diff --git a/packages/studio/src/components/editor/PropertyPanel.tsx b/packages/studio/src/components/editor/PropertyPanel.tsx
index f882e39bd4..1cf6688798 100644
--- a/packages/studio/src/components/editor/PropertyPanel.tsx
+++ b/packages/studio/src/components/editor/PropertyPanel.tsx
@@ -565,6 +565,7 @@ export const PropertyPanel = memo(function PropertyPanel(props: PropertyPanelPro
             styles={styles}
             assets={assets}
             onSetStyle={onSetStyle}
+            onSetHtmlAttribute={props.onSetHtmlAttribute}
             onImportAssets={onImportAssets}
             gsapBorderRadius={gsapBorderRadius}
           />
diff --git a/packages/studio/src/components/editor/PropertyPanelFlat.tsx b/packages/studio/src/components/editor/PropertyPanelFlat.tsx
index d254216719..f2778b4e9f 100644
--- a/packages/studio/src/components/editor/PropertyPanelFlat.tsx
+++ b/packages/studio/src/components/editor/PropertyPanelFlat.tsx
@@ -351,6 +351,7 @@ export function PropertyPanelFlat({
           styles={styles}
           assets={assets}
           onSetStyle={onSetStyle}
+          onSetHtmlAttribute={forwardedProps.onSetHtmlAttribute}
           onPreviewStyle={onPreviewStyle}
           onImportAssets={onImportAssets}
           gsapBorderRadius={gsapBorderRadius}
diff --git a/packages/studio/src/components/editor/propertyPanelFill.tsx b/packages/studio/src/components/editor/propertyPanelFill.tsx
index 8bb9e998c3..248e01eb09 100644
--- a/packages/studio/src/components/editor/propertyPanelFill.tsx
+++ b/packages/studio/src/components/editor/propertyPanelFill.tsx
@@ -10,6 +10,7 @@ import {
 } from "./gradientValue";
 import { ReverseGradientIcon } from "../icons/ReverseGradientIcon";
 import { IMAGE_EXT } from "../../utils/mediaTypes";
+import type { DomEditSelection } from "./domEditing";
 import { FIELD, LABEL, RESPONSIVE_GRID } from "./propertyPanelHelpers";
 import {
   DetailField,
@@ -27,9 +28,13 @@ import { useTrackDesignInput } from "../../contexts/DesignPanelInputContext";
 function normalizeProjectPath(value: string): string {
   const trimmed = value.trim();
   const maybeUrl = /^[a-z]+:\/\//i.test(trimmed) ? new URL(trimmed).pathname : trimmed;
-  return decodeURIComponent(maybeUrl)
-    .replace(/\\/g, "/")
-    .replace(/^\.?\//, "");
+  let decodedPath = maybeUrl;
+  try {
+    decodedPath = decodeURIComponent(maybeUrl);
+  } catch (error) {
+    if (!(error instanceof URIError)) throw error;
+  }
+  return decodedPath.replace(/\\/g, "/").replace(/^\.?\//, "");
 }
 
 function toRelativeProjectAssetPath(sourceFile: string, assetPath: string): string {
@@ -75,7 +80,8 @@ function resolveSelectedAsset(
 
 export function ImageFillField({
   projectId,
-  sourceFile,
+  element,
+  onSetHtmlAttribute,
   value,
   assets,
   disabled,
@@ -83,7 +89,8 @@ export function ImageFillField({
   onImportAssets,
 }: {
   projectId: string;
-  sourceFile: string;
+  element: DomEditSelection;
+  onSetHtmlAttribute: (attr: string, value: string | null) => void | Promise<void>;
   value: string;
   assets: string[];
   disabled?: boolean;
@@ -91,15 +98,29 @@ export function ImageFillField({
   onImportAssets?: (files: FileList) => Promise<string[]>;
 }) {
   const track = useTrackDesignInput();
+  const sourceFile = element.sourceFile;
+  const isImage = element.tagName === "img";
+  const imageUrl = isImage ? (element.element.getAttribute("src") ?? "") : value;
+  const commitImage = (next: string, projectAsset = false) => {
+    if (isImage) {
+      if (next)
+        void onSetHtmlAttribute(
+          "src",
+          projectAsset ? toRelativeProjectAssetPath(sourceFile, next) : next,
+        );
+      return;
+    }
+    onCommit(next ? `url("${next}")` : "none");
+  };
   const fileInputRef = useRef<HTMLInputElement | null>(null);
   const [uploading, setUploading] = useState(false);
   const [uploadError, setUploadError] = useState<string | null>(null);
   const imageAssets = useMemo(() => assets.filter((a) => IMAGE_EXT.test(a)), [assets]);
   const selectedAsset = useMemo(
-    () => resolveSelectedAsset(value, sourceFile, imageAssets),
-    [imageAssets, sourceFile, value],
+    () => resolveSelectedAsset(imageUrl, sourceFile, imageAssets),
+    [imageAssets, sourceFile, imageUrl],
   );
-  const externalUrlValue = selectedAsset ? "" : value;
+  const externalUrlValue = selectedAsset ? "" : imageUrl;
 
   const handleUpload = async (files: FileList | null) => {
     if (!files?.length || !onImportAssets) return;
@@ -110,7 +131,7 @@ export function ImageFillField({
       const nextImage = uploaded.find((a) => IMAGE_EXT.test(a));
       if (nextImage) {
         track("button", "Upload image");
-        onCommit(`url("${toProjectRootAssetPath(nextImage)}")`);
+        commitImage(toProjectRootAssetPath(nextImage), true);
       }
     } catch {
       setUploadError("Upload failed — check the file and try again.");
@@ -174,14 +195,16 @@ export function ImageFillField({
                   const next = e.target.value;
                   track("select", "Project asset");
                   if (!next) {
-                    onCommit("none");
+                    commitImage("");
                     return;
                   }
-                  onCommit(`url("${toProjectRootAssetPath(next)}")`);
+                  commitImage(toProjectRootAssetPath(next), true);
                 }}
                 className="min-w-0 w-full appearance-none bg-transparent text-[11px] font-medium text-neutral-100 outline-hidden disabled:cursor-not-allowed disabled:text-neutral-600"
               >
-                <option value="">None</option>
+                <option value="" disabled={isImage}>
+                  None
+                </option>
                 {imageAssets.map((asset) => (
                   <option key={asset} value={asset}>
                     {asset}
@@ -201,7 +224,7 @@ export function ImageFillField({
         label="External URL"
         value={externalUrlValue}
         disabled={disabled}
-        onCommit={(next) => onCommit(next.trim() ? `url("${next.trim()}")` : "none")}
+        onCommit={(next) => commitImage(next.trim())}
       />
     </div>
   );
diff --git a/packages/studio/src/components/editor/propertyPanelFlatStyleSections.test.tsx b/packages/studio/src/components/editor/propertyPanelFlatStyleSections.test.tsx
index c9f1df4083..a664e34bc3 100644
--- a/packages/studio/src/components/editor/propertyPanelFlatStyleSections.test.tsx
+++ b/packages/studio/src/components/editor/propertyPanelFlatStyleSections.test.tsx
@@ -63,6 +63,7 @@ function renderSection(
         styles={mergedStyles}
         assets={[]}
         onSetStyle={onSetStyle}
+        onSetHtmlAttribute={vi.fn()}
         gsapBorderRadius={gsapBorderRadius}
       />,
     );
@@ -375,6 +376,7 @@ describe("FlatStyleSection — blur sliders", () => {
           styles={{ filter: "blur(4px)" }}
           assets={[]}
           onSetStyle={onSetStyle}
+          onSetHtmlAttribute={vi.fn()}
           gsapBorderRadius={null}
         />,
       );
@@ -483,6 +485,7 @@ describe("FlatStyleSection — Overflow and Mask", () => {
           styles={{}}
           assets={[]}
           onSetStyle={onSetStyle}
+          onSetHtmlAttribute={vi.fn()}
           gsapBorderRadius={null}
         />,
       );
@@ -593,6 +596,7 @@ describe("FlatStyleSection — Opacity", () => {
           styles={{}}
           assets={[]}
           onSetStyle={onSetStyle}
+          onSetHtmlAttribute={vi.fn()}
           gsapBorderRadius={null}
         />,
       );
diff --git a/packages/studio/src/components/editor/propertyPanelFlatStyleSections.tsx b/packages/studio/src/components/editor/propertyPanelFlatStyleSections.tsx
index ff207878a7..d0457951d6 100644
--- a/packages/studio/src/components/editor/propertyPanelFlatStyleSections.tsx
+++ b/packages/studio/src/components/editor/propertyPanelFlatStyleSections.tsx
@@ -43,6 +43,7 @@ function FlatFillFields({
   styles,
   assets,
   onSetStyle,
+  onSetHtmlAttribute,
   onPreviewStyle,
   onImportAssets,
 }: {
@@ -51,18 +52,19 @@ function FlatFillFields({
   styles: Record<string, string>;
   assets: string[];
   onSetStyle: (prop: string, value: string) => void | Promise<unknown>;
+  onSetHtmlAttribute: (attr: string, value: string | null) => void | Promise<void>;
   onPreviewStyle?: (prop: string, value: string) => void;
   onImportAssets?: (files: FileList) => Promise<string[]>;
 }) {
   const styleEditingDisabled = !element.capabilities.canEditStyles;
   const backgroundImage = styles["background-image"] ?? "none";
   const hasTextControls = isTextEditableSelection(element);
-  const fillMode =
-    backgroundImage && backgroundImage !== "none"
-      ? backgroundImage.includes("gradient")
-        ? "Gradient"
-        : "Image"
-      : "Solid";
+  let fillMode = "Solid";
+  if (element.tagName === "img") {
+    fillMode = "Image";
+  } else if (backgroundImage && backgroundImage !== "none") {
+    fillMode = backgroundImage.includes("gradient") ? "Gradient" : "Image";
+  }
   const [preferredFillMode, setPreferredFillMode] = useState(fillMode);
   const imageUrl = extractBackgroundImageUrl(backgroundImage);
 
@@ -124,7 +126,8 @@ function FlatFillFields({
       ) : (
         <ImageFillField
           projectId={projectId}
-          sourceFile={element.sourceFile}
+          element={element}
+          onSetHtmlAttribute={onSetHtmlAttribute}
           value={imageUrl}
           assets={assets}
           disabled={styleEditingDisabled}
@@ -456,6 +459,7 @@ export function FlatStyleSection({
   styles,
   assets,
   onSetStyle,
+  onSetHtmlAttribute,
   onPreviewStyle,
   onImportAssets,
   gsapBorderRadius,
@@ -465,6 +469,7 @@ export function FlatStyleSection({
   styles: Record<string, string>;
   assets: string[];
   onSetStyle: (prop: string, value: string) => void | Promise<unknown>;
+  onSetHtmlAttribute: (attr: string, value: string | null) => void | Promise<void>;
   onPreviewStyle?: (prop: string, value: string) => void;
   onImportAssets?: (files: FileList) => Promise<string[]>;
   gsapBorderRadius?: { tl: number; tr: number; br: number; bl: number } | null;
@@ -478,6 +483,7 @@ export function FlatStyleSection({
         styles={styles}
         assets={assets}
         onSetStyle={onSetStyle}
+        onSetHtmlAttribute={onSetHtmlAttribute}
         onPreviewStyle={onPreviewStyle}
         onImportAssets={onImportAssets}
       />
diff --git a/packages/studio/src/components/editor/propertyPanelImageFill.test.tsx b/packages/studio/src/components/editor/propertyPanelImageFill.test.tsx
new file mode 100644
index 0000000000..348133ff11
--- /dev/null
+++ b/packages/studio/src/components/editor/propertyPanelImageFill.test.tsx
@@ -0,0 +1,164 @@
+// @vitest-environment happy-dom
+import React, { act } from "react";
+import { createRoot } from "react-dom/client";
+import { afterEach, describe, expect, it, vi } from "vitest";
+import { StyleSections } from "./propertyPanelStyleSections";
+import { FlatStyleSection } from "./propertyPanelFlatStyleSections";
+import type { DomEditSelection } from "./domEditing";
+
+(globalThis as unknown as { IS_REACT_ACT_ENVIRONMENT: boolean }).IS_REACT_ACT_ENVIRONMENT = true;
+afterEach(() => {
+  document.body.innerHTML = "";
+});
+
+function mount(
+  Panel: typeof StyleSections | typeof FlatStyleSection,
+  tag = "img",
+  sourceFile = "index.html",
+  src = "assets/old.png",
+) {
+  const selected = document.createElement(tag);
+  selected.id = "picture";
+  selected.setAttribute("src", src);
+  document.body.append(selected);
+  const element: DomEditSelection = {
+    element: selected,
+    id: "picture",
+    selector: "#picture",
+    label: "Picture",
+    tagName: tag,
+    sourceFile,
+    compositionPath: sourceFile,
+    isCompositionHost: false,
+    isInsideLockedComposition: false,
+    boundingBox: { x: 0, y: 0, width: 320, height: 180 },
+    textContent: "",
+    dataAttributes: {},
+    inlineStyles: {},
+    computedStyles: {},
+    textFields: [],
+    capabilities: {
+      canSelect: true,
+      canEditStyles: true,
+      canCrop: true,
+      canMove: true,
+      canResize: true,
+      canApplyManualOffset: true,
+      canApplyManualSize: true,
+      canApplyManualRotation: true,
+    },
+  };
+  const host = document.createElement("div");
+  document.body.append(host);
+  const root = createRoot(host);
+  const onSetStyle = vi.fn((prop: string, value: string) =>
+    selected.style.setProperty(prop, value),
+  );
+  const onSetHtmlAttribute = vi.fn((attr: string, value: string | null) => {
+    if (value !== null) selected.setAttribute(attr, value);
+  });
+  act(() =>
+    root.render(
+      <Panel
+        projectId="fixture"
+        element={element}
+        styles={{}}
+        assets={["assets/old.png", "assets/new.png"]}
+        onSetStyle={onSetStyle}
+        onSetHtmlAttribute={onSetHtmlAttribute}
+      />,
+    ),
+  );
+  const image = Array.from(host.querySelectorAll("button")).find(
+    (button) => button.textContent === "Image",
+  );
+  if (!image) throw new Error("Image control must exist");
+  act(() => image.click());
+  // The Image asset select is the one whose options include the fixture asset.
+  const assetSelect = Array.from(host.querySelectorAll("select")).find((node) =>
+    Array.from(node.options).some((option) => option.value === "assets/new.png"),
+  );
+  if (!assetSelect) throw new Error("Project asset control must exist");
+  function choose(value: string) {
+    const control = assetSelect;
+    if (!control) throw new Error("Asset control must exist");
+    act(() => {
+      control.value = value;
+      control.dispatchEvent(new Event("change", { bubbles: true }));
+    });
+  }
+  return { host, selected, root, choose, assetSelect, onSetStyle, onSetHtmlAttribute };
+}
+
+describe.each([
+  ["classic", StyleSections],
+  ["flat", FlatStyleSection],
+] as const)("%s Image fill", (_name, Panel) => {
+  it("shows the img source as the current project asset", () => {
+    const view = mount(Panel);
+    expect(view.assetSelect.value).toBe("assets/old.png");
+    act(() => view.root.unmount());
+  });
+  it.each([
+    "assets/100%.png",
+    'data:image/svg+xml,<svg xmlns="http://www.w3.org/2000/svg" width="100%"></svg>',
+  ])("shows an authored source containing a literal percent: %s", (src) => {
+    const view = mount(Panel, "img", "index.html", src);
+    const input = Array.from(view.host.querySelectorAll("label"))
+      .find((node) => node.querySelector("span")?.textContent === "External URL")
+      ?.querySelector("input");
+    expect(input?.value).toBe(src);
+    act(() => view.root.unmount());
+  });
+  it("replaces the img source rather than writing a hidden background", () => {
+    const view = mount(Panel);
+    view.choose("assets/new.png");
+    expect(view.selected.getAttribute("src")).toBe("assets/new.png");
+    expect(view.onSetHtmlAttribute).toHaveBeenCalledExactlyOnceWith("src", "assets/new.png");
+    expect(view.onSetStyle).not.toHaveBeenCalled();
+    act(() => view.root.unmount());
+  });
+  it("replaces an img with an external URL without CSS wrapping", () => {
+    const view = mount(Panel);
+    const row = Array.from(view.host.querySelectorAll("label")).find(
+      (node) =>
+        node.querySelector("span")?.textContent === "External URL" && node.querySelector("input"),
+    );
+    const input = row?.querySelector("input");
+    if (!input) throw new Error("External URL input must exist");
+    act(() => {
+      Object.getOwnPropertyDescriptor(HTMLInputElement.prototype, "value")?.set?.call(
+        input,
+        "https://example.com/new.png",
+      );
+      input.dispatchEvent(new Event("input", { bubbles: true }));
+    });
+    act(() => input.dispatchEvent(new FocusEvent("focusout", { bubbles: true })));
+    expect(view.selected.getAttribute("src")).toBe("https://example.com/new.png");
+    expect(view.onSetStyle).not.toHaveBeenCalled();
+    act(() => view.root.unmount());
+  });
+  it("keeps the img source when cleared", () => {
+    const view = mount(Panel);
+    view.choose("");
+    expect(view.selected.getAttribute("src")).toBe("assets/old.png");
+    expect(view.onSetHtmlAttribute).not.toHaveBeenCalled();
+    expect(view.onSetStyle).not.toHaveBeenCalled();
+    act(() => view.root.unmount());
+  });
+  it("uses source-relative image paths in nested compositions", () => {
+    const view = mount(Panel, "img", "compositions/scene.html");
+    view.choose("assets/new.png");
+    expect(view.selected.getAttribute("src")).toBe("../assets/new.png");
+    act(() => view.root.unmount());
+  });
+  it("keeps background-image replacement and clearing for ordinary elements", () => {
+    const view = mount(Panel, "div");
+    view.choose("assets/new.png");
+    expect(view.selected.style.backgroundImage).toBe('url("assets/new.png")');
+    view.choose("");
+    expect(view.selected.style.backgroundImage).toBe("none");
+    expect(view.onSetHtmlAttribute).not.toHaveBeenCalled();
+    act(() => view.root.unmount());
+  });
+});
diff --git a/packages/studio/src/components/editor/propertyPanelStyleSections.tsx b/packages/studio/src/components/editor/propertyPanelStyleSections.tsx
index 1d73c7be9a..2153c31e7d 100644
--- a/packages/studio/src/components/editor/propertyPanelStyleSections.tsx
+++ b/packages/studio/src/components/editor/propertyPanelStyleSections.tsx
@@ -45,6 +45,7 @@ export function StyleSections({
   styles,
   assets,
   onSetStyle,
+  onSetHtmlAttribute,
   onImportAssets,
   gsapBorderRadius,
   hideFlex = false,
@@ -54,6 +55,7 @@ export function StyleSections({
   styles: Record<string, string>;
   assets: string[];
   onSetStyle: (prop: string, value: string) => void | Promise<unknown>;
+  onSetHtmlAttribute: (attr: string, value: string | null) => void | Promise<void>;
   onImportAssets?: (files: FileList) => Promise<string[]>;
   gsapBorderRadius?: { tl: number; tr: number; br: number; bl: number } | null;
   // When true, the Flex `Section` is suppressed. The flat inspector renders
@@ -108,12 +110,12 @@ export function StyleSections({
   const backgroundImage = styles["background-image"] ?? "none";
   const hasTextControls = isTextEditableSelection(element);
 
-  const fillMode =
-    backgroundImage && backgroundImage !== "none"
-      ? backgroundImage.includes("gradient")
-        ? "Gradient"
-        : "Image"
-      : "Solid";
+  let fillMode = "Solid";
+  if (element.tagName === "img") {
+    fillMode = "Image";
+  } else if (backgroundImage && backgroundImage !== "none") {
+    fillMode = backgroundImage.includes("gradient") ? "Gradient" : "Image";
+  }
   const [preferredFillMode, setPreferredFillMode] = useState(fillMode);
   const imageUrl = extractBackgroundImageUrl(backgroundImage);
   // Remember the last authored gradient so an exploratory Solid↔Gradient
@@ -488,7 +490,8 @@ export function StyleSections({
           ) : (
             <ImageFillField
               projectId={projectId}
-              sourceFile={element.sourceFile}
+              element={element}
+              onSetHtmlAttribute={onSetHtmlAttribute}
               value={imageUrl}
               assets={assets}
               disabled={styleEditingDisabled}