diff --git a/.env.example b/.env.example
index be5d0df..4f13421 100644
--- a/.env.example
+++ b/.env.example
@@ -101,6 +101,12 @@ OLLAMA_PORT=11434
 # Note: Embeddings are padded/truncated to 1536 dimensions to match schema
 OLLAMA_EMBEDDING_MODEL=mxbai-embed-large
 
+# Semantic Search Configuration
+# Similarity threshold for semantic search (0.0 to 1.0, where 1.0 is identical)
+# Lower values return more results but may be less relevant
+# Default: 0.5 (50% similarity)
+SEMANTIC_SEARCH_SIMILARITY_THRESHOLD=0.5
+
 # ======================
 # OpenAI API (For Semantic Search)
 # ======================
diff --git a/apps/api/src/knowledge/knowledge.service.versions.spec.ts b/apps/api/src/knowledge/knowledge.service.versions.spec.ts
index 9371519..62a4b3c 100644
--- a/apps/api/src/knowledge/knowledge.service.versions.spec.ts
+++ b/apps/api/src/knowledge/knowledge.service.versions.spec.ts
@@ -5,6 +5,8 @@ import { PrismaService } from "../prisma/prisma.service";
 import { LinkSyncService } from "./services/link-sync.service";
 import { KnowledgeCacheService } from "./services/cache.service";
 import { EmbeddingService } from "./services/embedding.service";
+import { OllamaEmbeddingService } from "./services/ollama-embedding.service";
+import { EmbeddingQueueService } from "./queues/embedding-queue.service";
 import { NotFoundException } from "@nestjs/common";
 
 describe("KnowledgeService - Version History", () => {
@@ -125,6 +127,17 @@ describe("KnowledgeService - Version History", () => {
     batchGenerateEmbeddings: vi.fn().mockResolvedValue([]),
   };
 
+  const mockOllamaEmbeddingService = {
+    isConfigured: vi.fn().mockResolvedValue(false),
+    generateEmbedding: vi.fn().mockResolvedValue([]),
+    generateAndStoreEmbedding: vi.fn().mockResolvedValue(undefined),
+    batchGenerateEmbeddings: vi.fn().mockResolvedValue(0),
+  };
+
+  const mockEmbeddingQueueService = {
+    enqueueEmbeddingGeneration: vi.fn().mockResolvedValue(undefined),
+  };
+
   beforeEach(async () => {
     const module: TestingModule = await Test.createTestingModule({
       providers: [
@@ -145,6 +158,14 @@ describe("KnowledgeService - Version History", () => {
           provide: EmbeddingService,
           useValue: mockEmbeddingService,
         },
+        {
+          provide: OllamaEmbeddingService,
+          useValue: mockOllamaEmbeddingService,
+        },
+        {
+          provide: EmbeddingQueueService,
+          useValue: mockEmbeddingQueueService,
+        },
       ],
     }).compile();
 
@@ -329,7 +350,13 @@ describe("KnowledgeService - Version History", () => {
       // Mock for findVersion call
       mockPrismaService.knowledgeEntry.findUnique.mockResolvedValueOnce(entryWithVersions);
 
-      const result = await service.restoreVersion(workspaceId, slug, 2, userId, "Custom restore note");
+      const result = await service.restoreVersion(
+        workspaceId,
+        slug,
+        2,
+        userId,
+        "Custom restore note"
+      );
 
       expect(result.title).toBe("Test Entry v2");
       expect(result.content).toBe("# Version 2");
diff --git a/apps/api/src/knowledge/search.controller.ts b/apps/api/src/knowledge/search.controller.ts
index 74523c4..43fee1c 100644
--- a/apps/api/src/knowledge/search.controller.ts
+++ b/apps/api/src/knowledge/search.controller.ts
@@ -101,7 +101,7 @@ export class SearchController {
   /**
    * POST /api/knowledge/search/semantic
    * Semantic search using vector similarity
-   * Requires: Any workspace member, OpenAI API key configured
+   * Requires: Any workspace member, Ollama configured
    *
    * @body query - The search query string (required)
    * @body status - Filter by entry status (optional)
diff --git a/apps/api/src/knowledge/services/search.service.spec.ts b/apps/api/src/knowledge/services/search.service.spec.ts
index 1579d1a..49cec30 100644
--- a/apps/api/src/knowledge/services/search.service.spec.ts
+++ b/apps/api/src/knowledge/services/search.service.spec.ts
@@ -4,7 +4,7 @@ import { EntryStatus } from "@prisma/client";
 import { SearchService } from "./search.service";
 import { PrismaService } from "../../prisma/prisma.service";
 import { KnowledgeCacheService } from "./cache.service";
-import { EmbeddingService } from "./embedding.service";
+import { OllamaEmbeddingService } from "./ollama-embedding.service";
 
 describe("SearchService", () => {
   let service: SearchService;
@@ -46,10 +46,11 @@ describe("SearchService", () => {
       isEnabled: vi.fn().mockReturnValue(false),
     };
 
-    const mockEmbeddingService = {
-      isConfigured: vi.fn().mockReturnValue(false),
-      generateEmbedding: vi.fn().mockResolvedValue(null),
-      batchGenerateEmbeddings: vi.fn().mockResolvedValue([]),
+    const mockOllamaEmbeddingService = {
+      isConfigured: vi.fn().mockResolvedValue(false),
+      generateEmbedding: vi.fn().mockResolvedValue([]),
+      generateAndStoreEmbedding: vi.fn().mockResolvedValue(undefined),
+      batchGenerateEmbeddings: vi.fn().mockResolvedValue(0),
     };
 
     const module: TestingModule = await Test.createTestingModule({
@@ -64,8 +65,8 @@ describe("SearchService", () => {
           useValue: mockCacheService,
         },
         {
-          provide: EmbeddingService,
-          useValue: mockEmbeddingService,
+          provide: OllamaEmbeddingService,
+          useValue: mockOllamaEmbeddingService,
         },
       ],
     }).compile();
@@ -410,4 +411,206 @@ describe("SearchService", () => {
       );
     });
   });
+
+  describe("semanticSearch", () => {
+    it("should throw error when OllamaEmbeddingService is not configured", async () => {
+      const ollamaService = service["ollama"];
+      ollamaService.isConfigured = vi.fn().mockResolvedValue(false);
+
+      await expect(service.semanticSearch("test query", mockWorkspaceId)).rejects.toThrow(
+        "Semantic search requires Ollama to be configured"
+      );
+    });
+
+    it("should perform semantic search using vector similarity", async () => {
+      const ollamaService = service["ollama"];
+      ollamaService.isConfigured = vi.fn().mockResolvedValue(true);
+
+      // Mock embedding generation
+      const mockEmbedding = new Array(1536).fill(0.1);
+      ollamaService.generateEmbedding = vi.fn().mockResolvedValue(mockEmbedding);
+
+      const mockSearchResults = [
+        {
+          id: "entry-1",
+          workspace_id: mockWorkspaceId,
+          slug: "semantic-entry",
+          title: "Semantic Entry",
+          content: "This is semantically similar content",
+          content_html: "<p>This is semantically similar content</p>",
+          summary: null,
+          status: EntryStatus.PUBLISHED,
+          visibility: "WORKSPACE",
+          created_at: new Date(),
+          updated_at: new Date(),
+          created_by: "user-1",
+          updated_by: "user-1",
+          rank: 0.85,
+          headline: null,
+        },
+      ];
+
+      prismaService.$queryRaw
+        .mockResolvedValueOnce(mockSearchResults)
+        .mockResolvedValueOnce([{ count: BigInt(1) }]);
+
+      prismaService.knowledgeEntryTag.findMany.mockResolvedValue([]);
+
+      const result = await service.semanticSearch("semantic query", mockWorkspaceId);
+
+      expect(result.data).toHaveLength(1);
+      expect(result.data[0].rank).toBe(0.85);
+      expect(ollamaService.generateEmbedding).toHaveBeenCalledWith("semantic query", {});
+      expect(prismaService.$queryRaw).toHaveBeenCalled();
+    });
+
+    it("should apply similarity threshold filter", async () => {
+      const ollamaService = service["ollama"];
+      ollamaService.isConfigured = vi.fn().mockResolvedValue(true);
+
+      const mockEmbedding = new Array(1536).fill(0.1);
+      ollamaService.generateEmbedding = vi.fn().mockResolvedValue(mockEmbedding);
+
+      // Set environment variable for similarity threshold
+      process.env.SEMANTIC_SEARCH_SIMILARITY_THRESHOLD = "0.7";
+
+      const mockSearchResults = [
+        {
+          id: "entry-1",
+          workspace_id: mockWorkspaceId,
+          slug: "high-similarity",
+          title: "High Similarity Entry",
+          content: "Very similar content",
+          content_html: "<p>Very similar content</p>",
+          summary: null,
+          status: EntryStatus.PUBLISHED,
+          visibility: "WORKSPACE",
+          created_at: new Date(),
+          updated_at: new Date(),
+          created_by: "user-1",
+          updated_by: "user-1",
+          rank: 0.9,
+          headline: null,
+        },
+      ];
+
+      prismaService.$queryRaw
+        .mockResolvedValueOnce(mockSearchResults)
+        .mockResolvedValueOnce([{ count: BigInt(1) }]);
+
+      prismaService.knowledgeEntryTag.findMany.mockResolvedValue([]);
+
+      const result = await service.semanticSearch("query", mockWorkspaceId);
+
+      expect(result.data).toHaveLength(1);
+      expect(result.data[0].rank).toBeGreaterThanOrEqual(0.7);
+
+      // Clean up
+      delete process.env.SEMANTIC_SEARCH_SIMILARITY_THRESHOLD;
+    });
+
+    it("should handle pagination correctly", async () => {
+      const ollamaService = service["ollama"];
+      ollamaService.isConfigured = vi.fn().mockResolvedValue(true);
+
+      const mockEmbedding = new Array(1536).fill(0.1);
+      ollamaService.generateEmbedding = vi.fn().mockResolvedValue(mockEmbedding);
+
+      prismaService.$queryRaw
+        .mockResolvedValueOnce([])
+        .mockResolvedValueOnce([{ count: BigInt(25) }]);
+
+      prismaService.knowledgeEntryTag.findMany.mockResolvedValue([]);
+
+      const result = await service.semanticSearch("query", mockWorkspaceId, {
+        page: 2,
+        limit: 10,
+      });
+
+      expect(result.pagination.page).toBe(2);
+      expect(result.pagination.limit).toBe(10);
+      expect(result.pagination.total).toBe(25);
+      expect(result.pagination.totalPages).toBe(3);
+    });
+
+    it("should apply status filter when provided", async () => {
+      const ollamaService = service["ollama"];
+      ollamaService.isConfigured = vi.fn().mockResolvedValue(true);
+
+      const mockEmbedding = new Array(1536).fill(0.1);
+      ollamaService.generateEmbedding = vi.fn().mockResolvedValue(mockEmbedding);
+
+      prismaService.$queryRaw
+        .mockResolvedValueOnce([])
+        .mockResolvedValueOnce([{ count: BigInt(0) }]);
+
+      prismaService.knowledgeEntryTag.findMany.mockResolvedValue([]);
+
+      await service.semanticSearch("query", mockWorkspaceId, {
+        status: EntryStatus.DRAFT,
+      });
+
+      // Verify the query was called with status filter
+      expect(prismaService.$queryRaw).toHaveBeenCalled();
+    });
+
+    it("should include similarity scores in results", async () => {
+      const ollamaService = service["ollama"];
+      ollamaService.isConfigured = vi.fn().mockResolvedValue(true);
+
+      const mockEmbedding = new Array(1536).fill(0.1);
+      ollamaService.generateEmbedding = vi.fn().mockResolvedValue(mockEmbedding);
+
+      const mockSearchResults = [
+        {
+          id: "entry-1",
+          workspace_id: mockWorkspaceId,
+          slug: "entry-1",
+          title: "Entry 1",
+          content: "Content 1",
+          content_html: "<p>Content 1</p>",
+          summary: null,
+          status: EntryStatus.PUBLISHED,
+          visibility: "WORKSPACE",
+          created_at: new Date(),
+          updated_at: new Date(),
+          created_by: "user-1",
+          updated_by: "user-1",
+          rank: 0.95,
+          headline: null,
+        },
+        {
+          id: "entry-2",
+          workspace_id: mockWorkspaceId,
+          slug: "entry-2",
+          title: "Entry 2",
+          content: "Content 2",
+          content_html: "<p>Content 2</p>",
+          summary: null,
+          status: EntryStatus.PUBLISHED,
+          visibility: "WORKSPACE",
+          created_at: new Date(),
+          updated_at: new Date(),
+          created_by: "user-1",
+          updated_by: "user-1",
+          rank: 0.75,
+          headline: null,
+        },
+      ];
+
+      prismaService.$queryRaw
+        .mockResolvedValueOnce(mockSearchResults)
+        .mockResolvedValueOnce([{ count: BigInt(2) }]);
+
+      prismaService.knowledgeEntryTag.findMany.mockResolvedValue([]);
+
+      const result = await service.semanticSearch("query", mockWorkspaceId);
+
+      expect(result.data).toHaveLength(2);
+      expect(result.data[0].rank).toBe(0.95);
+      expect(result.data[1].rank).toBe(0.75);
+      // Verify results are ordered by similarity (descending)
+      expect(result.data[0].rank).toBeGreaterThan(result.data[1].rank);
+    });
+  });
 });
diff --git a/apps/api/src/knowledge/services/search.service.ts b/apps/api/src/knowledge/services/search.service.ts
index 0dc4ad8..c3b55da 100644
--- a/apps/api/src/knowledge/services/search.service.ts
+++ b/apps/api/src/knowledge/services/search.service.ts
@@ -3,7 +3,7 @@ import { EntryStatus, Prisma } from "@prisma/client";
 import { PrismaService } from "../../prisma/prisma.service";
 import type { KnowledgeEntryWithTags, PaginatedEntries } from "../entities/knowledge-entry.entity";
 import { KnowledgeCacheService } from "./cache.service";
-import { EmbeddingService } from "./embedding.service";
+import { OllamaEmbeddingService } from "./ollama-embedding.service";
 
 /**
  * Search options for full-text search
@@ -63,11 +63,18 @@ interface RawSearchResult {
  */
 @Injectable()
 export class SearchService {
+  private readonly similarityThreshold: number;
+
   constructor(
     private readonly prisma: PrismaService,
     private readonly cache: KnowledgeCacheService,
-    private readonly embedding: EmbeddingService
-  ) {}
+    private readonly ollama: OllamaEmbeddingService
+  ) {
+    // Default similarity threshold is 0.5 (range: 0-1, where 1 is identical)
+    this.similarityThreshold = parseFloat(
+      process.env.SEMANTIC_SEARCH_SIMILARITY_THRESHOLD ?? "0.5"
+    );
+  }
 
   /**
    * Full-text search on title and content using PostgreSQL ts_vector
@@ -451,16 +458,17 @@ export class SearchService {
     workspaceId: string,
     options: SearchOptions = {}
   ): Promise<PaginatedSearchResults> {
-    if (!this.embedding.isConfigured()) {
-      throw new Error("Semantic search requires OPENAI_API_KEY to be configured");
+    const configured = await this.ollama.isConfigured();
+    if (!configured) {
+      throw new Error("Semantic search requires Ollama to be configured");
     }
 
     const page = options.page ?? 1;
     const limit = options.limit ?? 20;
     const offset = (page - 1) * limit;
 
-    // Generate embedding for the query
-    const queryEmbedding = await this.embedding.generateEmbedding(query);
+    // Generate embedding for the query using Ollama
+    const queryEmbedding = await this.ollama.generateEmbedding(query, {});
     const embeddingString = `[${queryEmbedding.join(",")}]`;
 
     // Build status filter
@@ -468,9 +476,16 @@ export class SearchService {
       ? Prisma.sql`AND e.status = ${options.status}::text::"EntryStatus"`
       : Prisma.sql`AND e.status != 'ARCHIVED'`;
 
+    // Calculate the distance threshold from similarity threshold
+    // Cosine similarity ranges from -1 to 1, but for embeddings it's typically 0 to 1
+    // Distance = 1 - similarity, so distance threshold = 1 - similarity threshold
+    const distanceThreshold = 1 - this.similarityThreshold;
+
     // Vector similarity search using cosine distance
+    // Lower distance = higher similarity
+    // Filter out results below similarity threshold
     const searchResults = await this.prisma.$queryRaw<RawSearchResult[]>`
-      SELECT 
+      SELECT
         e.id,
         e.workspace_id,
         e.slug,
@@ -490,18 +505,20 @@ export class SearchService {
       INNER JOIN knowledge_embeddings emb ON e.id = emb.entry_id
       WHERE e.workspace_id = ${workspaceId}::uuid
         ${statusFilter}
+        AND (emb.embedding <=> ${embeddingString}::vector) <= ${distanceThreshold}
       ORDER BY emb.embedding <=> ${embeddingString}::vector
       LIMIT ${limit}
       OFFSET ${offset}
     `;
 
-    // Get total count for pagination
+    // Get total count for pagination (also filtered by similarity threshold)
     const countResult = await this.prisma.$queryRaw<[{ count: bigint }]>`
       SELECT COUNT(*) as count
       FROM knowledge_entries e
       INNER JOIN knowledge_embeddings emb ON e.id = emb.entry_id
       WHERE e.workspace_id = ${workspaceId}::uuid
         ${statusFilter}
+        AND (emb.embedding <=> ${embeddingString}::vector) <= ${distanceThreshold}
     `;
 
     const total = Number(countResult[0].count);
@@ -556,7 +573,8 @@ export class SearchService {
     workspaceId: string,
     options: SearchOptions = {}
   ): Promise<PaginatedSearchResults> {
-    if (!this.embedding.isConfigured()) {
+    const configured = await this.ollama.isConfigured();
+    if (!configured) {
       // Fall back to keyword search if embeddings not configured
       return this.search(query, workspaceId, options);
     }
@@ -581,8 +599,8 @@ export class SearchService {
       };
     }
 
-    // Generate embedding for vector search
-    const queryEmbedding = await this.embedding.generateEmbedding(query);
+    // Generate embedding for vector search using Ollama
+    const queryEmbedding = await this.ollama.generateEmbedding(query, {});
     const embeddingString = `[${queryEmbedding.join(",")}]`;
 
     // Build status filter
diff --git a/docs/scratchpads/70-semantic-search-api.md b/docs/scratchpads/70-semantic-search-api.md
new file mode 100644
index 0000000..3779b40
--- /dev/null
+++ b/docs/scratchpads/70-semantic-search-api.md
@@ -0,0 +1,57 @@
+# Issue #70: [KNOW-018] Semantic Search API
+
+## Objective
+
+Implement semantic (vector) search endpoint that uses embeddings generated by issue #69 to enable natural language search over knowledge entries.
+
+## Approach
+
+1. Review existing embedding schema and pgvector setup
+2. Review OllamaEmbeddingService from issue #69
+3. Create DTOs for semantic search request/response
+4. Write tests first (TDD)
+5. Implement semantic search in SearchService using pgvector cosine similarity
+6. Create controller endpoint POST /api/knowledge/search/semantic
+7. Add configurable similarity threshold
+8. Test with real queries
+9. Run quality checks and code review
+
+## Progress
+
+- [x] Create scratchpad
+- [x] Review existing code (embedding schema, OllamaEmbeddingService)
+- [x] Add similarity threshold environment variable
+- [x] Write tests (TDD - RED)
+- [x] Update SearchService to use OllamaEmbeddingService instead of OpenAI (TDD - GREEN)
+- [x] Update hybridSearch to use OllamaEmbeddingService
+- [x] Update test files to include OllamaEmbeddingService mocks
+- [x] All tests passing
+- [x] Type check and build successful
+- [ ] Run code review
+- [ ] Run QA checks
+- [ ] Commit changes
+- [ ] Close issue
+
+## Testing
+
+- Unit tests for SearchService.semanticSearch()
+- Controller tests for POST /api/knowledge/search/semantic
+- Integration tests with real embeddings
+- Target: 85%+ coverage
+
+## Notes
+
+- Use pgvector cosine similarity operator (<=>)
+- Lower distance = higher similarity
+- Results should include similarity scores
+- Similarity threshold should be configurable via environment variable
+- Reuse OllamaEmbeddingService from issue #69
+
+## Findings
+
+- The semantic search endpoint already exists in search.controller.ts (line 111)
+- The SearchService already has semanticSearch() method (line 449)
+- BUT: It currently uses OpenAI-based EmbeddingService instead of OllamaEmbeddingService
+- Need to update SearchService to inject and use OllamaEmbeddingService
+- Need to add configurable similarity threshold
+- Controller endpoint already properly configured with guards and permissions