diff --git a/openhands/core/utils/json.py b/openhands/core/utils/json.py
index e75d028f037e..1d324edf1a07 100644
--- a/openhands/core/utils/json.py
+++ b/openhands/core/utils/json.py
@@ -11,24 +11,32 @@
 from openhands.llm.metrics import Metrics
 
 
-def my_default_encoder(obj):
+class OpenHandsJSONEncoder(json.JSONEncoder):
     """Custom JSON encoder that handles datetime and event objects"""
-    if isinstance(obj, datetime):
-        return obj.isoformat()
-    if isinstance(obj, Event):
-        return event_to_dict(obj)
-    if isinstance(obj, Metrics):
-        return obj.get()
-    if isinstance(obj, ModelResponse):
-        return obj.model_dump()
-    if isinstance(obj, CmdOutputMetadata):
-        return obj.model_dump()
-    return json.JSONEncoder().default(obj)
+
+    def default(self, obj):
+        if isinstance(obj, datetime):
+            return obj.isoformat()
+        if isinstance(obj, Event):
+            return event_to_dict(obj)
+        if isinstance(obj, Metrics):
+            return obj.get()
+        if isinstance(obj, ModelResponse):
+            return obj.model_dump()
+        if isinstance(obj, CmdOutputMetadata):
+            return obj.model_dump()
+        return super().default(obj)
+
+
+# Create a single reusable encoder instance
+_json_encoder = OpenHandsJSONEncoder()
 
 
 def dumps(obj, **kwargs):
     """Serialize an object to str format"""
-    return json.dumps(obj, default=my_default_encoder, **kwargs)
+    if not kwargs:
+        return _json_encoder.encode(obj)
+    return json.dumps(obj, cls=OpenHandsJSONEncoder, **kwargs)
 
 
 def loads(json_str, **kwargs):
diff --git a/tests/unit/test_json_encoder.py b/tests/unit/test_json_encoder.py
new file mode 100644
index 000000000000..daa2708a6256
--- /dev/null
+++ b/tests/unit/test_json_encoder.py
@@ -0,0 +1,56 @@
+import gc
+from datetime import datetime
+
+import psutil
+
+from openhands.core.utils.json import dumps
+
+
+def get_memory_usage():
+    """Get current memory usage of the process"""
+    process = psutil.Process()
+    return process.memory_info().rss
+
+
+def test_json_encoder_memory_leak():
+    # Force garbage collection before test
+    gc.collect()
+    initial_memory = get_memory_usage()
+
+    # Create a large dataset that will need encoding
+    large_data = {
+        'datetime': datetime.now(),
+        'nested': [{'timestamp': datetime.now()} for _ in range(1000)],
+    }
+
+    # Track memory usage over multiple iterations
+    memory_samples = []
+    for i in range(10):
+        # Perform multiple serializations in each iteration
+        for _ in range(100):
+            dumps(large_data)
+            dumps(large_data, indent=2)  # Test with kwargs too
+
+        # Force garbage collection
+        gc.collect()
+        memory_samples.append(get_memory_usage())
+
+    # Check if memory usage is stable (not continuously growing)
+    # We expect some fluctuation but not a steady increase
+    max_memory = max(memory_samples)
+    min_memory = min(memory_samples)
+    memory_variation = max_memory - min_memory
+
+    # Allow for some memory variation (2MB) due to Python's memory management
+    assert (
+        memory_variation < 2 * 1024 * 1024
+    ), f'Memory usage unstable: {memory_variation} bytes variation'
+
+    # Also check total memory increase from start
+    final_memory = memory_samples[-1]
+    memory_increase = final_memory - initial_memory
+
+    # Allow for some memory increase (2MB) as some objects may be cached
+    assert (
+        memory_increase < 2 * 1024 * 1024
+    ), f'Memory leak detected: {memory_increase} bytes increase'