diff --git a/packages/core-audit/src/payload-audit-log.test.ts b/packages/core-audit/src/payload-audit-log.test.ts
index daffe95..e37e5f4 100644
--- a/packages/core-audit/src/payload-audit-log.test.ts
+++ b/packages/core-audit/src/payload-audit-log.test.ts
@@ -1,4 +1,4 @@
-import { describe, it, expect, vi } from "vitest";
+import { describe, it, expect, vi, beforeEach, afterEach } from "vitest";
 import { PayloadAuditLog } from "./payload-audit-log";
 import type { AuditEntry } from "@repo/core-shared/audit";
 
@@ -39,3 +39,90 @@ describe("PayloadAuditLog.record", () => {
     expect(call.data.outcome).toBe("success");
   });
 });
+
+describe("PayloadAuditLog.eraseSubject", () => {
+  const originalSalt = process.env["AUDIT_PSEUDONYM_SALT"];
+
+  beforeEach(() => {
+    process.env["AUDIT_PSEUDONYM_SALT"] = "test-salt-erase";
+  });
+
+  afterEach(() => {
+    if (originalSalt === undefined) {
+      delete process.env["AUDIT_PSEUDONYM_SALT"];
+    } else {
+      process.env["AUDIT_PSEUDONYM_SALT"] = originalSalt;
+    }
+  });
+
+  it("mode='delete' calls payload.delete with the correct where clause + overrideAccess", async () => {
+    const mockDelete = vi.fn().mockResolvedValue({});
+    const mockGetPayload = vi.fn().mockResolvedValue({ delete: mockDelete });
+    const log = new PayloadAuditLog({} as never, mockGetPayload);
+
+    await log.eraseSubject("user_1", "delete");
+
+    expect(mockDelete).toHaveBeenCalledOnce();
+    const call = mockDelete.mock.calls[0]![0] as {
+      collection: string;
+      where: Record<string, unknown>;
+      overrideAccess: boolean;
+    };
+    expect(call.collection).toBe("audit-logs");
+    expect(call.where).toEqual({ actorId: { equals: "user_1" } });
+    expect(call.overrideAccess).toBe(true);
+  });
+
+  it("mode='pseudonymize' finds matching docs and updates each actorId to the pseudonym", async () => {
+    const mockFind = vi.fn().mockResolvedValue({
+      docs: [{ id: "doc_a" }, { id: "doc_b" }],
+    });
+    const mockUpdate = vi.fn().mockResolvedValue({});
+    const mockGetPayload = vi.fn().mockResolvedValue({
+      find: mockFind,
+      update: mockUpdate,
+    });
+    const log = new PayloadAuditLog({} as never, mockGetPayload);
+
+    await log.eraseSubject("user_1", "pseudonymize");
+
+    // find must use overrideAccess + limit=10_000
+    const findCall = mockFind.mock.calls[0]![0] as {
+      collection: string;
+      where: Record<string, unknown>;
+      limit: number;
+      overrideAccess: boolean;
+    };
+    expect(findCall.collection).toBe("audit-logs");
+    expect(findCall.where).toEqual({ actorId: { equals: "user_1" } });
+    expect(findCall.limit).toBe(10_000);
+    expect(findCall.overrideAccess).toBe(true);
+
+    // update called for each doc
+    expect(mockUpdate).toHaveBeenCalledTimes(2);
+    const updateCalls = mockUpdate.mock.calls as Array<
+      [{ collection: string; id: string; data: Record<string, unknown>; overrideAccess: boolean }]
+    >;
+    expect(updateCalls[0]![0].id).toBe("doc_a");
+    expect(updateCalls[1]![0].id).toBe("doc_b");
+
+    // both updates replace actorId with the same pseudonym
+    const pseudonym = updateCalls[0]![0].data["actorId"] as string;
+    expect(pseudonym).toMatch(/^erased-[0-9a-f]{16}$/);
+    expect(updateCalls[1]![0].data["actorId"]).toBe(pseudonym);
+
+    // overrideAccess bypasses the append-only rule
+    expect(updateCalls[0]![0].overrideAccess).toBe(true);
+  });
+
+  it("mode='pseudonymize' with no matching docs does not call update", async () => {
+    const mockFind = vi.fn().mockResolvedValue({ docs: [] });
+    const mockUpdate = vi.fn();
+    const mockGetPayload = vi.fn().mockResolvedValue({ find: mockFind, update: mockUpdate });
+    const log = new PayloadAuditLog({} as never, mockGetPayload);
+
+    await log.eraseSubject("unknown_user", "pseudonymize");
+
+    expect(mockUpdate).not.toHaveBeenCalled();
+  });
+});
diff --git a/packages/core-audit/src/payload-audit-log.ts b/packages/core-audit/src/payload-audit-log.ts
index e819909..ca64543 100644
--- a/packages/core-audit/src/payload-audit-log.ts
+++ b/packages/core-audit/src/payload-audit-log.ts
@@ -1,6 +1,7 @@
 import type { SanitizedConfig } from "payload";
 import type { AuditEntry } from "@repo/core-shared/audit";
 import type { IAuditLog } from "./audit-log.interface";
+import { pseudonymize } from "./pseudonymize";
 
 type GetPayload = (args: { config: SanitizedConfig }) => Promise<{
   create: (args: { collection: string; data: Record<string, unknown> }) => Promise<unknown>;
@@ -66,8 +67,37 @@ export class PayloadAuditLog implements IAuditLog {
     });
   }
 
-  async eraseSubject(_actorId: string, _mode: "pseudonymize" | "delete"): Promise<void> {
-    // Implemented in Phase 3.
-    throw new Error("PayloadAuditLog.eraseSubject not yet implemented (Phase 3)");
+  async eraseSubject(actorId: string, mode: "pseudonymize" | "delete"): Promise<void> {
+    const payload = await this.getPayload({ config: this.config });
+
+    if (mode === "delete") {
+      await payload.delete({
+        collection: "audit-logs",
+        where: { actorId: { equals: actorId } },
+        overrideAccess: true,
+      });
+      return;
+    }
+
+    // mode === "pseudonymize"
+    // Fetch all matching docs. Limit is 10_000 — a subject with more than
+    // 10k audit entries will not have all entries pseudonymized in one call.
+    // This is an accepted v1 limitation; callers may loop if needed.
+    const { docs } = await payload.find({
+      collection: "audit-logs",
+      where: { actorId: { equals: actorId } },
+      limit: 10_000,
+      overrideAccess: true,
+    });
+
+    const pseudonym = pseudonymize(actorId);
+    for (const doc of docs) {
+      await payload.update({
+        collection: "audit-logs",
+        id: doc.id,
+        data: { actorId: pseudonym },
+        overrideAccess: true,
+      });
+    }
   }
 }