Stochastic modeling of complex systems plays an essential, yet often computationally intensive, role across the quantitative sciences. Recent advances in quantum information processing have elucidated the potential for quantum simulators to exhibit memory advantages for such tasks. Heretofore, the focus has been on lossless memory compression, wherein the advantage is typically in terms of lessening the amount of information tracked by the model, while—arguably more practical—reductions in memory dimension are not always possible. Here, we address the case of lossy compression for quantum stochastic modeling of continuous-time processes, introducing a method for coarse graining in quantum state space that drastically reduces the requisite memory dimension for modeling temporal dynamics while retaining near-exact statistics. In contrast to classical coarse graining, this compression is not based on sacrificing temporal resolution and brings memory-efficient high-fidelity stochastic modeling within reach of present quantum technologies.