diff --git a/src/backend/src/modules/puterai/GeminiImageGenerationService.js b/src/backend/src/modules/puterai/GeminiImageGenerationService.js
index ee4dc9efd..1744f40c6 100644
--- a/src/backend/src/modules/puterai/GeminiImageGenerationService.js
+++ b/src/backend/src/modules/puterai/GeminiImageGenerationService.js
@@ -88,8 +88,10 @@ class GeminiImageGenerationService extends BaseService {
                     input_image_mime_type
                 });
 
+                // Determine if this is a data URL or web URL
+                const isDataUrl = url.startsWith('data:');
                 const image = new TypedValue({
-                    $: 'string:url:web',
+                    $: isDataUrl ? 'string:url:data' : 'string:url:web',
                     content_type: 'image'
                 }, url);
 
diff --git a/src/backend/src/services/drivers/CoercionService.js b/src/backend/src/services/drivers/CoercionService.js
index 13f429bf3..a3a3a13b7 100644
--- a/src/backend/src/services/drivers/CoercionService.js
+++ b/src/backend/src/services/drivers/CoercionService.js
@@ -90,6 +90,37 @@ class CoercionService extends BaseService {
                 }, response.data);
             }
         });
+
+        // Add coercion for data URLs to streams
+        this.coercions_.push({
+            produces: {
+                $: 'stream',
+                content_type: 'image'
+            },
+            consumes: {
+                $: 'string:url:data',
+                content_type: 'image'
+            },
+            coerce: async typed_value => {
+                this.log.noticeme('data URL coercion is running!');
+                
+                const data_url = typed_value.value;
+                const data = data_url.split(',')[1];
+                const buffer = Buffer.from(data, 'base64');
+                
+                const { PassThrough } = require('stream');
+                const stream = new PassThrough();
+                stream.end(buffer);
+
+                // Extract content type from data URL
+                const contentType = data_url.match(/data:([^;]+)/)?.[1] || 'image/png';
+
+                return new TypedValue({
+                    $: 'stream',
+                    content_type: contentType,
+                }, stream);
+            }
+        });
     }
 
     /**
diff --git a/src/puter-js/src/modules/AI.js b/src/puter-js/src/modules/AI.js
index a97a46f35..e1051e340 100644
--- a/src/puter-js/src/modules/AI.js
+++ b/src/puter-js/src/modules/AI.js
@@ -604,6 +604,31 @@ class AI{
         }).call(this, requestParams);
     }
 
+    /**
+     * Generate images from text prompts or perform image-to-image generation
+     * 
+     * @param {string|object} prompt - Text prompt or options object
+     * @param {object|boolean} [options] - Generation options or test mode flag
+     * @param {string} [options.prompt] - Text description of the image to generate
+     * @param {string} [options.model] - Model to use (e.g., "gemini-2.5-flash-image-preview")
+     * @param {object} [options.ratio] - Image dimensions (e.g., {w: 1024, h: 1024})
+     * @param {string} [options.input_image] - Base64 encoded input image for image-to-image generation
+     * @param {string} [options.input_image_mime_type] - MIME type of input image (e.g., "image/png")
+     * @returns {Promise<Image>} Generated image object with src property
+     * 
+     * @example
+     * // Text-to-image
+     * const img = await puter.ai.txt2img("A beautiful sunset");
+     * 
+     * @example
+     * // Image-to-image
+     * const img = await puter.ai.txt2img({
+     *   prompt: "Transform this into a watercolor painting",
+     *   input_image: base64ImageData,
+     *   input_image_mime_type: "image/png",
+     *   model: "gemini-2.5-flash-image-preview"
+     * });
+     */
     txt2img = async (...args) => {
         let options = {};
         let testMode = false;