diff --git a/artifacts/api-server/src/lib/moderation.ts b/artifacts/api-server/src/lib/moderation.ts
index 5dca1a3..ca9d665 100644
--- a/artifacts/api-server/src/lib/moderation.ts
+++ b/artifacts/api-server/src/lib/moderation.ts
@@ -134,7 +134,7 @@ export class ModerationService {
   /**
    * Review a single pending event with Claude.
    * Returns "approve" (event is injected into strfry + status → auto_approved)
-   * or "flag" (status stays pending — admin must decide).
+   * or "flag" (status → flagged — admin must decide).
    */
   async autoReview(eventId: string): Promise<ModerationDecision> {
     const rows = await db
@@ -176,10 +176,10 @@ export class ModerationService {
     if (result.decision === "approve") {
       await this.decide(eventId, "auto_approved", result.reason, "timmy_ai");
     } else {
-      // Update reason but leave status as "pending" for admin
+      // Transition to "flagged" so processPending() won't re-review this event
       await db
         .update(relayEventQueue)
-        .set({ reviewReason: result.reason, reviewedBy: "timmy_ai" })
+        .set({ status: "flagged", reviewReason: result.reason, reviewedBy: "timmy_ai" })
         .where(eq(relayEventQueue.eventId, eventId));
 
       logger.info("moderation: event flagged for admin review", {
diff --git a/artifacts/api-server/src/routes/admin-relay.ts b/artifacts/api-server/src/routes/admin-relay.ts
index d268312..df95fbe 100644
--- a/artifacts/api-server/src/routes/admin-relay.ts
+++ b/artifacts/api-server/src/routes/admin-relay.ts
@@ -106,6 +106,7 @@ router.get("/admin/relay/stats", requireAdmin, async (_req: Request, res: Respon
 
   res.json({
     pending: statusMap["pending"] ?? 0,
+    flagged: statusMap["flagged"] ?? 0,
     approved: statusMap["approved"] ?? 0,
     autoApproved: statusMap["auto_approved"] ?? 0,
     rejected: statusMap["rejected"] ?? 0,
diff --git a/lib/db/migrations/0007_moderation_flagged_status.sql b/lib/db/migrations/0007_moderation_flagged_status.sql
new file mode 100644
index 0000000..649ed33
--- /dev/null
+++ b/lib/db/migrations/0007_moderation_flagged_status.sql
@@ -0,0 +1,9 @@
+-- Migration: Add 'flagged' status to relay_event_queue
+-- Fixes infinite re-review loop (#27): AI-flagged events now transition to
+-- status='flagged' instead of staying 'pending', so processPending() skips them.
+--
+-- The status column is plain TEXT (not a Postgres enum), so no ALTER TYPE is
+-- needed. This migration adds an index for admin queries on flagged events.
+
+CREATE INDEX IF NOT EXISTS idx_relay_event_queue_status
+  ON relay_event_queue(status);
diff --git a/lib/db/src/schema/relay-event-queue.ts b/lib/db/src/schema/relay-event-queue.ts
index f601fcc..46355bd 100644
--- a/lib/db/src/schema/relay-event-queue.ts
+++ b/lib/db/src/schema/relay-event-queue.ts
@@ -3,7 +3,7 @@ import { nostrIdentities } from "./nostr-identities";
 
 // ── Status + reviewer types ───────────────────────────────────────────────────
 
-export const QUEUE_STATUSES = ["pending", "approved", "rejected", "auto_approved"] as const;
+export const QUEUE_STATUSES = ["pending", "approved", "rejected", "auto_approved", "flagged"] as const;
 export type QueueStatus = (typeof QUEUE_STATUSES)[number];
 
 export const QUEUE_REVIEWERS = ["timmy_ai", "admin"] as const;