diff --git a/editor/CMakeLists.txt b/editor/CMakeLists.txt
index a1e0bdd..a11b366 100644
--- a/editor/CMakeLists.txt
+++ b/editor/CMakeLists.txt
@@ -193,6 +193,9 @@ target_include_directories(step66_test PRIVATE src)
 add_executable(step67_test tests/step67_test.cpp)
 target_include_directories(step67_test PRIVATE src)
 
+add_executable(step68_test tests/step68_test.cpp)
+target_include_directories(step68_test PRIVATE src)
+
 add_executable(whetstone_editor src/main.cpp)
 target_include_directories(whetstone_editor PRIVATE src)
 # find_package(SDL2 REQUIRED)  # Commented out for now to avoid build issues
diff --git a/editor/tests/step68_test.cpp b/editor/tests/step68_test.cpp
new file mode 100644
index 0000000..c023511
--- /dev/null
+++ b/editor/tests/step68_test.cpp
@@ -0,0 +1,216 @@
+// Step 68 TDD Test: Transformation engine
+//
+// Tests AST transformation framework:
+// 1. Constant folding: 3 + 4 → 7 in AST
+// 2. Dead code elimination: unreachable code after return removed
+// 3. Transform checks OptimizationLock before modifying (warn, don't reject)
+// 4. Respect @Loop annotations
+// 5. Transform framework defines pre/post conditions
+//
+// Will fail until the transformation engine is implemented.
+
+#include <iostream>
+#include <string>
+#include <cassert>
+#include <vector>
+#include <memory>
+#include "ast/ASTNode.h"
+#include "ast/Module.h"
+#include "ast/Function.h"
+#include "ast/Variable.h"
+#include "ast/Statement.h"
+#include "ast/Expression.h"
+#include "ast/Annotation.h"
+
+// Forward declaration — TransformEngine
+class TransformEngine {
+public:
+    struct TransformResult {
+        bool applied;
+        std::string warning;  // Non-empty if warning produced
+        int nodesModified;
+    };
+
+    // Set the AST root to transform
+    void setRoot(ASTNode* root);
+
+    // Apply constant folding pass
+    TransformResult constantFolding();
+
+    // Apply dead code elimination pass
+    TransformResult deadCodeElimination();
+
+    // Apply all built-in transforms
+    std::vector<TransformResult> applyAll();
+};
+
+int main() {
+    int passed = 0;
+    int failed = 0;
+
+    // --- Test 1: Constant folding 3 + 4 → 7 ---
+    {
+        Module mod("m1", "Test", "python");
+        Function* fn = new Function("f1", "calc");
+
+        // return 3 + 4
+        Return* ret = new Return();
+        ret->id = "r1";
+        BinaryOperation* binOp = new BinaryOperation("b1", "+");
+        IntegerLiteral* left = new IntegerLiteral("i1", 3);
+        IntegerLiteral* right = new IntegerLiteral("i2", 4);
+        binOp->setChild("left", left);
+        binOp->setChild("right", right);
+        ret->setChild("value", binOp);
+        fn->addChild("body", ret);
+        mod.addChild("functions", fn);
+
+        TransformEngine engine;
+        engine.setRoot(&mod);
+
+        auto result = engine.constantFolding();
+        assert(result.applied && "Constant folding should apply");
+        assert(result.nodesModified > 0 && "Should modify at least one node");
+
+        // After folding, the return value should be IntegerLiteral(7)
+        auto* newValue = ret->getChild("value");
+        assert(newValue != nullptr && "Return should still have a value");
+        assert(newValue->conceptType == "IntegerLiteral" &&
+               "Folded result should be IntegerLiteral");
+        auto* foldedLit = static_cast<IntegerLiteral*>(newValue);
+        assert(foldedLit->value == 7 && "3 + 4 should fold to 7");
+
+        std::cout << "Test 1 PASS: Constant folding 3 + 4 → 7" << std::endl;
+        ++passed;
+
+        delete right;
+        delete left;
+        delete binOp;
+        delete ret;
+        delete fn;
+    }
+
+    // --- Test 2: Dead code elimination removes code after return ---
+    {
+        Module mod("m1", "Test", "python");
+        Function* fn = new Function("f1", "early");
+
+        // return 1; x = 2 (dead code)
+        Return* ret = new Return();
+        ret->id = "r1";
+        IntegerLiteral* retVal = new IntegerLiteral("i1", 1);
+        ret->setChild("value", retVal);
+        fn->addChild("body", ret);
+
+        Assignment* deadAssign = new Assignment();
+        deadAssign->id = "dead1";
+        VariableReference* target = new VariableReference("vr1", "x");
+        IntegerLiteral* val = new IntegerLiteral("i2", 2);
+        deadAssign->setChild("target", target);
+        deadAssign->setChild("value", val);
+        fn->addChild("body", deadAssign);
+
+        mod.addChild("functions", fn);
+
+        TransformEngine engine;
+        engine.setRoot(&mod);
+
+        auto result = engine.deadCodeElimination();
+        assert(result.applied && "DCE should apply");
+
+        // The assignment after return should be removed
+        auto body = fn->getChildren("body");
+        assert(body.size() == 1 && "Only the return should remain");
+        assert(body[0]->conceptType == "Return" && "Remaining stmt should be Return");
+
+        std::cout << "Test 2 PASS: Dead code after return eliminated" << std::endl;
+        ++passed;
+
+        delete val;
+        delete target;
+        delete deadAssign;
+        delete retVal;
+        delete ret;
+        delete fn;
+    }
+
+    // --- Test 3: Locked node produces warning but still transforms ---
+    {
+        Module mod("m1", "Test", "python");
+        Function* fn = new Function("f1", "locked");
+
+        OptimizationLock* lock = new OptimizationLock();
+        lock->id = "lock1";
+        lock->lockedBy = "user";
+        lock->lockReason = "Don't optimize";
+        lock->lockLevel = "warning";
+        fn->addChild("annotations", lock);
+
+        // return 5 + 3
+        Return* ret = new Return();
+        ret->id = "r1";
+        BinaryOperation* binOp = new BinaryOperation("b1", "+");
+        IntegerLiteral* left = new IntegerLiteral("i1", 5);
+        IntegerLiteral* right = new IntegerLiteral("i2", 3);
+        binOp->setChild("left", left);
+        binOp->setChild("right", right);
+        ret->setChild("value", binOp);
+        fn->addChild("body", ret);
+        mod.addChild("functions", fn);
+
+        TransformEngine engine;
+        engine.setRoot(&mod);
+
+        auto result = engine.constantFolding();
+        assert(result.applied && "Should still apply (warning level, not block)");
+        assert(!result.warning.empty() && "Should produce a warning for locked node");
+
+        // Should still fold
+        auto* newValue = ret->getChild("value");
+        assert(newValue->conceptType == "IntegerLiteral" && "Should still fold");
+        auto* lit = static_cast<IntegerLiteral*>(newValue);
+        assert(lit->value == 8 && "5 + 3 should fold to 8");
+
+        std::cout << "Test 3 PASS: Locked node warns but still transforms" << std::endl;
+        ++passed;
+
+        delete right;
+        delete left;
+        delete binOp;
+        delete ret;
+        delete lock;
+        delete fn;
+    }
+
+    // --- Test 4: No transformation needed → result.applied is false ---
+    {
+        Module mod("m1", "Test", "python");
+        Function* fn = new Function("f1", "simple");
+
+        // return x (nothing to fold)
+        Return* ret = new Return();
+        ret->id = "r1";
+        VariableReference* ref = new VariableReference("vr1", "x");
+        ret->setChild("value", ref);
+        fn->addChild("body", ret);
+        mod.addChild("functions", fn);
+
+        TransformEngine engine;
+        engine.setRoot(&mod);
+
+        auto result = engine.constantFolding();
+        assert(!result.applied && "No constants to fold");
+        assert(result.nodesModified == 0 && "No nodes should be modified");
+
+        std::cout << "Test 4 PASS: No-op when nothing to transform" << std::endl;
+        ++passed;
+
+        delete ref;
+        delete ret;
+        delete fn;
+    }
+
+    // --- Summary ---
+    std::cout << "\n=== Step 68 Results: " << passed << " passed, " << failed << " failed ===" << std::endl;
+    return failed > 0 ? 1 : 0;
+}