std::collections::HashMap;
+use std::fs;
+use std::path::{Path, PathBuf};
 use std::time::SystemTime;
+use yara::{Compiler, Rules, Scanner};
 
 #[derive(Debug, Clone, Serialize, Deserialize)]
 pub struct DynamicYaraEngine {
-    rules: Vec<YaraRule>,
-    sources: Vec<YaraRuleSource>,
+    rules_path: Option<PathBuf>,
+    #[serde(skip)]
+    compiled_rules: Option<Rules>,
+    rule_metadata: Vec<YaraRuleMetadata>,
     scan_cache: HashMap<String, CachedScanResult>,
 }
 
 #[derive(Debug, Clone, Serialize, Deserialize)]
-pub struct YaraRule {
+pub struct YaraRuleMetadata {
     pub name: String,
-    pub content: String,
-    pub source: String,
+    pub file_path: String,
     pub threat_level: ThreatLevel,
     pub last_updated: SystemTime,
 }
 
-#[derive(Debug, Clone, Serialize, Deserialize)]
-pub struct YaraRuleSource {
-    pub name: String,
-    pub url: String,
-    pub enabled: bool,
-    pub rule_count: usize,
-    pub last_update: SystemTime,
-}
-
 #[derive(Debug, Clone, Serialize, Deserialize)]
 pub struct YaraScanResult {
     pub matches: Vec<RuleMatch>,
@@ -38,13 +33,15 @@ pub struct YaraScanResult {
 #[derive(Debug, Clone, Serialize, Deserialize)]
 pub struct RuleMatch {
     pub rule_name: String,
+    pub namespace: String,
     pub threat_level: ThreatLevel,
     pub offset: u64,
     pub length: u32,
     pub metadata: HashMap<String, String>,
+    pub matched_strings: Vec<String>,
 }
 
-#[derive(Debug, Clone, Copy, Serialize, Deserialize)]
+#[derive(Debug, Clone, Copy, Serialize, Deserialize, PartialEq, Eq)]
 pub enum ThreatLevel {
     Info = 1,
     Low = 2,
@@ -53,6 +50,22 @@ pub enum ThreatLevel {
     Critical = 5,
 }
 
+impl ThreatLevel {
+    pub fn from_metadata(metadata: &HashMap<String, String>) -> Self {
+        metadata
+            .get("threat_level")
+            .and_then(|s| match s.to_lowercase().as_str() {
+                "info" => Some(ThreatLevel::Info),
+                "low" => Some(ThreatLevel::Low),
+                "medium" => Some(ThreatLevel::Medium),
+                "high" => Some(ThreatLevel::High),
+                "critical" => Some(ThreatLevel::Critical),
+                _ => None,
+            })
+            .unwrap_or(ThreatLevel::Medium)
+    }
+}
+
 #[derive(Debug, Clone, Serialize, Deserialize)]
 struct CachedScanResult {
     result: YaraScanResult,
@@ -60,96 +73,334 @@ struct CachedScanResult {
 }
 
 impl DynamicYaraEngine {
-    pub fn new(_config_path: Option<&str>) -> Result<Self, GhostError> {
-        let sources = vec![
-            YaraRuleSource {
-                name: "Malware Bazaar".to_string(),
-                url: "https://bazaar.abuse.ch/browse/".to_string(),
-                enabled: true,
-                rule_count: 0,
-                last_update: SystemTime::now(),
-            },
-            YaraRuleSource {
-                name: "VX-Underground".to_string(),
-                url: "https://vx-underground.org/yara".to_string(),
-                enabled: true,
-                rule_count: 0,
-                last_update: SystemTime::now(),
-            },
-        ];
+    /// Create a new YARA engine with optional custom rules directory
+    pub fn new(rules_path: Option<&str>) -> Result<Self, GhostError> {
+        let rules_path = rules_path.map(PathBuf::from);
 
-        Ok(DynamicYaraEngine {
-            rules: Vec::new(),
-            sources,
+        let mut engine = DynamicYaraEngine {
+            rules_path,
+            compiled_rules: None,
+            rule_metadata: Vec::new(),
             scan_cache: HashMap::new(),
-        })
-    }
+        };
 
-    pub async fn update_rules(&mut self) -> Result<usize, GhostError> {
-        let mut updated_count = 0;
-
-        for source in &mut self.sources {
-            if !source.enabled {
-                continue;
+        // Attempt to load rules if path is provided
+        if engine.rules_path.is_some() {
+            if let Err(e) = engine.compile_rules() {
+                log::warn!("Failed to compile YARA rules: {:?}", e);
             }
-
-            // Simulate rule download
-            let new_rules = vec![YaraRule {
-                name: format!("generic_malware_{}", updated_count + 1),
-                content: "rule generic_malware { condition: true }".to_string(),
-                source: source.name.clone(),
-                threat_level: ThreatLevel::Medium,
-                last_updated: SystemTime::now(),
-            }];
-
-            self.rules.extend(new_rules);
-            source.rule_count = self.rules.len();
-            source.last_update = SystemTime::now();
-            updated_count += 1;
         }
 
-        Ok(updated_count)
+        Ok(engine)
     }
 
+    /// Compile all YARA rules from the rules directory
+    pub fn compile_rules(&mut self) -> Result<usize, GhostError> {
+        let rules_dir = self.rules_path.as_ref().ok_or_else(|| {
+            GhostError::ConfigurationError("No rules directory configured".to_string())
+        })?;
+
+        if !rules_dir.exists() {
+            return Err(GhostError::ConfigurationError(format!(
+                "Rules directory does not exist: {}",
+                rules_dir.display()
+            )));
+        }
+
+        let mut compiler = Compiler::new()
+            .map_err(|e| GhostError::ConfigurationError(format!("YARA compiler error: {}", e)))?;
+
+        let mut rule_count = 0;
+        self.rule_metadata.clear();
+
+        // Recursively find and compile all .yar and .yara files
+        let rule_files = Self::find_rule_files(rules_dir)?;
+
+        for rule_file in &rule_files {
+            match fs::read_to_string(rule_file) {
+                Ok(content) => {
+                    let namespace = rule_file
+                        .file_stem()
+                        .and_then(|s| s.to_str())
+                        .unwrap_or("default");
+
+                    match compiler.add_rules_str_with_namespace(&content, namespace) {
+                        Ok(_) => {
+                            log::info!("Compiled YARA rule: {}", rule_file.display());
+
+                            self.rule_metadata.push(YaraRuleMetadata {
+                                name: namespace.to_string(),
+                                file_path: rule_file.display().to_string(),
+                                threat_level: ThreatLevel::Medium,
+                                last_updated: SystemTime::now(),
+                            });
+
+                            rule_count += 1;
+                        }
+                        Err(e) => {
+                            log::error!("Failed to compile {}: {}", rule_file.display(), e);
+                        }
+                    }
+                }
+                Err(e) => {
+                    log::error!("Failed to read {}: {}", rule_file.display(), e);
+                }
+            }
+        }
+
+        if rule_count == 0 {
+            return Err(GhostError::ConfigurationError(
+                "No YARA rules were successfully compiled".to_string(),
+            ));
+        }
+
+        self.compiled_rules = Some(
+            compiler
+                .compile_rules()
+                .map_err(|e| GhostError::ConfigurationError(format!("Rule compilation failed: {}", e)))?,
+        );
+
+        log::info!("Successfully compiled {} YARA rules", rule_count);
+        Ok(rule_count)
+    }
+
+    /// Find all YARA rule files in the given directory
+    fn find_rule_files(dir: &Path) -> Result<Vec<PathBuf>, GhostError> {
+        let mut rule_files = Vec::new();
+
+        if !dir.is_dir() {
+            return Ok(rule_files);
+        }
+
+        let entries = fs::read_dir(dir).map_err(|e| {
+            GhostError::ConfigurationError(format!("Failed to read rules directory: {}", e))
+        })?;
+
+        for entry in entries.flatten() {
+            let path = entry.path();
+
+            if path.is_file() {
+                if let Some(ext) = path.extension() {
+                    if ext == "yar" || ext == "yara" {
+                        rule_files.push(path);
+                    }
+                }
+            } else if path.is_dir() {
+                // Recursively search subdirectories
+                rule_files.extend(Self::find_rule_files(&path)?);
+            }
+        }
+
+        Ok(rule_files)
+    }
+
+    /// Scan process memory regions with compiled YARA rules
     pub async fn scan_process(
         &self,
-        _process: &ProcessInfo,
+        process: &ProcessInfo,
         memory_regions: &[MemoryRegion],
     ) -> Result<YaraScanResult, GhostError> {
         let start_time = SystemTime::now();
-        let mut matches = Vec::new();
-        let mut bytes_scanned = 0;
 
-        // Simulate YARA scanning
+        let rules = self.compiled_rules.as_ref().ok_or_else(|| {
+            GhostError::ConfigurationError("YARA rules not compiled".to_string())
+        })?;
+
+        let mut all_matches = Vec::new();
+        let mut bytes_scanned = 0u64;
+
+        // Scan each executable memory region
         for region in memory_regions.iter() {
-            bytes_scanned += region.size;
+            // Only scan executable regions with reasonable size
+            if !region.protection.is_executable() {
+                continue;
+            }
 
-            // Simulate finding suspicious patterns
-            if region.protection.is_executable() && region.protection.is_writable() {
-                matches.push(RuleMatch {
-                    rule_name: "suspicious_rwx_memory".to_string(),
-                    threat_level: ThreatLevel::High,
-                    offset: region.base_address as u64,
-                    length: 1024,
-                    metadata: HashMap::new(),
-                });
+            if region.size > 100 * 1024 * 1024 {
+                log::debug!(
+                    "Skipping large region at {:#x} (size: {} MB)",
+                    region.base_address,
+                    region.size / (1024 * 1024)
+                );
+                continue;
+            }
+
+            // Read memory content
+            let memory_content = match Self::read_process_memory(process.pid, region) {
+                Ok(data) => data,
+                Err(e) => {
+                    log::debug!(
+                        "Failed to read memory at {:#x}: {:?}",
+                        region.base_address,
+                        e
+                    );
+                    continue;
+                }
+            };
+
+            bytes_scanned += memory_content.len() as u64;
+
+            // Perform YARA scan on this memory region
+            match Self::scan_memory_with_yara(rules, &memory_content, region.base_address) {
+                Ok(mut matches) => {
+                    all_matches.append(&mut matches);
+                }
+                Err(e) => {
+                    log::debug!("YARA scan error at {:#x}: {:?}", region.base_address, e);
+                }
             }
         }
 
         let scan_time_ms = start_time.elapsed().unwrap_or_default().as_millis() as u64;
 
         Ok(YaraScanResult {
-            matches,
+            matches: all_matches,
             scan_time_ms,
-            bytes_scanned: bytes_scanned as u64,
+            bytes_scanned,
         })
     }
 
-    pub fn get_rule_count(&self) -> usize {
-        self.rules.len()
+    /// Scan a memory buffer with YARA rules
+    fn scan_memory_with_yara(
+        rules: &Rules,
+        data: &[u8],
+        base_address: usize,
+    ) -> Result<Vec<RuleMatch>, GhostError> {
+        let mut scanner = Scanner::new(rules)
+            .map_err(|e| GhostError::ScanError(format!("Scanner creation failed: {}", e)))?;
+
+        let scan_results = scanner
+            .scan_mem(data)
+            .map_err(|e| GhostError::ScanError(format!("Scan failed: {}", e)))?;
+
+        let mut matches = Vec::new();
+
+        for rule in scan_results {
+            let rule_name = rule.identifier.to_string();
+            let namespace = rule.namespace.to_string();
+
+            // Extract metadata
+            let mut metadata = HashMap::new();
+            for meta in rule.metadatas {
+                let value = match meta.value {
+                    yara::MetadataValue::Integer(i) => i.to_string(),
+                    yara::MetadataValue::String(ref s) => s.clone(),
+                    yara::MetadataValue::Boolean(b) => b.to_string(),
+                };
+                metadata.insert(meta.identifier.to_string(), value);
+            }
+
+            let threat_level = ThreatLevel::from_metadata(&metadata);
+
+            // Extract matched strings
+            let mut matched_strings = Vec::new();
+            for string in rule.strings {
+                let identifier = string.identifier.to_string();
+                for m in string.matches {
+                    matched_strings.push(format!(
+                        "{} at offset {:#x}",
+                        identifier,
+                        base_address + m.offset
+                    ));
+
+                    // Create a match entry for each string match
+                    matches.push(RuleMatch {
+                        rule_name: rule_name.clone(),
+                        namespace: namespace.clone(),
+                        threat_level,
+                        offset: (base_address + m.offset) as u64,
+                        length: m.length as u32,
+                        metadata: metadata.clone(),
+                        matched_strings: vec![identifier.clone()],
+                    });
+                }
+            }
+        }
+
+        Ok(matches)
     }
 
-    pub fn get_sources(&self) -> &[YaraRuleSource] {
-        &self.sources
+    /// Read memory from a specific process and region
+    #[cfg(target_os = "windows")]
+    fn read_process_memory(
+        pid: u32,
+        region: &MemoryRegion,
+    ) -> Result<Vec<u8>, GhostError> {
+        use windows::Win32::Foundation::{CloseHandle, HANDLE};
+        use windows::Win32::System::Diagnostics::Debug::ReadProcessMemory;
+        use windows::Win32::System::Threading::{OpenProcess, PROCESS_VM_READ};
+
+        unsafe {
+            let handle = OpenProcess(PROCESS_VM_READ, false, pid)
+                .map_err(|e| GhostError::MemoryReadError(format!("OpenProcess failed: {}", e)))?;
+
+            let mut buffer = vec![0u8; region.size];
+            let mut bytes_read = 0;
+
+            let result = ReadProcessMemory(
+                handle,
+                region.base_address as *const _,
+                buffer.as_mut_ptr() as *mut _,
+                region.size,
+                Some(&mut bytes_read),
+            );
+
+            let _ = CloseHandle(handle);
+
+            if result.is_ok() && bytes_read > 0 {
+                buffer.truncate(bytes_read);
+                Ok(buffer)
+            } else {
+                Err(GhostError::MemoryReadError(
+                    "ReadProcessMemory failed".to_string(),
+                ))
+            }
+        }
+    }
+
+    /// Read memory from a specific process and region (Linux implementation)
+    #[cfg(target_os = "linux")]
+    fn read_process_memory(
+        pid: u32,
+        region: &MemoryRegion,
+    ) -> Result<Vec<u8>, GhostError> {
+        use std::fs::File;
+        use std::io::{Read, Seek, SeekFrom};
+
+        let mem_path = format!("/proc/{}/mem", pid);
+        let mut file = File::open(&mem_path)
+            .map_err(|e| GhostError::MemoryReadError(format!("Failed to open {}: {}", mem_path, e)))?;
+
+        file.seek(SeekFrom::Start(region.base_address as u64))
+            .map_err(|e| GhostError::MemoryReadError(format!("Seek failed: {}", e)))?;
+
+        let mut buffer = vec![0u8; region.size];
+        file.read_exact(&mut buffer)
+            .map_err(|e| GhostError::MemoryReadError(format!("Read failed: {}", e)))?;
+
+        Ok(buffer)
+    }
+
+    /// Read memory from a specific process and region (macOS implementation)
+    #[cfg(target_os = "macos")]
+    fn read_process_memory(
+        _pid: u32,
+        _region: &MemoryRegion,
+    ) -> Result<Vec<u8>, GhostError> {
+        Err(GhostError::NotImplemented(
+            "Memory reading not implemented for macOS".to_string(),
+        ))
+    }
+
+    pub fn get_rule_count(&self) -> usize {
+        self.rule_metadata.len()
+    }
+
+    pub fn get_rule_metadata(&self) -> &[YaraRuleMetadata] {
+        &self.rule_metadata
+    }
+
+    pub fn is_compiled(&self) -> bool {
+        self.compiled_rules.is_some()
     }
 }