diff --git a/autogpt_platform/CLAUDE.md b/autogpt_platform/CLAUDE.md
index 2c76e7db80..9690178587 100644
--- a/autogpt_platform/CLAUDE.md
+++ b/autogpt_platform/CLAUDE.md
@@ -194,6 +194,50 @@ ex: do the inputs and outputs tie well together?
 
 If you get any pushback or hit complex block conditions check the new_blocks guide in the docs.
 
+**Handling files in blocks with `store_media_file()`:**
+
+When blocks need to work with files (images, videos, documents), use `store_media_file()` from `backend.util.file`. The `return_format` parameter determines what you get back:
+
+| Format | Use When | Returns |
+|--------|----------|---------|
+| `"for_local_processing"` | Processing with local tools (ffmpeg, MoviePy, PIL) | Local file path (e.g., `"image.png"`) |
+| `"for_external_api"` | Sending content to external APIs (Replicate, OpenAI) | Data URI (e.g., `"data:image/png;base64,..."`) |
+| `"for_block_output"` | Returning output from your block | Smart: `workspace://` in CoPilot, data URI in graphs |
+
+**Examples:**
+```python
+# INPUT: Need to process file locally with ffmpeg
+local_path = await store_media_file(
+    file=input_data.video,
+    execution_context=execution_context,
+    return_format="for_local_processing",
+)
+# local_path = "video.mp4" - use with Path/ffmpeg/etc
+
+# INPUT: Need to send to external API like Replicate
+image_b64 = await store_media_file(
+    file=input_data.image,
+    execution_context=execution_context,
+    return_format="for_external_api",
+)
+# image_b64 = "data:image/png;base64,iVBORw0..." - send to API
+
+# OUTPUT: Returning result from block
+result_url = await store_media_file(
+    file=generated_image_url,
+    execution_context=execution_context,
+    return_format="for_block_output",
+)
+yield "image_url", result_url
+# In CoPilot: result_url = "workspace://abc123"
+# In graphs:  result_url = "data:image/png;base64,..."
+```
+
+**Key points:**
+- `for_block_output` is the ONLY format that auto-adapts to execution context
+- Always use `for_block_output` for block outputs unless you have a specific reason not to
+- Never hardcode workspace checks - let `for_block_output` handle it
+
 **Modifying the API:**
 
 1. Update route in `/backend/backend/server/routers/`
diff --git a/autogpt_platform/backend/backend/api/features/chat/tools/IDEAS.md b/autogpt_platform/backend/backend/api/features/chat/tools/IDEAS.md
new file mode 100644
index 0000000000..656aac61c4
--- /dev/null
+++ b/autogpt_platform/backend/backend/api/features/chat/tools/IDEAS.md
@@ -0,0 +1,79 @@
+# CoPilot Tools - Future Ideas
+
+## Multimodal Image Support for CoPilot
+
+**Problem:** CoPilot uses a vision-capable model but can't "see" workspace images. When a block generates an image and returns `workspace://abc123`, CoPilot can't evaluate it (e.g., checking blog thumbnail quality).
+
+**Backend Solution:**
+When preparing messages for the LLM, detect `workspace://` image references and convert them to proper image content blocks:
+
+```python
+# Before sending to LLM, scan for workspace image references
+# and inject them as image content parts
+
+# Example message transformation:
+# FROM: {"role": "assistant", "content": "Generated image: workspace://abc123"}
+# TO:   {"role": "assistant", "content": [
+#         {"type": "text", "text": "Generated image: workspace://abc123"},
+#         {"type": "image_url", "image_url": {"url": "data:image/png;base64,..."}}
+#       ]}
+```
+
+**Where to implement:**
+- In the chat stream handler before calling the LLM
+- Or in a message preprocessing step
+- Need to fetch image from workspace, convert to base64, add as image content
+
+**Considerations:**
+- Only do this for image MIME types (image/png, image/jpeg, etc.)
+- May want a size limit (don't pass 10MB images)
+- Track which images were "shown" to the AI for frontend indicator
+- Cost implications - vision API calls are more expensive
+
+**Frontend Solution:**
+Show visual indicator on workspace files in chat:
+- If AI saw the image: normal display
+- If AI didn't see it: overlay icon saying "AI can't see this image"
+
+Requires response metadata indicating which `workspace://` refs were passed to the model.
+
+---
+
+## Output Post-Processing Layer for run_block
+
+**Problem:** Many blocks produce large outputs that:
+- Consume massive context (100KB base64 image = ~133KB tokens)
+- Can't fit in conversation
+- Break things and cause high LLM costs
+
+**Proposed Solution:** Instead of modifying individual blocks or `store_media_file()`, implement a centralized output processor in `run_block.py` that handles outputs before they're returned to CoPilot.
+
+**Benefits:**
+1. **Centralized** - one place to handle all output processing
+2. **Future-proof** - new blocks automatically get output processing
+3. **Keeps blocks pure** - they don't need to know about context constraints
+4. **Handles all large outputs** - not just images
+
+**Processing Rules:**
+- Detect base64 data URIs → save to workspace, return `workspace://` reference
+- Truncate very long strings (>N chars) with truncation note
+- Summarize large arrays/lists (e.g., "Array with 1000 items, first 5: [...]")
+- Handle nested large outputs in dicts recursively
+- Cap total output size
+
+**Implementation Location:** `run_block.py` after block execution, before returning `BlockOutputResponse`
+
+**Example:**
+```python
+def _process_outputs_for_context(
+    outputs: dict[str, list[Any]],
+    workspace_manager: WorkspaceManager,
+    max_string_length: int = 10000,
+    max_array_preview: int = 5,
+) -> dict[str, list[Any]]:
+    """Process block outputs to prevent context bloat."""
+    processed = {}
+    for name, values in outputs.items():
+        processed[name] = [_process_value(v, workspace_manager) for v in values]
+    return processed
+```
diff --git a/autogpt_platform/backend/backend/api/features/chat/tools/__init__.py b/autogpt_platform/backend/backend/api/features/chat/tools/__init__.py
index beeb128ae9..d078860c3a 100644
--- a/autogpt_platform/backend/backend/api/features/chat/tools/__init__.py
+++ b/autogpt_platform/backend/backend/api/features/chat/tools/__init__.py
@@ -18,6 +18,12 @@ from .get_doc_page import GetDocPageTool
 from .run_agent import RunAgentTool
 from .run_block import RunBlockTool
 from .search_docs import SearchDocsTool
+from .workspace_files import (
+    DeleteWorkspaceFileTool,
+    ListWorkspaceFilesTool,
+    ReadWorkspaceFileTool,
+    WriteWorkspaceFileTool,
+)
 
 if TYPE_CHECKING:
     from backend.api.features.chat.response_model import StreamToolOutputAvailable
@@ -37,6 +43,11 @@ TOOL_REGISTRY: dict[str, BaseTool] = {
     "view_agent_output": AgentOutputTool(),
     "search_docs": SearchDocsTool(),
     "get_doc_page": GetDocPageTool(),
+    # Workspace tools for CoPilot file operations
+    "list_workspace_files": ListWorkspaceFilesTool(),
+    "read_workspace_file": ReadWorkspaceFileTool(),
+    "write_workspace_file": WriteWorkspaceFileTool(),
+    "delete_workspace_file": DeleteWorkspaceFileTool(),
 }
 
 # Export individual tool instances for backwards compatibility
diff --git a/autogpt_platform/backend/backend/api/features/chat/tools/models.py b/autogpt_platform/backend/backend/api/features/chat/tools/models.py
index 8552681d03..49b233784e 100644
--- a/autogpt_platform/backend/backend/api/features/chat/tools/models.py
+++ b/autogpt_platform/backend/backend/api/features/chat/tools/models.py
@@ -28,6 +28,12 @@ class ResponseType(str, Enum):
     BLOCK_OUTPUT = "block_output"
     DOC_SEARCH_RESULTS = "doc_search_results"
     DOC_PAGE = "doc_page"
+    # Workspace response types
+    WORKSPACE_FILE_LIST = "workspace_file_list"
+    WORKSPACE_FILE_CONTENT = "workspace_file_content"
+    WORKSPACE_FILE_METADATA = "workspace_file_metadata"
+    WORKSPACE_FILE_WRITTEN = "workspace_file_written"
+    WORKSPACE_FILE_DELETED = "workspace_file_deleted"
     # Long-running operation types
     OPERATION_STARTED = "operation_started"
     OPERATION_PENDING = "operation_pending"
diff --git a/autogpt_platform/backend/backend/api/features/chat/tools/run_block.py b/autogpt_platform/backend/backend/api/features/chat/tools/run_block.py
index 3f57236564..a59082b399 100644
--- a/autogpt_platform/backend/backend/api/features/chat/tools/run_block.py
+++ b/autogpt_platform/backend/backend/api/features/chat/tools/run_block.py
@@ -1,6 +1,7 @@
 """Tool for executing blocks directly."""
 
 import logging
+import uuid
 from collections import defaultdict
 from typing import Any
 
@@ -8,6 +9,7 @@ from backend.api.features.chat.model import ChatSession
 from backend.data.block import get_block
 from backend.data.execution import ExecutionContext
 from backend.data.model import CredentialsMetaInput
+from backend.data.workspace import get_or_create_workspace
 from backend.integrations.creds_manager import IntegrationCredentialsManager
 from backend.util.exceptions import BlockError
 
@@ -223,11 +225,48 @@ class RunBlockTool(BaseTool):
             )
 
         try:
-            # Fetch actual credentials and prepare kwargs for block execution
-            # Create execution context with defaults (blocks may require it)
+            # Get or create user's workspace for CoPilot file operations
+            workspace = await get_or_create_workspace(user_id)
+
+            # Generate synthetic IDs for CoPilot context
+            # Each chat session is treated as its own agent with one continuous run
+            # This means:
+            # - graph_id (agent) = session (memories scoped to session when limit_to_agent=True)
+            # - graph_exec_id (run) = session (memories scoped to session when limit_to_run=True)
+            # - node_exec_id = unique per block execution
+            synthetic_graph_id = f"copilot-session-{session.session_id}"
+            synthetic_graph_exec_id = f"copilot-session-{session.session_id}"
+            synthetic_node_id = f"copilot-node-{block_id}"
+            synthetic_node_exec_id = (
+                f"copilot-{session.session_id}-{uuid.uuid4().hex[:8]}"
+            )
+
+            # Create unified execution context with all required fields
+            execution_context = ExecutionContext(
+                # Execution identity
+                user_id=user_id,
+                graph_id=synthetic_graph_id,
+                graph_exec_id=synthetic_graph_exec_id,
+                graph_version=1,  # Versions are 1-indexed
+                node_id=synthetic_node_id,
+                node_exec_id=synthetic_node_exec_id,
+                # Workspace with session scoping
+                workspace_id=workspace.id,
+                session_id=session.session_id,
+            )
+
+            # Prepare kwargs for block execution
+            # Keep individual kwargs for backwards compatibility with existing blocks
             exec_kwargs: dict[str, Any] = {
                 "user_id": user_id,
-                "execution_context": ExecutionContext(),
+                "execution_context": execution_context,
+                # Legacy: individual kwargs for blocks not yet using execution_context
+                "workspace_id": workspace.id,
+                "graph_exec_id": synthetic_graph_exec_id,
+                "node_exec_id": synthetic_node_exec_id,
+                "node_id": synthetic_node_id,
+                "graph_version": 1,  # Versions are 1-indexed
+                "graph_id": synthetic_graph_id,
             }
 
             for field_name, cred_meta in matched_credentials.items():
diff --git a/autogpt_platform/backend/backend/api/features/chat/tools/workspace_files.py b/autogpt_platform/backend/backend/api/features/chat/tools/workspace_files.py
new file mode 100644
index 0000000000..03532c8fee
--- /dev/null
+++ b/autogpt_platform/backend/backend/api/features/chat/tools/workspace_files.py
@@ -0,0 +1,620 @@
+"""CoPilot tools for workspace file operations."""
+
+import base64
+import logging
+from typing import Any, Optional
+
+from pydantic import BaseModel
+
+from backend.api.features.chat.model import ChatSession
+from backend.data.workspace import get_or_create_workspace
+from backend.util.settings import Config
+from backend.util.virus_scanner import scan_content_safe
+from backend.util.workspace import WorkspaceManager
+
+from .base import BaseTool
+from .models import ErrorResponse, ResponseType, ToolResponseBase
+
+logger = logging.getLogger(__name__)
+
+
+class WorkspaceFileInfoData(BaseModel):
+    """Data model for workspace file information (not a response itself)."""
+
+    file_id: str
+    name: str
+    path: str
+    mime_type: str
+    size_bytes: int
+
+
+class WorkspaceFileListResponse(ToolResponseBase):
+    """Response containing list of workspace files."""
+
+    type: ResponseType = ResponseType.WORKSPACE_FILE_LIST
+    files: list[WorkspaceFileInfoData]
+    total_count: int
+
+
+class WorkspaceFileContentResponse(ToolResponseBase):
+    """Response containing workspace file content (legacy, for small text files)."""
+
+    type: ResponseType = ResponseType.WORKSPACE_FILE_CONTENT
+    file_id: str
+    name: str
+    path: str
+    mime_type: str
+    content_base64: str
+
+
+class WorkspaceFileMetadataResponse(ToolResponseBase):
+    """Response containing workspace file metadata and download URL (prevents context bloat)."""
+
+    type: ResponseType = ResponseType.WORKSPACE_FILE_METADATA
+    file_id: str
+    name: str
+    path: str
+    mime_type: str
+    size_bytes: int
+    download_url: str
+    preview: str | None = None  # First 500 chars for text files
+
+
+class WorkspaceWriteResponse(ToolResponseBase):
+    """Response after writing a file to workspace."""
+
+    type: ResponseType = ResponseType.WORKSPACE_FILE_WRITTEN
+    file_id: str
+    name: str
+    path: str
+    size_bytes: int
+
+
+class WorkspaceDeleteResponse(ToolResponseBase):
+    """Response after deleting a file from workspace."""
+
+    type: ResponseType = ResponseType.WORKSPACE_FILE_DELETED
+    file_id: str
+    success: bool
+
+
+class ListWorkspaceFilesTool(BaseTool):
+    """Tool for listing files in user's workspace."""
+
+    @property
+    def name(self) -> str:
+        return "list_workspace_files"
+
+    @property
+    def description(self) -> str:
+        return (
+            "List files in the user's workspace. "
+            "Returns file names, paths, sizes, and metadata. "
+            "Optionally filter by path prefix."
+        )
+
+    @property
+    def parameters(self) -> dict[str, Any]:
+        return {
+            "type": "object",
+            "properties": {
+                "path_prefix": {
+                    "type": "string",
+                    "description": (
+                        "Optional path prefix to filter files "
+                        "(e.g., '/documents/' to list only files in documents folder). "
+                        "By default, only files from the current session are listed."
+                    ),
+                },
+                "limit": {
+                    "type": "integer",
+                    "description": "Maximum number of files to return (default 50, max 100)",
+                    "minimum": 1,
+                    "maximum": 100,
+                },
+                "include_all_sessions": {
+                    "type": "boolean",
+                    "description": (
+                        "If true, list files from all sessions. "
+                        "Default is false (only current session's files)."
+                    ),
+                },
+            },
+            "required": [],
+        }
+
+    @property
+    def requires_auth(self) -> bool:
+        return True
+
+    async def _execute(
+        self,
+        user_id: str | None,
+        session: ChatSession,
+        **kwargs,
+    ) -> ToolResponseBase:
+        session_id = session.session_id
+
+        if not user_id:
+            return ErrorResponse(
+                message="Authentication required",
+                session_id=session_id,
+            )
+
+        path_prefix: Optional[str] = kwargs.get("path_prefix")
+        limit = min(kwargs.get("limit", 50), 100)
+        include_all_sessions: bool = kwargs.get("include_all_sessions", False)
+
+        try:
+            workspace = await get_or_create_workspace(user_id)
+            # Pass session_id for session-scoped file access
+            manager = WorkspaceManager(user_id, workspace.id, session_id)
+
+            files = await manager.list_files(
+                path=path_prefix,
+                limit=limit,
+                include_all_sessions=include_all_sessions,
+            )
+            total = await manager.get_file_count(
+                path=path_prefix,
+                include_all_sessions=include_all_sessions,
+            )
+
+            file_infos = [
+                WorkspaceFileInfoData(
+                    file_id=f.id,
+                    name=f.name,
+                    path=f.path,
+                    mime_type=f.mimeType,
+                    size_bytes=f.sizeBytes,
+                )
+                for f in files
+            ]
+
+            scope_msg = "all sessions" if include_all_sessions else "current session"
+            return WorkspaceFileListResponse(
+                files=file_infos,
+                total_count=total,
+                message=f"Found {len(files)} files in workspace ({scope_msg})",
+                session_id=session_id,
+            )
+
+        except Exception as e:
+            logger.error(f"Error listing workspace files: {e}", exc_info=True)
+            return ErrorResponse(
+                message=f"Failed to list workspace files: {str(e)}",
+                error=str(e),
+                session_id=session_id,
+            )
+
+
+class ReadWorkspaceFileTool(BaseTool):
+    """Tool for reading file content from workspace."""
+
+    # Size threshold for returning full content vs metadata+URL
+    # Files larger than this return metadata with download URL to prevent context bloat
+    MAX_INLINE_SIZE_BYTES = 32 * 1024  # 32KB
+    # Preview size for text files
+    PREVIEW_SIZE = 500
+
+    @property
+    def name(self) -> str:
+        return "read_workspace_file"
+
+    @property
+    def description(self) -> str:
+        return (
+            "Read a file from the user's workspace. "
+            "Specify either file_id or path to identify the file. "
+            "For small text files, returns content directly. "
+            "For large or binary files, returns metadata and a download URL. "
+            "Paths are scoped to the current session by default. "
+            "Use /sessions/<session_id>/... for cross-session access."
+        )
+
+    @property
+    def parameters(self) -> dict[str, Any]:
+        return {
+            "type": "object",
+            "properties": {
+                "file_id": {
+                    "type": "string",
+                    "description": "The file's unique ID (from list_workspace_files)",
+                },
+                "path": {
+                    "type": "string",
+                    "description": (
+                        "The virtual file path (e.g., '/documents/report.pdf'). "
+                        "Scoped to current session by default."
+                    ),
+                },
+                "force_download_url": {
+                    "type": "boolean",
+                    "description": (
+                        "If true, always return metadata+URL instead of inline content. "
+                        "Default is false (auto-selects based on file size/type)."
+                    ),
+                },
+            },
+            "required": [],  # At least one must be provided
+        }
+
+    @property
+    def requires_auth(self) -> bool:
+        return True
+
+    def _is_text_mime_type(self, mime_type: str) -> bool:
+        """Check if the MIME type is a text-based type."""
+        text_types = [
+            "text/",
+            "application/json",
+            "application/xml",
+            "application/javascript",
+            "application/x-python",
+            "application/x-sh",
+        ]
+        return any(mime_type.startswith(t) for t in text_types)
+
+    async def _execute(
+        self,
+        user_id: str | None,
+        session: ChatSession,
+        **kwargs,
+    ) -> ToolResponseBase:
+        session_id = session.session_id
+
+        if not user_id:
+            return ErrorResponse(
+                message="Authentication required",
+                session_id=session_id,
+            )
+
+        file_id: Optional[str] = kwargs.get("file_id")
+        path: Optional[str] = kwargs.get("path")
+        force_download_url: bool = kwargs.get("force_download_url", False)
+
+        if not file_id and not path:
+            return ErrorResponse(
+                message="Please provide either file_id or path",
+                session_id=session_id,
+            )
+
+        try:
+            workspace = await get_or_create_workspace(user_id)
+            # Pass session_id for session-scoped file access
+            manager = WorkspaceManager(user_id, workspace.id, session_id)
+
+            # Get file info
+            if file_id:
+                file_info = await manager.get_file_info(file_id)
+                if file_info is None:
+                    return ErrorResponse(
+                        message=f"File not found: {file_id}",
+                        session_id=session_id,
+                    )
+                target_file_id = file_id
+            else:
+                # path is guaranteed to be non-None here due to the check above
+                assert path is not None
+                file_info = await manager.get_file_info_by_path(path)
+                if file_info is None:
+                    return ErrorResponse(
+                        message=f"File not found at path: {path}",
+                        session_id=session_id,
+                    )
+                target_file_id = file_info.id
+
+            # Decide whether to return inline content or metadata+URL
+            is_small_file = file_info.sizeBytes <= self.MAX_INLINE_SIZE_BYTES
+            is_text_file = self._is_text_mime_type(file_info.mimeType)
+
+            # Return inline content for small text files (unless force_download_url)
+            if is_small_file and is_text_file and not force_download_url:
+                content = await manager.read_file_by_id(target_file_id)
+                content_b64 = base64.b64encode(content).decode("utf-8")
+
+                return WorkspaceFileContentResponse(
+                    file_id=file_info.id,
+                    name=file_info.name,
+                    path=file_info.path,
+                    mime_type=file_info.mimeType,
+                    content_base64=content_b64,
+                    message=f"Successfully read file: {file_info.name}",
+                    session_id=session_id,
+                )
+
+            # Return metadata + workspace:// reference for large or binary files
+            # This prevents context bloat (100KB file = ~133KB as base64)
+            # Use workspace:// format so frontend urlTransform can add proxy prefix
+            download_url = f"workspace://{target_file_id}"
+
+            # Generate preview for text files
+            preview: str | None = None
+            if is_text_file:
+                try:
+                    content = await manager.read_file_by_id(target_file_id)
+                    preview_text = content[: self.PREVIEW_SIZE].decode(
+                        "utf-8", errors="replace"
+                    )
+                    if len(content) > self.PREVIEW_SIZE:
+                        preview_text += "..."
+                    preview = preview_text
+                except Exception:
+                    pass  # Preview is optional
+
+            return WorkspaceFileMetadataResponse(
+                file_id=file_info.id,
+                name=file_info.name,
+                path=file_info.path,
+                mime_type=file_info.mimeType,
+                size_bytes=file_info.sizeBytes,
+                download_url=download_url,
+                preview=preview,
+                message=f"File: {file_info.name} ({file_info.sizeBytes} bytes). Use download_url to retrieve content.",
+                session_id=session_id,
+            )
+
+        except FileNotFoundError as e:
+            return ErrorResponse(
+                message=str(e),
+                session_id=session_id,
+            )
+        except Exception as e:
+            logger.error(f"Error reading workspace file: {e}", exc_info=True)
+            return ErrorResponse(
+                message=f"Failed to read workspace file: {str(e)}",
+                error=str(e),
+                session_id=session_id,
+            )
+
+
+class WriteWorkspaceFileTool(BaseTool):
+    """Tool for writing files to workspace."""
+
+    @property
+    def name(self) -> str:
+        return "write_workspace_file"
+
+    @property
+    def description(self) -> str:
+        return (
+            "Write or create a file in the user's workspace. "
+            "Provide the content as a base64-encoded string. "
+            f"Maximum file size is {Config().max_file_size_mb}MB. "
+            "Files are saved to the current session's folder by default. "
+            "Use /sessions/<session_id>/... for cross-session access."
+        )
+
+    @property
+    def parameters(self) -> dict[str, Any]:
+        return {
+            "type": "object",
+            "properties": {
+                "filename": {
+                    "type": "string",
+                    "description": "Name for the file (e.g., 'report.pdf')",
+                },
+                "content_base64": {
+                    "type": "string",
+                    "description": "Base64-encoded file content",
+                },
+                "path": {
+                    "type": "string",
+                    "description": (
+                        "Optional virtual path where to save the file "
+                        "(e.g., '/documents/report.pdf'). "
+                        "Defaults to '/{filename}'. Scoped to current session."
+                    ),
+                },
+                "mime_type": {
+                    "type": "string",
+                    "description": (
+                        "Optional MIME type of the file. "
+                        "Auto-detected from filename if not provided."
+                    ),
+                },
+                "overwrite": {
+                    "type": "boolean",
+                    "description": "Whether to overwrite if file exists at path (default: false)",
+                },
+            },
+            "required": ["filename", "content_base64"],
+        }
+
+    @property
+    def requires_auth(self) -> bool:
+        return True
+
+    async def _execute(
+        self,
+        user_id: str | None,
+        session: ChatSession,
+        **kwargs,
+    ) -> ToolResponseBase:
+        session_id = session.session_id
+
+        if not user_id:
+            return ErrorResponse(
+                message="Authentication required",
+                session_id=session_id,
+            )
+
+        filename: str = kwargs.get("filename", "")
+        content_b64: str = kwargs.get("content_base64", "")
+        path: Optional[str] = kwargs.get("path")
+        mime_type: Optional[str] = kwargs.get("mime_type")
+        overwrite: bool = kwargs.get("overwrite", False)
+
+        if not filename:
+            return ErrorResponse(
+                message="Please provide a filename",
+                session_id=session_id,
+            )
+
+        if not content_b64:
+            return ErrorResponse(
+                message="Please provide content_base64",
+                session_id=session_id,
+            )
+
+        # Decode content
+        try:
+            content = base64.b64decode(content_b64)
+        except Exception:
+            return ErrorResponse(
+                message="Invalid base64-encoded content",
+                session_id=session_id,
+            )
+
+        # Check size
+        max_file_size = Config().max_file_size_mb * 1024 * 1024
+        if len(content) > max_file_size:
+            return ErrorResponse(
+                message=f"File too large. Maximum size is {Config().max_file_size_mb}MB",
+                session_id=session_id,
+            )
+
+        try:
+            # Virus scan
+            await scan_content_safe(content, filename=filename)
+
+            workspace = await get_or_create_workspace(user_id)
+            # Pass session_id for session-scoped file access
+            manager = WorkspaceManager(user_id, workspace.id, session_id)
+
+            file_record = await manager.write_file(
+                content=content,
+                filename=filename,
+                path=path,
+                mime_type=mime_type,
+                overwrite=overwrite,
+            )
+
+            return WorkspaceWriteResponse(
+                file_id=file_record.id,
+                name=file_record.name,
+                path=file_record.path,
+                size_bytes=file_record.sizeBytes,
+                message=f"Successfully wrote file: {file_record.name}",
+                session_id=session_id,
+            )
+
+        except ValueError as e:
+            return ErrorResponse(
+                message=str(e),
+                session_id=session_id,
+            )
+        except Exception as e:
+            logger.error(f"Error writing workspace file: {e}", exc_info=True)
+            return ErrorResponse(
+                message=f"Failed to write workspace file: {str(e)}",
+                error=str(e),
+                session_id=session_id,
+            )
+
+
+class DeleteWorkspaceFileTool(BaseTool):
+    """Tool for deleting files from workspace."""
+
+    @property
+    def name(self) -> str:
+        return "delete_workspace_file"
+
+    @property
+    def description(self) -> str:
+        return (
+            "Delete a file from the user's workspace. "
+            "Specify either file_id or path to identify the file. "
+            "Paths are scoped to the current session by default. "
+            "Use /sessions/<session_id>/... for cross-session access."
+        )
+
+    @property
+    def parameters(self) -> dict[str, Any]:
+        return {
+            "type": "object",
+            "properties": {
+                "file_id": {
+                    "type": "string",
+                    "description": "The file's unique ID (from list_workspace_files)",
+                },
+                "path": {
+                    "type": "string",
+                    "description": (
+                        "The virtual file path (e.g., '/documents/report.pdf'). "
+                        "Scoped to current session by default."
+                    ),
+                },
+            },
+            "required": [],  # At least one must be provided
+        }
+
+    @property
+    def requires_auth(self) -> bool:
+        return True
+
+    async def _execute(
+        self,
+        user_id: str | None,
+        session: ChatSession,
+        **kwargs,
+    ) -> ToolResponseBase:
+        session_id = session.session_id
+
+        if not user_id:
+            return ErrorResponse(
+                message="Authentication required",
+                session_id=session_id,
+            )
+
+        file_id: Optional[str] = kwargs.get("file_id")
+        path: Optional[str] = kwargs.get("path")
+
+        if not file_id and not path:
+            return ErrorResponse(
+                message="Please provide either file_id or path",
+                session_id=session_id,
+            )
+
+        try:
+            workspace = await get_or_create_workspace(user_id)
+            # Pass session_id for session-scoped file access
+            manager = WorkspaceManager(user_id, workspace.id, session_id)
+
+            # Determine the file_id to delete
+            target_file_id: str
+            if file_id:
+                target_file_id = file_id
+            else:
+                # path is guaranteed to be non-None here due to the check above
+                assert path is not None
+                file_info = await manager.get_file_info_by_path(path)
+                if file_info is None:
+                    return ErrorResponse(
+                        message=f"File not found at path: {path}",
+                        session_id=session_id,
+                    )
+                target_file_id = file_info.id
+
+            success = await manager.delete_file(target_file_id)
+
+            if not success:
+                return ErrorResponse(
+                    message=f"File not found: {target_file_id}",
+                    session_id=session_id,
+                )
+
+            return WorkspaceDeleteResponse(
+                file_id=target_file_id,
+                success=True,
+                message="File deleted successfully",
+                session_id=session_id,
+            )
+
+        except Exception as e:
+            logger.error(f"Error deleting workspace file: {e}", exc_info=True)
+            return ErrorResponse(
+                message=f"Failed to delete workspace file: {str(e)}",
+                error=str(e),
+                session_id=session_id,
+            )
diff --git a/autogpt_platform/backend/backend/api/features/workspace/__init__.py b/autogpt_platform/backend/backend/api/features/workspace/__init__.py
new file mode 100644
index 0000000000..688ada9937
--- /dev/null
+++ b/autogpt_platform/backend/backend/api/features/workspace/__init__.py
@@ -0,0 +1 @@
+# Workspace API feature module
diff --git a/autogpt_platform/backend/backend/api/features/workspace/routes.py b/autogpt_platform/backend/backend/api/features/workspace/routes.py
new file mode 100644
index 0000000000..b6d0c84572
--- /dev/null
+++ b/autogpt_platform/backend/backend/api/features/workspace/routes.py
@@ -0,0 +1,122 @@
+"""
+Workspace API routes for managing user file storage.
+"""
+
+import logging
+import re
+from typing import Annotated
+from urllib.parse import quote
+
+import fastapi
+from autogpt_libs.auth.dependencies import get_user_id, requires_user
+from fastapi.responses import Response
+
+from backend.data.workspace import get_workspace, get_workspace_file
+from backend.util.workspace_storage import get_workspace_storage
+
+
+def _sanitize_filename_for_header(filename: str) -> str:
+    """
+    Sanitize filename for Content-Disposition header to prevent header injection.
+
+    Removes/replaces characters that could break the header or inject new headers.
+    Uses RFC5987 encoding for non-ASCII characters.
+    """
+    # Remove CR, LF, and null bytes (header injection prevention)
+    sanitized = re.sub(r"[\r\n\x00]", "", filename)
+    # Escape quotes
+    sanitized = sanitized.replace('"', '\\"')
+    # For non-ASCII, use RFC5987 filename* parameter
+    # Check if filename has non-ASCII characters
+    try:
+        sanitized.encode("ascii")
+        return f'attachment; filename="{sanitized}"'
+    except UnicodeEncodeError:
+        # Use RFC5987 encoding for UTF-8 filenames
+        encoded = quote(sanitized, safe="")
+        return f"attachment; filename*=UTF-8''{encoded}"
+
+
+logger = logging.getLogger(__name__)
+
+router = fastapi.APIRouter(
+    dependencies=[fastapi.Security(requires_user)],
+)
+
+
+def _create_streaming_response(content: bytes, file) -> Response:
+    """Create a streaming response for file content."""
+    return Response(
+        content=content,
+        media_type=file.mimeType,
+        headers={
+            "Content-Disposition": _sanitize_filename_for_header(file.name),
+            "Content-Length": str(len(content)),
+        },
+    )
+
+
+async def _create_file_download_response(file) -> Response:
+    """
+    Create a download response for a workspace file.
+
+    Handles both local storage (direct streaming) and GCS (signed URL redirect
+    with fallback to streaming).
+    """
+    storage = await get_workspace_storage()
+
+    # For local storage, stream the file directly
+    if file.storagePath.startswith("local://"):
+        content = await storage.retrieve(file.storagePath)
+        return _create_streaming_response(content, file)
+
+    # For GCS, try to redirect to signed URL, fall back to streaming
+    try:
+        url = await storage.get_download_url(file.storagePath, expires_in=300)
+        # If we got back an API path (fallback), stream directly instead
+        if url.startswith("/api/"):
+            content = await storage.retrieve(file.storagePath)
+            return _create_streaming_response(content, file)
+        return fastapi.responses.RedirectResponse(url=url, status_code=302)
+    except Exception as e:
+        # Log the signed URL failure with context
+        logger.error(
+            f"Failed to get signed URL for file {file.id} "
+            f"(storagePath={file.storagePath}): {e}",
+            exc_info=True,
+        )
+        # Fall back to streaming directly from GCS
+        try:
+            content = await storage.retrieve(file.storagePath)
+            return _create_streaming_response(content, file)
+        except Exception as fallback_error:
+            logger.error(
+                f"Fallback streaming also failed for file {file.id} "
+                f"(storagePath={file.storagePath}): {fallback_error}",
+                exc_info=True,
+            )
+            raise
+
+
+@router.get(
+    "/files/{file_id}/download",
+    summary="Download file by ID",
+)
+async def download_file(
+    user_id: Annotated[str, fastapi.Security(get_user_id)],
+    file_id: str,
+) -> Response:
+    """
+    Download a file by its ID.
+
+    Returns the file content directly or redirects to a signed URL for GCS.
+    """
+    workspace = await get_workspace(user_id)
+    if workspace is None:
+        raise fastapi.HTTPException(status_code=404, detail="Workspace not found")
+
+    file = await get_workspace_file(file_id, workspace.id)
+    if file is None:
+        raise fastapi.HTTPException(status_code=404, detail="File not found")
+
+    return await _create_file_download_response(file)
diff --git a/autogpt_platform/backend/backend/api/rest_api.py b/autogpt_platform/backend/backend/api/rest_api.py
index e9556e992f..b936312ce1 100644
--- a/autogpt_platform/backend/backend/api/rest_api.py
+++ b/autogpt_platform/backend/backend/api/rest_api.py
@@ -32,6 +32,7 @@ import backend.api.features.postmark.postmark
 import backend.api.features.store.model
 import backend.api.features.store.routes
 import backend.api.features.v1
+import backend.api.features.workspace.routes as workspace_routes
 import backend.data.block
 import backend.data.db
 import backend.data.graph
@@ -52,6 +53,7 @@ from backend.util.exceptions import (
 )
 from backend.util.feature_flag import initialize_launchdarkly, shutdown_launchdarkly
 from backend.util.service import UnhealthyServiceError
+from backend.util.workspace_storage import shutdown_workspace_storage
 
 from .external.fastapi_app import external_api
 from .features.analytics import router as analytics_router
@@ -124,6 +126,11 @@ async def lifespan_context(app: fastapi.FastAPI):
     except Exception as e:
         logger.warning(f"Error shutting down cloud storage handler: {e}")
 
+    try:
+        await shutdown_workspace_storage()
+    except Exception as e:
+        logger.warning(f"Error shutting down workspace storage: {e}")
+
     await backend.data.db.disconnect()
 
 
@@ -315,6 +322,11 @@ app.include_router(
     tags=["v2", "chat"],
     prefix="/api/chat",
 )
+app.include_router(
+    workspace_routes.router,
+    tags=["workspace"],
+    prefix="/api/workspace",
+)
 app.include_router(
     backend.api.features.oauth.router,
     tags=["oauth"],
diff --git a/autogpt_platform/backend/backend/blocks/ai_image_customizer.py b/autogpt_platform/backend/backend/blocks/ai_image_customizer.py
index 83178e924d..91be33a60e 100644
--- a/autogpt_platform/backend/backend/blocks/ai_image_customizer.py
+++ b/autogpt_platform/backend/backend/blocks/ai_image_customizer.py
@@ -13,6 +13,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import (
     APIKeyCredentials,
     CredentialsField,
@@ -117,11 +118,13 @@ class AIImageCustomizerBlock(Block):
                 "credentials": TEST_CREDENTIALS_INPUT,
             },
             test_output=[
-                ("image_url", "https://replicate.delivery/generated-image.jpg"),
+                # Output will be a workspace ref or data URI depending on context
+                ("image_url", lambda x: x.startswith(("workspace://", "data:"))),
             ],
             test_mock={
+                # Use data URI to avoid HTTP requests during tests
                 "run_model": lambda *args, **kwargs: MediaFileType(
-                    "https://replicate.delivery/generated-image.jpg"
+                    "data:image/jpeg;base64,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"
                 ),
             },
             test_credentials=TEST_CREDENTIALS,
@@ -132,8 +135,7 @@ class AIImageCustomizerBlock(Block):
         input_data: Input,
         *,
         credentials: APIKeyCredentials,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         try:
@@ -141,10 +143,9 @@ class AIImageCustomizerBlock(Block):
             processed_images = await asyncio.gather(
                 *(
                     store_media_file(
-                        graph_exec_id=graph_exec_id,
                         file=img,
-                        user_id=user_id,
-                        return_content=True,
+                        execution_context=execution_context,
+                        return_format="for_external_api",  # Get content for Replicate API
                     )
                     for img in input_data.images
                 )
@@ -158,7 +159,14 @@ class AIImageCustomizerBlock(Block):
                 aspect_ratio=input_data.aspect_ratio.value,
                 output_format=input_data.output_format.value,
             )
-            yield "image_url", result
+
+            # Store the generated image to the user's workspace for persistence
+            stored_url = await store_media_file(
+                file=result,
+                execution_context=execution_context,
+                return_format="for_block_output",
+            )
+            yield "image_url", stored_url
         except Exception as e:
             yield "error", str(e)
 
diff --git a/autogpt_platform/backend/backend/blocks/ai_image_generator_block.py b/autogpt_platform/backend/backend/blocks/ai_image_generator_block.py
index 8c7b6e6102..e40731cd97 100644
--- a/autogpt_platform/backend/backend/blocks/ai_image_generator_block.py
+++ b/autogpt_platform/backend/backend/blocks/ai_image_generator_block.py
@@ -6,6 +6,7 @@ from replicate.client import Client as ReplicateClient
 from replicate.helpers import FileOutput
 
 from backend.data.block import Block, BlockCategory, BlockSchemaInput, BlockSchemaOutput
+from backend.data.execution import ExecutionContext
 from backend.data.model import (
     APIKeyCredentials,
     CredentialsField,
@@ -13,6 +14,8 @@ from backend.data.model import (
     SchemaField,
 )
 from backend.integrations.providers import ProviderName
+from backend.util.file import store_media_file
+from backend.util.type import MediaFileType
 
 
 class ImageSize(str, Enum):
@@ -165,11 +168,13 @@ class AIImageGeneratorBlock(Block):
             test_output=[
                 (
                     "image_url",
-                    "https://replicate.delivery/generated-image.webp",
+                    # Test output is a data URI since we now store images
+                    lambda x: x.startswith("data:image/"),
                 ),
             ],
             test_mock={
-                "_run_client": lambda *args, **kwargs: "https://replicate.delivery/generated-image.webp"
+                # Return a data URI directly so store_media_file doesn't need to download
+                "_run_client": lambda *args, **kwargs: "data:image/webp;base64,UklGRiQAAABXRUJQVlA4IBgAAAAwAQCdASoBAAEAAQAcJYgCdAEO"
             },
         )
 
@@ -318,11 +323,24 @@ class AIImageGeneratorBlock(Block):
         style_text = style_map.get(style, "")
         return f"{style_text} of" if style_text else ""
 
-    async def run(self, input_data: Input, *, credentials: APIKeyCredentials, **kwargs):
+    async def run(
+        self,
+        input_data: Input,
+        *,
+        credentials: APIKeyCredentials,
+        execution_context: ExecutionContext,
+        **kwargs,
+    ):
         try:
             url = await self.generate_image(input_data, credentials)
             if url:
-                yield "image_url", url
+                # Store the generated image to the user's workspace/execution folder
+                stored_url = await store_media_file(
+                    file=MediaFileType(url),
+                    execution_context=execution_context,
+                    return_format="for_block_output",
+                )
+                yield "image_url", stored_url
             else:
                 yield "error", "Image generation returned an empty result."
         except Exception as e:
diff --git a/autogpt_platform/backend/backend/blocks/ai_shortform_video_block.py b/autogpt_platform/backend/backend/blocks/ai_shortform_video_block.py
index a9e96890d3..eb60843185 100644
--- a/autogpt_platform/backend/backend/blocks/ai_shortform_video_block.py
+++ b/autogpt_platform/backend/backend/blocks/ai_shortform_video_block.py
@@ -13,6 +13,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import (
     APIKeyCredentials,
     CredentialsField,
@@ -21,7 +22,9 @@ from backend.data.model import (
 )
 from backend.integrations.providers import ProviderName
 from backend.util.exceptions import BlockExecutionError
+from backend.util.file import store_media_file
 from backend.util.request import Requests
+from backend.util.type import MediaFileType
 
 TEST_CREDENTIALS = APIKeyCredentials(
     id="01234567-89ab-cdef-0123-456789abcdef",
@@ -271,7 +274,10 @@ class AIShortformVideoCreatorBlock(Block):
                 "voice": Voice.LILY,
                 "video_style": VisualMediaType.STOCK_VIDEOS,
             },
-            test_output=("video_url", "https://example.com/video.mp4"),
+            test_output=(
+                "video_url",
+                lambda x: x.startswith(("workspace://", "data:")),
+            ),
             test_mock={
                 "create_webhook": lambda *args, **kwargs: (
                     "test_uuid",
@@ -280,15 +286,21 @@ class AIShortformVideoCreatorBlock(Block):
                 "create_video": lambda *args, **kwargs: {"pid": "test_pid"},
                 "check_video_status": lambda *args, **kwargs: {
                     "status": "ready",
-                    "videoUrl": "https://example.com/video.mp4",
+                    "videoUrl": "data:video/mp4;base64,AAAA",
                 },
-                "wait_for_video": lambda *args, **kwargs: "https://example.com/video.mp4",
+                # Use data URI to avoid HTTP requests during tests
+                "wait_for_video": lambda *args, **kwargs: "data:video/mp4;base64,AAAA",
             },
             test_credentials=TEST_CREDENTIALS,
         )
 
     async def run(
-        self, input_data: Input, *, credentials: APIKeyCredentials, **kwargs
+        self,
+        input_data: Input,
+        *,
+        credentials: APIKeyCredentials,
+        execution_context: ExecutionContext,
+        **kwargs,
     ) -> BlockOutput:
         # Create a new Webhook.site URL
         webhook_token, webhook_url = await self.create_webhook()
@@ -340,7 +352,13 @@ class AIShortformVideoCreatorBlock(Block):
             )
             video_url = await self.wait_for_video(credentials.api_key, pid)
             logger.debug(f"Video ready: {video_url}")
-            yield "video_url", video_url
+            # Store the generated video to the user's workspace for persistence
+            stored_url = await store_media_file(
+                file=MediaFileType(video_url),
+                execution_context=execution_context,
+                return_format="for_block_output",
+            )
+            yield "video_url", stored_url
 
 
 class AIAdMakerVideoCreatorBlock(Block):
@@ -447,7 +465,10 @@ class AIAdMakerVideoCreatorBlock(Block):
                     "https://cdn.revid.ai/uploads/1747076315114-image.png",
                 ],
             },
-            test_output=("video_url", "https://example.com/ad.mp4"),
+            test_output=(
+                "video_url",
+                lambda x: x.startswith(("workspace://", "data:")),
+            ),
             test_mock={
                 "create_webhook": lambda *args, **kwargs: (
                     "test_uuid",
@@ -456,14 +477,21 @@ class AIAdMakerVideoCreatorBlock(Block):
                 "create_video": lambda *args, **kwargs: {"pid": "test_pid"},
                 "check_video_status": lambda *args, **kwargs: {
                     "status": "ready",
-                    "videoUrl": "https://example.com/ad.mp4",
+                    "videoUrl": "data:video/mp4;base64,AAAA",
                 },
-                "wait_for_video": lambda *args, **kwargs: "https://example.com/ad.mp4",
+                "wait_for_video": lambda *args, **kwargs: "data:video/mp4;base64,AAAA",
             },
             test_credentials=TEST_CREDENTIALS,
         )
 
-    async def run(self, input_data: Input, *, credentials: APIKeyCredentials, **kwargs):
+    async def run(
+        self,
+        input_data: Input,
+        *,
+        credentials: APIKeyCredentials,
+        execution_context: ExecutionContext,
+        **kwargs,
+    ):
         webhook_token, webhook_url = await self.create_webhook()
 
         payload = {
@@ -531,7 +559,13 @@ class AIAdMakerVideoCreatorBlock(Block):
             raise RuntimeError("Failed to create video: No project ID returned")
 
         video_url = await self.wait_for_video(credentials.api_key, pid)
-        yield "video_url", video_url
+        # Store the generated video to the user's workspace for persistence
+        stored_url = await store_media_file(
+            file=MediaFileType(video_url),
+            execution_context=execution_context,
+            return_format="for_block_output",
+        )
+        yield "video_url", stored_url
 
 
 class AIScreenshotToVideoAdBlock(Block):
@@ -626,7 +660,10 @@ class AIScreenshotToVideoAdBlock(Block):
                 "script": "Amazing numbers!",
                 "screenshot_url": "https://cdn.revid.ai/uploads/1747080376028-image.png",
             },
-            test_output=("video_url", "https://example.com/screenshot.mp4"),
+            test_output=(
+                "video_url",
+                lambda x: x.startswith(("workspace://", "data:")),
+            ),
             test_mock={
                 "create_webhook": lambda *args, **kwargs: (
                     "test_uuid",
@@ -635,14 +672,21 @@ class AIScreenshotToVideoAdBlock(Block):
                 "create_video": lambda *args, **kwargs: {"pid": "test_pid"},
                 "check_video_status": lambda *args, **kwargs: {
                     "status": "ready",
-                    "videoUrl": "https://example.com/screenshot.mp4",
+                    "videoUrl": "data:video/mp4;base64,AAAA",
                 },
-                "wait_for_video": lambda *args, **kwargs: "https://example.com/screenshot.mp4",
+                "wait_for_video": lambda *args, **kwargs: "data:video/mp4;base64,AAAA",
             },
             test_credentials=TEST_CREDENTIALS,
         )
 
-    async def run(self, input_data: Input, *, credentials: APIKeyCredentials, **kwargs):
+    async def run(
+        self,
+        input_data: Input,
+        *,
+        credentials: APIKeyCredentials,
+        execution_context: ExecutionContext,
+        **kwargs,
+    ):
         webhook_token, webhook_url = await self.create_webhook()
 
         payload = {
@@ -710,4 +754,10 @@ class AIScreenshotToVideoAdBlock(Block):
             raise RuntimeError("Failed to create video: No project ID returned")
 
         video_url = await self.wait_for_video(credentials.api_key, pid)
-        yield "video_url", video_url
+        # Store the generated video to the user's workspace for persistence
+        stored_url = await store_media_file(
+            file=MediaFileType(video_url),
+            execution_context=execution_context,
+            return_format="for_block_output",
+        )
+        yield "video_url", stored_url
diff --git a/autogpt_platform/backend/backend/blocks/bannerbear/text_overlay.py b/autogpt_platform/backend/backend/blocks/bannerbear/text_overlay.py
index 16d46c0d99..62aaf63d88 100644
--- a/autogpt_platform/backend/backend/blocks/bannerbear/text_overlay.py
+++ b/autogpt_platform/backend/backend/blocks/bannerbear/text_overlay.py
@@ -6,6 +6,7 @@ if TYPE_CHECKING:
 
 from pydantic import SecretStr
 
+from backend.data.execution import ExecutionContext
 from backend.sdk import (
     APIKeyCredentials,
     Block,
@@ -17,6 +18,8 @@ from backend.sdk import (
     Requests,
     SchemaField,
 )
+from backend.util.file import store_media_file
+from backend.util.type import MediaFileType
 
 from ._config import bannerbear
 
@@ -135,15 +138,17 @@ class BannerbearTextOverlayBlock(Block):
             },
             test_output=[
                 ("success", True),
-                ("image_url", "https://cdn.bannerbear.com/test-image.jpg"),
+                # Output will be a workspace ref or data URI depending on context
+                ("image_url", lambda x: x.startswith(("workspace://", "data:"))),
                 ("uid", "test-uid-123"),
                 ("status", "completed"),
             ],
             test_mock={
+                # Use data URI to avoid HTTP requests during tests
                 "_make_api_request": lambda *args, **kwargs: {
                     "uid": "test-uid-123",
                     "status": "completed",
-                    "image_url": "https://cdn.bannerbear.com/test-image.jpg",
+                    "image_url": "data:image/jpeg;base64,/9j/4AAQSkZJRgABAQAAAQABAAD/2wBDAAgGBgcGBQgHBwcJCQgKDBQNDAsLDBkSEw8UHRofHh0aHBwgJC4nICIsIxwcKDcpLDAxNDQ0Hyc5PTgyPC4zNDL/wAALCAABAAEBAREA/8QAHwAAAQUBAQEBAQEAAAAAAAAAAAECAwQFBgcICQoL/8QAtRAAAgEDAwIEAwUFBAQAAAF9AQIDAAQRBRIhMUEGE1FhByJxFDKBkaEII0KxwRVS0fAkM2JyggkKFhcYGRolJicoKSo0NTY3ODk6Q0RFRkdISUpTVFVWV1hZWmNkZWZnaGlqc3R1dnd4eXqDhIWGh4iJipKTlJWWl5iZmqKjpKWmp6ipqrKztLW2t7i5usLDxMXGx8jJytLT1NXW19jZ2uHi4+Tl5ufo6erx8vP09fb3+Pn6/9oACAEBAAA/APn+v//Z",
                 }
             },
             test_credentials=TEST_CREDENTIALS,
@@ -177,7 +182,12 @@ class BannerbearTextOverlayBlock(Block):
             raise Exception(error_msg)
 
     async def run(
-        self, input_data: Input, *, credentials: APIKeyCredentials, **kwargs
+        self,
+        input_data: Input,
+        *,
+        credentials: APIKeyCredentials,
+        execution_context: ExecutionContext,
+        **kwargs,
     ) -> BlockOutput:
         # Build the modifications array
         modifications = []
@@ -234,6 +244,18 @@ class BannerbearTextOverlayBlock(Block):
 
         # Synchronous request - image should be ready
         yield "success", True
-        yield "image_url", data.get("image_url", "")
+
+        # Store the generated image to workspace for persistence
+        image_url = data.get("image_url", "")
+        if image_url:
+            stored_url = await store_media_file(
+                file=MediaFileType(image_url),
+                execution_context=execution_context,
+                return_format="for_block_output",
+            )
+            yield "image_url", stored_url
+        else:
+            yield "image_url", ""
+
         yield "uid", data.get("uid", "")
         yield "status", data.get("status", "completed")
diff --git a/autogpt_platform/backend/backend/blocks/basic.py b/autogpt_platform/backend/backend/blocks/basic.py
index a9c77e2b93..95193b3feb 100644
--- a/autogpt_platform/backend/backend/blocks/basic.py
+++ b/autogpt_platform/backend/backend/blocks/basic.py
@@ -9,6 +9,7 @@ from backend.data.block import (
     BlockSchemaOutput,
     BlockType,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import SchemaField
 from backend.util.file import store_media_file
 from backend.util.type import MediaFileType, convert
@@ -17,10 +18,10 @@ from backend.util.type import MediaFileType, convert
 class FileStoreBlock(Block):
     class Input(BlockSchemaInput):
         file_in: MediaFileType = SchemaField(
-            description="The file to store in the temporary directory, it can be a URL, data URI, or local path."
+            description="The file to download and store. Can be a URL (https://...), data URI, or local path."
         )
         base_64: bool = SchemaField(
-            description="Whether produce an output in base64 format (not recommended, you can pass the string path just fine accross blocks).",
+            description="Whether to produce output in base64 format (not recommended, you can pass the file reference across blocks).",
             default=False,
             advanced=True,
             title="Produce Base64 Output",
@@ -28,13 +29,18 @@ class FileStoreBlock(Block):
 
     class Output(BlockSchemaOutput):
         file_out: MediaFileType = SchemaField(
-            description="The relative path to the stored file in the temporary directory."
+            description="Reference to the stored file. In CoPilot: workspace:// URI (visible in list_workspace_files). In graphs: data URI for passing to other blocks."
         )
 
     def __init__(self):
         super().__init__(
             id="cbb50872-625b-42f0-8203-a2ae78242d8a",
-            description="Stores the input file in the temporary directory.",
+            description=(
+                "Downloads and stores a file from a URL, data URI, or local path. "
+                "Use this to fetch images, documents, or other files for processing. "
+                "In CoPilot: saves to workspace (use list_workspace_files to see it). "
+                "In graphs: outputs a data URI to pass to other blocks."
+            ),
             categories={BlockCategory.BASIC, BlockCategory.MULTIMEDIA},
             input_schema=FileStoreBlock.Input,
             output_schema=FileStoreBlock.Output,
@@ -45,15 +51,18 @@ class FileStoreBlock(Block):
         self,
         input_data: Input,
         *,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
+        # Determine return format based on user preference
+        # for_external_api: always returns data URI (base64) - honors "Produce Base64 Output"
+        # for_block_output: smart format - workspace:// in CoPilot, data URI in graphs
+        return_format = "for_external_api" if input_data.base_64 else "for_block_output"
+
         yield "file_out", await store_media_file(
-            graph_exec_id=graph_exec_id,
             file=input_data.file_in,
-            user_id=user_id,
-            return_content=input_data.base_64,
+            execution_context=execution_context,
+            return_format=return_format,
         )
 
 
diff --git a/autogpt_platform/backend/backend/blocks/discord/bot_blocks.py b/autogpt_platform/backend/backend/blocks/discord/bot_blocks.py
index 5ecd730f47..4438af1955 100644
--- a/autogpt_platform/backend/backend/blocks/discord/bot_blocks.py
+++ b/autogpt_platform/backend/backend/blocks/discord/bot_blocks.py
@@ -15,6 +15,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import APIKeyCredentials, SchemaField
 from backend.util.file import store_media_file
 from backend.util.request import Requests
@@ -666,8 +667,7 @@ class SendDiscordFileBlock(Block):
         file: MediaFileType,
         filename: str,
         message_content: str,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
     ) -> dict:
         intents = discord.Intents.default()
         intents.guilds = True
@@ -731,10 +731,9 @@ class SendDiscordFileBlock(Block):
                     # Local file path - read from stored media file
                     # This would be a path from a previous block's output
                     stored_file = await store_media_file(
-                        graph_exec_id=graph_exec_id,
                         file=file,
-                        user_id=user_id,
-                        return_content=True,  # Get as data URI
+                        execution_context=execution_context,
+                        return_format="for_external_api",  # Get content to send to Discord
                     )
                     # Now process as data URI
                     header, encoded = stored_file.split(",", 1)
@@ -781,8 +780,7 @@ class SendDiscordFileBlock(Block):
         input_data: Input,
         *,
         credentials: APIKeyCredentials,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         try:
@@ -793,8 +791,7 @@ class SendDiscordFileBlock(Block):
                 file=input_data.file,
                 filename=input_data.filename,
                 message_content=input_data.message_content,
-                graph_exec_id=graph_exec_id,
-                user_id=user_id,
+                execution_context=execution_context,
             )
 
             yield "status", result.get("status", "Unknown error")
diff --git a/autogpt_platform/backend/backend/blocks/fal/ai_video_generator.py b/autogpt_platform/backend/backend/blocks/fal/ai_video_generator.py
index 2a71548dcc..c2079ef159 100644
--- a/autogpt_platform/backend/backend/blocks/fal/ai_video_generator.py
+++ b/autogpt_platform/backend/backend/blocks/fal/ai_video_generator.py
@@ -17,8 +17,11 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import SchemaField
+from backend.util.file import store_media_file
 from backend.util.request import ClientResponseError, Requests
+from backend.util.type import MediaFileType
 
 logger = logging.getLogger(__name__)
 
@@ -64,9 +67,13 @@ class AIVideoGeneratorBlock(Block):
                 "credentials": TEST_CREDENTIALS_INPUT,
             },
             test_credentials=TEST_CREDENTIALS,
-            test_output=[("video_url", "https://fal.media/files/example/video.mp4")],
+            test_output=[
+                # Output will be a workspace ref or data URI depending on context
+                ("video_url", lambda x: x.startswith(("workspace://", "data:"))),
+            ],
             test_mock={
-                "generate_video": lambda *args, **kwargs: "https://fal.media/files/example/video.mp4"
+                # Use data URI to avoid HTTP requests during tests
+                "generate_video": lambda *args, **kwargs: "data:video/mp4;base64,AAAA"
             },
         )
 
@@ -208,11 +215,22 @@ class AIVideoGeneratorBlock(Block):
             raise RuntimeError(f"API request failed: {str(e)}")
 
     async def run(
-        self, input_data: Input, *, credentials: FalCredentials, **kwargs
+        self,
+        input_data: Input,
+        *,
+        credentials: FalCredentials,
+        execution_context: ExecutionContext,
+        **kwargs,
     ) -> BlockOutput:
         try:
             video_url = await self.generate_video(input_data, credentials)
-            yield "video_url", video_url
+            # Store the generated video to the user's workspace for persistence
+            stored_url = await store_media_file(
+                file=MediaFileType(video_url),
+                execution_context=execution_context,
+                return_format="for_block_output",
+            )
+            yield "video_url", stored_url
         except Exception as e:
             error_message = str(e)
             yield "error", error_message
diff --git a/autogpt_platform/backend/backend/blocks/flux_kontext.py b/autogpt_platform/backend/backend/blocks/flux_kontext.py
index dd8375c4ce..d56baa6d92 100644
--- a/autogpt_platform/backend/backend/blocks/flux_kontext.py
+++ b/autogpt_platform/backend/backend/blocks/flux_kontext.py
@@ -12,6 +12,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import (
     APIKeyCredentials,
     CredentialsField,
@@ -121,10 +122,12 @@ class AIImageEditorBlock(Block):
                 "credentials": TEST_CREDENTIALS_INPUT,
             },
             test_output=[
-                ("output_image", "https://replicate.com/output/edited-image.png"),
+                # Output will be a workspace ref or data URI depending on context
+                ("output_image", lambda x: x.startswith(("workspace://", "data:"))),
             ],
             test_mock={
-                "run_model": lambda *args, **kwargs: "https://replicate.com/output/edited-image.png",
+                # Use data URI to avoid HTTP requests during tests
+                "run_model": lambda *args, **kwargs: "data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+M9QDwADhgGAWjR9awAAAABJRU5ErkJggg==",
             },
             test_credentials=TEST_CREDENTIALS,
         )
@@ -134,8 +137,7 @@ class AIImageEditorBlock(Block):
         input_data: Input,
         *,
         credentials: APIKeyCredentials,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         result = await self.run_model(
@@ -144,20 +146,25 @@ class AIImageEditorBlock(Block):
             prompt=input_data.prompt,
             input_image_b64=(
                 await store_media_file(
-                    graph_exec_id=graph_exec_id,
                     file=input_data.input_image,
-                    user_id=user_id,
-                    return_content=True,
+                    execution_context=execution_context,
+                    return_format="for_external_api",  # Get content for Replicate API
                 )
                 if input_data.input_image
                 else None
             ),
             aspect_ratio=input_data.aspect_ratio.value,
             seed=input_data.seed,
-            user_id=user_id,
-            graph_exec_id=graph_exec_id,
+            user_id=execution_context.user_id or "",
+            graph_exec_id=execution_context.graph_exec_id or "",
         )
-        yield "output_image", result
+        # Store the generated image to the user's workspace for persistence
+        stored_url = await store_media_file(
+            file=result,
+            execution_context=execution_context,
+            return_format="for_block_output",
+        )
+        yield "output_image", stored_url
 
     async def run_model(
         self,
diff --git a/autogpt_platform/backend/backend/blocks/google/gmail.py b/autogpt_platform/backend/backend/blocks/google/gmail.py
index d1b3ecd4bf..2040cabe3f 100644
--- a/autogpt_platform/backend/backend/blocks/google/gmail.py
+++ b/autogpt_platform/backend/backend/blocks/google/gmail.py
@@ -21,6 +21,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import SchemaField
 from backend.util.file import MediaFileType, get_exec_file_path, store_media_file
 from backend.util.settings import Settings
@@ -95,8 +96,7 @@ def _make_mime_text(
 
 async def create_mime_message(
     input_data,
-    graph_exec_id: str,
-    user_id: str,
+    execution_context: ExecutionContext,
 ) -> str:
     """Create a MIME message with attachments and return base64-encoded raw message."""
 
@@ -117,12 +117,12 @@ async def create_mime_message(
     if input_data.attachments:
         for attach in input_data.attachments:
             local_path = await store_media_file(
-                user_id=user_id,
-                graph_exec_id=graph_exec_id,
                 file=attach,
-                return_content=False,
+                execution_context=execution_context,
+                return_format="for_local_processing",
             )
-            abs_path = get_exec_file_path(graph_exec_id, local_path)
+            assert execution_context.graph_exec_id  # Validated by store_media_file
+            abs_path = get_exec_file_path(execution_context.graph_exec_id, local_path)
             part = MIMEBase("application", "octet-stream")
             with open(abs_path, "rb") as f:
                 part.set_payload(f.read())
@@ -582,27 +582,25 @@ class GmailSendBlock(GmailBase):
         input_data: Input,
         *,
         credentials: GoogleCredentials,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         service = self._build_service(credentials, **kwargs)
         result = await self._send_email(
             service,
             input_data,
-            graph_exec_id,
-            user_id,
+            execution_context,
         )
         yield "result", result
 
     async def _send_email(
-        self, service, input_data: Input, graph_exec_id: str, user_id: str
+        self, service, input_data: Input, execution_context: ExecutionContext
     ) -> dict:
         if not input_data.to or not input_data.subject or not input_data.body:
             raise ValueError(
                 "At least one recipient, subject, and body are required for sending an email"
             )
-        raw_message = await create_mime_message(input_data, graph_exec_id, user_id)
+        raw_message = await create_mime_message(input_data, execution_context)
         sent_message = await asyncio.to_thread(
             lambda: service.users()
             .messages()
@@ -692,30 +690,28 @@ class GmailCreateDraftBlock(GmailBase):
         input_data: Input,
         *,
         credentials: GoogleCredentials,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         service = self._build_service(credentials, **kwargs)
         result = await self._create_draft(
             service,
             input_data,
-            graph_exec_id,
-            user_id,
+            execution_context,
         )
         yield "result", GmailDraftResult(
             id=result["id"], message_id=result["message"]["id"], status="draft_created"
         )
 
     async def _create_draft(
-        self, service, input_data: Input, graph_exec_id: str, user_id: str
+        self, service, input_data: Input, execution_context: ExecutionContext
     ) -> dict:
         if not input_data.to or not input_data.subject:
             raise ValueError(
                 "At least one recipient and subject are required for creating a draft"
             )
 
-        raw_message = await create_mime_message(input_data, graph_exec_id, user_id)
+        raw_message = await create_mime_message(input_data, execution_context)
         draft = await asyncio.to_thread(
             lambda: service.users()
             .drafts()
@@ -1100,7 +1096,7 @@ class GmailGetThreadBlock(GmailBase):
 
 
 async def _build_reply_message(
-    service, input_data, graph_exec_id: str, user_id: str
+    service, input_data, execution_context: ExecutionContext
 ) -> tuple[str, str]:
     """
     Builds a reply MIME message for Gmail threads.
@@ -1190,12 +1186,12 @@ async def _build_reply_message(
     # Handle attachments
     for attach in input_data.attachments:
         local_path = await store_media_file(
-            user_id=user_id,
-            graph_exec_id=graph_exec_id,
             file=attach,
-            return_content=False,
+            execution_context=execution_context,
+            return_format="for_local_processing",
         )
-        abs_path = get_exec_file_path(graph_exec_id, local_path)
+        assert execution_context.graph_exec_id  # Validated by store_media_file
+        abs_path = get_exec_file_path(execution_context.graph_exec_id, local_path)
         part = MIMEBase("application", "octet-stream")
         with open(abs_path, "rb") as f:
             part.set_payload(f.read())
@@ -1311,16 +1307,14 @@ class GmailReplyBlock(GmailBase):
         input_data: Input,
         *,
         credentials: GoogleCredentials,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         service = self._build_service(credentials, **kwargs)
         message = await self._reply(
             service,
             input_data,
-            graph_exec_id,
-            user_id,
+            execution_context,
         )
         yield "messageId", message["id"]
         yield "threadId", message.get("threadId", input_data.threadId)
@@ -1343,11 +1337,11 @@ class GmailReplyBlock(GmailBase):
         yield "email", email
 
     async def _reply(
-        self, service, input_data: Input, graph_exec_id: str, user_id: str
+        self, service, input_data: Input, execution_context: ExecutionContext
     ) -> dict:
         # Build the reply message using the shared helper
         raw, thread_id = await _build_reply_message(
-            service, input_data, graph_exec_id, user_id
+            service, input_data, execution_context
         )
 
         # Send the message
@@ -1441,16 +1435,14 @@ class GmailDraftReplyBlock(GmailBase):
         input_data: Input,
         *,
         credentials: GoogleCredentials,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         service = self._build_service(credentials, **kwargs)
         draft = await self._create_draft_reply(
             service,
             input_data,
-            graph_exec_id,
-            user_id,
+            execution_context,
         )
         yield "draftId", draft["id"]
         yield "messageId", draft["message"]["id"]
@@ -1458,11 +1450,11 @@ class GmailDraftReplyBlock(GmailBase):
         yield "status", "draft_created"
 
     async def _create_draft_reply(
-        self, service, input_data: Input, graph_exec_id: str, user_id: str
+        self, service, input_data: Input, execution_context: ExecutionContext
     ) -> dict:
         # Build the reply message using the shared helper
         raw, thread_id = await _build_reply_message(
-            service, input_data, graph_exec_id, user_id
+            service, input_data, execution_context
         )
 
         # Create draft with proper thread association
@@ -1629,23 +1621,21 @@ class GmailForwardBlock(GmailBase):
         input_data: Input,
         *,
         credentials: GoogleCredentials,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         service = self._build_service(credentials, **kwargs)
         result = await self._forward_message(
             service,
             input_data,
-            graph_exec_id,
-            user_id,
+            execution_context,
         )
         yield "messageId", result["id"]
         yield "threadId", result.get("threadId", "")
         yield "status", "forwarded"
 
     async def _forward_message(
-        self, service, input_data: Input, graph_exec_id: str, user_id: str
+        self, service, input_data: Input, execution_context: ExecutionContext
     ) -> dict:
         if not input_data.to:
             raise ValueError("At least one recipient is required for forwarding")
@@ -1727,12 +1717,12 @@ To: {original_to}
         # Add any additional attachments
         for attach in input_data.additionalAttachments:
             local_path = await store_media_file(
-                user_id=user_id,
-                graph_exec_id=graph_exec_id,
                 file=attach,
-                return_content=False,
+                execution_context=execution_context,
+                return_format="for_local_processing",
             )
-            abs_path = get_exec_file_path(graph_exec_id, local_path)
+            assert execution_context.graph_exec_id  # Validated by store_media_file
+            abs_path = get_exec_file_path(execution_context.graph_exec_id, local_path)
             part = MIMEBase("application", "octet-stream")
             with open(abs_path, "rb") as f:
                 part.set_payload(f.read())
diff --git a/autogpt_platform/backend/backend/blocks/http.py b/autogpt_platform/backend/backend/blocks/http.py
index 9b27a3b129..77e7fe243f 100644
--- a/autogpt_platform/backend/backend/blocks/http.py
+++ b/autogpt_platform/backend/backend/blocks/http.py
@@ -15,6 +15,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import (
     CredentialsField,
     CredentialsMetaInput,
@@ -116,10 +117,9 @@ class SendWebRequestBlock(Block):
 
     @staticmethod
     async def _prepare_files(
-        graph_exec_id: str,
+        execution_context: ExecutionContext,
         files_name: str,
         files: list[MediaFileType],
-        user_id: str,
     ) -> list[tuple[str, tuple[str, BytesIO, str]]]:
         """
         Prepare files for the request by storing them and reading their content.
@@ -127,11 +127,16 @@ class SendWebRequestBlock(Block):
         (files_name, (filename, BytesIO, mime_type))
         """
         files_payload: list[tuple[str, tuple[str, BytesIO, str]]] = []
+        graph_exec_id = execution_context.graph_exec_id
+        if graph_exec_id is None:
+            raise ValueError("graph_exec_id is required for file operations")
 
         for media in files:
             # Normalise to a list so we can repeat the same key
             rel_path = await store_media_file(
-                graph_exec_id, media, user_id, return_content=False
+                file=media,
+                execution_context=execution_context,
+                return_format="for_local_processing",
             )
             abs_path = get_exec_file_path(graph_exec_id, rel_path)
             async with aiofiles.open(abs_path, "rb") as f:
@@ -143,7 +148,7 @@ class SendWebRequestBlock(Block):
         return files_payload
 
     async def run(
-        self, input_data: Input, *, graph_exec_id: str, user_id: str, **kwargs
+        self, input_data: Input, *, execution_context: ExecutionContext, **kwargs
     ) -> BlockOutput:
         # ─── Parse/normalise body ────────────────────────────────────
         body = input_data.body
@@ -174,7 +179,7 @@ class SendWebRequestBlock(Block):
         files_payload: list[tuple[str, tuple[str, BytesIO, str]]] = []
         if use_files:
             files_payload = await self._prepare_files(
-                graph_exec_id, input_data.files_name, input_data.files, user_id
+                execution_context, input_data.files_name, input_data.files
             )
 
         # Enforce body format rules
@@ -238,9 +243,8 @@ class SendAuthenticatedWebRequestBlock(SendWebRequestBlock):
         self,
         input_data: Input,
         *,
-        graph_exec_id: str,
+        execution_context: ExecutionContext,
         credentials: HostScopedCredentials,
-        user_id: str,
         **kwargs,
     ) -> BlockOutput:
         # Create SendWebRequestBlock.Input from our input (removing credentials field)
@@ -271,6 +275,6 @@ class SendAuthenticatedWebRequestBlock(SendWebRequestBlock):
 
         # Use parent class run method
         async for output_name, output_data in super().run(
-            base_input, graph_exec_id=graph_exec_id, user_id=user_id, **kwargs
+            base_input, execution_context=execution_context, **kwargs
         ):
             yield output_name, output_data
diff --git a/autogpt_platform/backend/backend/blocks/io.py b/autogpt_platform/backend/backend/blocks/io.py
index 6f8e62e339..a9c3859490 100644
--- a/autogpt_platform/backend/backend/blocks/io.py
+++ b/autogpt_platform/backend/backend/blocks/io.py
@@ -12,6 +12,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockType,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import SchemaField
 from backend.util.file import store_media_file
 from backend.util.mock import MockObject
@@ -462,18 +463,21 @@ class AgentFileInputBlock(AgentInputBlock):
         self,
         input_data: Input,
         *,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         if not input_data.value:
             return
 
+        # Determine return format based on user preference
+        # for_external_api: always returns data URI (base64) - honors "Produce Base64 Output"
+        # for_block_output: smart format - workspace:// in CoPilot, data URI in graphs
+        return_format = "for_external_api" if input_data.base_64 else "for_block_output"
+
         yield "result", await store_media_file(
-            graph_exec_id=graph_exec_id,
             file=input_data.value,
-            user_id=user_id,
-            return_content=input_data.base_64,
+            execution_context=execution_context,
+            return_format=return_format,
         )
 
 
diff --git a/autogpt_platform/backend/backend/blocks/media.py b/autogpt_platform/backend/backend/blocks/media.py
index c8d4b4768f..a8d145bc64 100644
--- a/autogpt_platform/backend/backend/blocks/media.py
+++ b/autogpt_platform/backend/backend/blocks/media.py
@@ -1,6 +1,6 @@
 import os
 import tempfile
-from typing import Literal, Optional
+from typing import Optional
 
 from moviepy.audio.io.AudioFileClip import AudioFileClip
 from moviepy.video.fx.Loop import Loop
@@ -13,6 +13,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import SchemaField
 from backend.util.file import MediaFileType, get_exec_file_path, store_media_file
 
@@ -46,18 +47,19 @@ class MediaDurationBlock(Block):
         self,
         input_data: Input,
         *,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         # 1) Store the input media locally
         local_media_path = await store_media_file(
-            graph_exec_id=graph_exec_id,
             file=input_data.media_in,
-            user_id=user_id,
-            return_content=False,
+            execution_context=execution_context,
+            return_format="for_local_processing",
+        )
+        assert execution_context.graph_exec_id is not None
+        media_abspath = get_exec_file_path(
+            execution_context.graph_exec_id, local_media_path
         )
-        media_abspath = get_exec_file_path(graph_exec_id, local_media_path)
 
         # 2) Load the clip
         if input_data.is_video:
@@ -88,10 +90,6 @@ class LoopVideoBlock(Block):
             default=None,
             ge=1,
         )
-        output_return_type: Literal["file_path", "data_uri"] = SchemaField(
-            description="How to return the output video. Either a relative path or base64 data URI.",
-            default="file_path",
-        )
 
     class Output(BlockSchemaOutput):
         video_out: str = SchemaField(
@@ -111,17 +109,19 @@ class LoopVideoBlock(Block):
         self,
         input_data: Input,
         *,
-        node_exec_id: str,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
+        assert execution_context.graph_exec_id is not None
+        assert execution_context.node_exec_id is not None
+        graph_exec_id = execution_context.graph_exec_id
+        node_exec_id = execution_context.node_exec_id
+
         # 1) Store the input video locally
         local_video_path = await store_media_file(
-            graph_exec_id=graph_exec_id,
             file=input_data.video_in,
-            user_id=user_id,
-            return_content=False,
+            execution_context=execution_context,
+            return_format="for_local_processing",
         )
         input_abspath = get_exec_file_path(graph_exec_id, local_video_path)
 
@@ -149,12 +149,11 @@ class LoopVideoBlock(Block):
         looped_clip = looped_clip.with_audio(clip.audio)
         looped_clip.write_videofile(output_abspath, codec="libx264", audio_codec="aac")
 
-        # Return as data URI
+        # Return output - for_block_output returns workspace:// if available, else data URI
         video_out = await store_media_file(
-            graph_exec_id=graph_exec_id,
             file=output_filename,
-            user_id=user_id,
-            return_content=input_data.output_return_type == "data_uri",
+            execution_context=execution_context,
+            return_format="for_block_output",
         )
 
         yield "video_out", video_out
@@ -177,10 +176,6 @@ class AddAudioToVideoBlock(Block):
             description="Volume scale for the newly attached audio track (1.0 = original).",
             default=1.0,
         )
-        output_return_type: Literal["file_path", "data_uri"] = SchemaField(
-            description="Return the final output as a relative path or base64 data URI.",
-            default="file_path",
-        )
 
     class Output(BlockSchemaOutput):
         video_out: MediaFileType = SchemaField(
@@ -200,23 +195,24 @@ class AddAudioToVideoBlock(Block):
         self,
         input_data: Input,
         *,
-        node_exec_id: str,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
+        assert execution_context.graph_exec_id is not None
+        assert execution_context.node_exec_id is not None
+        graph_exec_id = execution_context.graph_exec_id
+        node_exec_id = execution_context.node_exec_id
+
         # 1) Store the inputs locally
         local_video_path = await store_media_file(
-            graph_exec_id=graph_exec_id,
             file=input_data.video_in,
-            user_id=user_id,
-            return_content=False,
+            execution_context=execution_context,
+            return_format="for_local_processing",
         )
         local_audio_path = await store_media_file(
-            graph_exec_id=graph_exec_id,
             file=input_data.audio_in,
-            user_id=user_id,
-            return_content=False,
+            execution_context=execution_context,
+            return_format="for_local_processing",
         )
 
         abs_temp_dir = os.path.join(tempfile.gettempdir(), "exec_file", graph_exec_id)
@@ -240,12 +236,11 @@ class AddAudioToVideoBlock(Block):
         output_abspath = os.path.join(abs_temp_dir, output_filename)
         final_clip.write_videofile(output_abspath, codec="libx264", audio_codec="aac")
 
-        # 5) Return either path or data URI
+        # 5) Return output - for_block_output returns workspace:// if available, else data URI
         video_out = await store_media_file(
-            graph_exec_id=graph_exec_id,
             file=output_filename,
-            user_id=user_id,
-            return_content=input_data.output_return_type == "data_uri",
+            execution_context=execution_context,
+            return_format="for_block_output",
         )
 
         yield "video_out", video_out
diff --git a/autogpt_platform/backend/backend/blocks/screenshotone.py b/autogpt_platform/backend/backend/blocks/screenshotone.py
index 1f8947376b..ee998f8da2 100644
--- a/autogpt_platform/backend/backend/blocks/screenshotone.py
+++ b/autogpt_platform/backend/backend/blocks/screenshotone.py
@@ -11,6 +11,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import (
     APIKeyCredentials,
     CredentialsField,
@@ -112,8 +113,7 @@ class ScreenshotWebPageBlock(Block):
     @staticmethod
     async def take_screenshot(
         credentials: APIKeyCredentials,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         url: str,
         viewport_width: int,
         viewport_height: int,
@@ -155,12 +155,11 @@ class ScreenshotWebPageBlock(Block):
 
         return {
             "image": await store_media_file(
-                graph_exec_id=graph_exec_id,
                 file=MediaFileType(
                     f"data:image/{format.value};base64,{b64encode(content).decode('utf-8')}"
                 ),
-                user_id=user_id,
-                return_content=True,
+                execution_context=execution_context,
+                return_format="for_block_output",
             )
         }
 
@@ -169,15 +168,13 @@ class ScreenshotWebPageBlock(Block):
         input_data: Input,
         *,
         credentials: APIKeyCredentials,
-        graph_exec_id: str,
-        user_id: str,
+        execution_context: ExecutionContext,
         **kwargs,
     ) -> BlockOutput:
         try:
             screenshot_data = await self.take_screenshot(
                 credentials=credentials,
-                graph_exec_id=graph_exec_id,
-                user_id=user_id,
+                execution_context=execution_context,
                 url=input_data.url,
                 viewport_width=input_data.viewport_width,
                 viewport_height=input_data.viewport_height,
diff --git a/autogpt_platform/backend/backend/blocks/spreadsheet.py b/autogpt_platform/backend/backend/blocks/spreadsheet.py
index 211aac23f4..a13f9e2f6d 100644
--- a/autogpt_platform/backend/backend/blocks/spreadsheet.py
+++ b/autogpt_platform/backend/backend/blocks/spreadsheet.py
@@ -7,6 +7,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import ContributorDetails, SchemaField
 from backend.util.file import get_exec_file_path, store_media_file
 from backend.util.type import MediaFileType
@@ -98,7 +99,7 @@ class ReadSpreadsheetBlock(Block):
         )
 
     async def run(
-        self, input_data: Input, *, graph_exec_id: str, user_id: str, **_kwargs
+        self, input_data: Input, *, execution_context: ExecutionContext, **_kwargs
     ) -> BlockOutput:
         import csv
         from io import StringIO
@@ -106,14 +107,16 @@ class ReadSpreadsheetBlock(Block):
         # Determine data source - prefer file_input if provided, otherwise use contents
         if input_data.file_input:
             stored_file_path = await store_media_file(
-                user_id=user_id,
-                graph_exec_id=graph_exec_id,
                 file=input_data.file_input,
-                return_content=False,
+                execution_context=execution_context,
+                return_format="for_local_processing",
             )
 
             # Get full file path
-            file_path = get_exec_file_path(graph_exec_id, stored_file_path)
+            assert execution_context.graph_exec_id  # Validated by store_media_file
+            file_path = get_exec_file_path(
+                execution_context.graph_exec_id, stored_file_path
+            )
             if not Path(file_path).exists():
                 raise ValueError(f"File does not exist: {file_path}")
 
diff --git a/autogpt_platform/backend/backend/blocks/talking_head.py b/autogpt_platform/backend/backend/blocks/talking_head.py
index 7a466bec7e..e01e3d4023 100644
--- a/autogpt_platform/backend/backend/blocks/talking_head.py
+++ b/autogpt_platform/backend/backend/blocks/talking_head.py
@@ -10,6 +10,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import (
     APIKeyCredentials,
     CredentialsField,
@@ -17,7 +18,9 @@ from backend.data.model import (
     SchemaField,
 )
 from backend.integrations.providers import ProviderName
+from backend.util.file import store_media_file
 from backend.util.request import Requests
+from backend.util.type import MediaFileType
 
 TEST_CREDENTIALS = APIKeyCredentials(
     id="01234567-89ab-cdef-0123-456789abcdef",
@@ -102,7 +105,7 @@ class CreateTalkingAvatarVideoBlock(Block):
             test_output=[
                 (
                     "video_url",
-                    "https://d-id.com/api/clips/abcd1234-5678-efgh-ijkl-mnopqrstuvwx/video",
+                    lambda x: x.startswith(("workspace://", "data:")),
                 ),
             ],
             test_mock={
@@ -110,9 +113,10 @@ class CreateTalkingAvatarVideoBlock(Block):
                     "id": "abcd1234-5678-efgh-ijkl-mnopqrstuvwx",
                     "status": "created",
                 },
+                # Use data URI to avoid HTTP requests during tests
                 "get_clip_status": lambda *args, **kwargs: {
                     "status": "done",
-                    "result_url": "https://d-id.com/api/clips/abcd1234-5678-efgh-ijkl-mnopqrstuvwx/video",
+                    "result_url": "data:video/mp4;base64,AAAA",
                 },
             },
             test_credentials=TEST_CREDENTIALS,
@@ -138,7 +142,12 @@ class CreateTalkingAvatarVideoBlock(Block):
         return response.json()
 
     async def run(
-        self, input_data: Input, *, credentials: APIKeyCredentials, **kwargs
+        self,
+        input_data: Input,
+        *,
+        credentials: APIKeyCredentials,
+        execution_context: ExecutionContext,
+        **kwargs,
     ) -> BlockOutput:
         # Create the clip
         payload = {
@@ -165,7 +174,14 @@ class CreateTalkingAvatarVideoBlock(Block):
         for _ in range(input_data.max_polling_attempts):
             status_response = await self.get_clip_status(credentials.api_key, clip_id)
             if status_response["status"] == "done":
-                yield "video_url", status_response["result_url"]
+                # Store the generated video to the user's workspace for persistence
+                video_url = status_response["result_url"]
+                stored_url = await store_media_file(
+                    file=MediaFileType(video_url),
+                    execution_context=execution_context,
+                    return_format="for_block_output",
+                )
+                yield "video_url", stored_url
                 return
             elif status_response["status"] == "error":
                 raise RuntimeError(
diff --git a/autogpt_platform/backend/backend/blocks/test/test_blocks_dos_vulnerability.py b/autogpt_platform/backend/backend/blocks/test/test_blocks_dos_vulnerability.py
index 389bb5c636..e2e44b194c 100644
--- a/autogpt_platform/backend/backend/blocks/test/test_blocks_dos_vulnerability.py
+++ b/autogpt_platform/backend/backend/blocks/test/test_blocks_dos_vulnerability.py
@@ -12,6 +12,7 @@ from backend.blocks.iteration import StepThroughItemsBlock
 from backend.blocks.llm import AITextSummarizerBlock
 from backend.blocks.text import ExtractTextInformationBlock
 from backend.blocks.xml_parser import XMLParserBlock
+from backend.data.execution import ExecutionContext
 from backend.util.file import store_media_file
 from backend.util.type import MediaFileType
 
@@ -233,9 +234,12 @@ class TestStoreMediaFileSecurity:
 
         with pytest.raises(ValueError, match="File too large"):
             await store_media_file(
-                graph_exec_id="test",
                 file=MediaFileType(large_data_uri),
-                user_id="test_user",
+                execution_context=ExecutionContext(
+                    user_id="test_user",
+                    graph_exec_id="test",
+                ),
+                return_format="for_local_processing",
             )
 
     @patch("backend.util.file.Path")
@@ -270,9 +274,12 @@ class TestStoreMediaFileSecurity:
         # Should raise an error when directory size exceeds limit
         with pytest.raises(ValueError, match="Disk usage limit exceeded"):
             await store_media_file(
-                graph_exec_id="test",
                 file=MediaFileType(
                     "data:text/plain;base64,dGVzdA=="
                 ),  # Small test file
-                user_id="test_user",
+                execution_context=ExecutionContext(
+                    user_id="test_user",
+                    graph_exec_id="test",
+                ),
+                return_format="for_local_processing",
             )
diff --git a/autogpt_platform/backend/backend/blocks/test/test_http.py b/autogpt_platform/backend/backend/blocks/test/test_http.py
index bdc30f3ecf..e01b8e2c5b 100644
--- a/autogpt_platform/backend/backend/blocks/test/test_http.py
+++ b/autogpt_platform/backend/backend/blocks/test/test_http.py
@@ -11,10 +11,22 @@ from backend.blocks.http import (
     HttpMethod,
     SendAuthenticatedWebRequestBlock,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import HostScopedCredentials
 from backend.util.request import Response
 
 
+def make_test_context(
+    graph_exec_id: str = "test-exec-id",
+    user_id: str = "test-user-id",
+) -> ExecutionContext:
+    """Helper to create test ExecutionContext."""
+    return ExecutionContext(
+        user_id=user_id,
+        graph_exec_id=graph_exec_id,
+    )
+
+
 class TestHttpBlockWithHostScopedCredentials:
     """Test suite for HTTP block integration with HostScopedCredentials."""
 
@@ -105,8 +117,7 @@ class TestHttpBlockWithHostScopedCredentials:
         async for output_name, output_data in http_block.run(
             input_data,
             credentials=exact_match_credentials,
-            graph_exec_id="test-exec-id",
-            user_id="test-user-id",
+            execution_context=make_test_context(),
         ):
             result.append((output_name, output_data))
 
@@ -161,8 +172,7 @@ class TestHttpBlockWithHostScopedCredentials:
         async for output_name, output_data in http_block.run(
             input_data,
             credentials=wildcard_credentials,
-            graph_exec_id="test-exec-id",
-            user_id="test-user-id",
+            execution_context=make_test_context(),
         ):
             result.append((output_name, output_data))
 
@@ -208,8 +218,7 @@ class TestHttpBlockWithHostScopedCredentials:
         async for output_name, output_data in http_block.run(
             input_data,
             credentials=non_matching_credentials,
-            graph_exec_id="test-exec-id",
-            user_id="test-user-id",
+            execution_context=make_test_context(),
         ):
             result.append((output_name, output_data))
 
@@ -258,8 +267,7 @@ class TestHttpBlockWithHostScopedCredentials:
         async for output_name, output_data in http_block.run(
             input_data,
             credentials=exact_match_credentials,
-            graph_exec_id="test-exec-id",
-            user_id="test-user-id",
+            execution_context=make_test_context(),
         ):
             result.append((output_name, output_data))
 
@@ -318,8 +326,7 @@ class TestHttpBlockWithHostScopedCredentials:
         async for output_name, output_data in http_block.run(
             input_data,
             credentials=auto_discovered_creds,  # Execution manager found these
-            graph_exec_id="test-exec-id",
-            user_id="test-user-id",
+            execution_context=make_test_context(),
         ):
             result.append((output_name, output_data))
 
@@ -382,8 +389,7 @@ class TestHttpBlockWithHostScopedCredentials:
         async for output_name, output_data in http_block.run(
             input_data,
             credentials=multi_header_creds,
-            graph_exec_id="test-exec-id",
-            user_id="test-user-id",
+            execution_context=make_test_context(),
         ):
             result.append((output_name, output_data))
 
@@ -471,8 +477,7 @@ class TestHttpBlockWithHostScopedCredentials:
             async for output_name, output_data in http_block.run(
                 input_data,
                 credentials=test_creds,
-                graph_exec_id="test-exec-id",
-                user_id="test-user-id",
+                execution_context=make_test_context(),
             ):
                 result.append((output_name, output_data))
 
diff --git a/autogpt_platform/backend/backend/blocks/text.py b/autogpt_platform/backend/backend/blocks/text.py
index 5e58e27101..359e22a84f 100644
--- a/autogpt_platform/backend/backend/blocks/text.py
+++ b/autogpt_platform/backend/backend/blocks/text.py
@@ -11,6 +11,7 @@ from backend.data.block import (
     BlockSchemaInput,
     BlockSchemaOutput,
 )
+from backend.data.execution import ExecutionContext
 from backend.data.model import SchemaField
 from backend.util import json, text
 from backend.util.file import get_exec_file_path, store_media_file
@@ -444,18 +445,21 @@ class FileReadBlock(Block):
         )
 
     async def run(
-        self, input_data: Input, *, graph_exec_id: str, user_id: str, **_kwargs
+        self, input_data: Input, *, execution_context: ExecutionContext, **_kwargs
     ) -> BlockOutput:
         # Store the media file properly (handles URLs, data URIs, etc.)
         stored_file_path = await store_media_file(
-            user_id=user_id,
-            graph_exec_id=graph_exec_id,
             file=input_data.file_input,
-            return_content=False,
+            execution_context=execution_context,
+            return_format="for_local_processing",
         )
 
-        # Get full file path
-        file_path = get_exec_file_path(graph_exec_id, stored_file_path)
+        # Get full file path (graph_exec_id validated by store_media_file above)
+        if not execution_context.graph_exec_id:
+            raise ValueError("execution_context.graph_exec_id is required")
+        file_path = get_exec_file_path(
+            execution_context.graph_exec_id, stored_file_path
+        )
 
         if not Path(file_path).exists():
             raise ValueError(f"File does not exist: {file_path}")
diff --git a/autogpt_platform/backend/backend/data/execution.py b/autogpt_platform/backend/backend/data/execution.py
index 3c1fd25c51..afb8c70538 100644
--- a/autogpt_platform/backend/backend/data/execution.py
+++ b/autogpt_platform/backend/backend/data/execution.py
@@ -83,12 +83,29 @@ class ExecutionContext(BaseModel):
 
     model_config = {"extra": "ignore"}
 
+    # Execution identity
+    user_id: Optional[str] = None
+    graph_id: Optional[str] = None
+    graph_exec_id: Optional[str] = None
+    graph_version: Optional[int] = None
+    node_id: Optional[str] = None
+    node_exec_id: Optional[str] = None
+
+    # Safety settings
     human_in_the_loop_safe_mode: bool = True
     sensitive_action_safe_mode: bool = False
+
+    # User settings
     user_timezone: str = "UTC"
+
+    # Execution hierarchy
     root_execution_id: Optional[str] = None
     parent_execution_id: Optional[str] = None
 
+    # Workspace
+    workspace_id: Optional[str] = None
+    session_id: Optional[str] = None
+
 
 # -------------------------- Models -------------------------- #
 
diff --git a/autogpt_platform/backend/backend/data/workspace.py b/autogpt_platform/backend/backend/data/workspace.py
new file mode 100644
index 0000000000..f3dba0a294
--- /dev/null
+++ b/autogpt_platform/backend/backend/data/workspace.py
@@ -0,0 +1,276 @@
+"""
+Database CRUD operations for User Workspace.
+
+This module provides functions for managing user workspaces and workspace files.
+"""
+
+import logging
+from datetime import datetime, timezone
+from typing import Optional
+
+from prisma.models import UserWorkspace, UserWorkspaceFile
+from prisma.types import UserWorkspaceFileWhereInput
+
+from backend.util.json import SafeJson
+
+logger = logging.getLogger(__name__)
+
+
+async def get_or_create_workspace(user_id: str) -> UserWorkspace:
+    """
+    Get user's workspace, creating one if it doesn't exist.
+
+    Uses upsert to handle race conditions when multiple concurrent requests
+    attempt to create a workspace for the same user.
+
+    Args:
+        user_id: The user's ID
+
+    Returns:
+        UserWorkspace instance
+    """
+    workspace = await UserWorkspace.prisma().upsert(
+        where={"userId": user_id},
+        data={
+            "create": {"userId": user_id},
+            "update": {},  # No updates needed if exists
+        },
+    )
+
+    return workspace
+
+
+async def get_workspace(user_id: str) -> Optional[UserWorkspace]:
+    """
+    Get user's workspace if it exists.
+
+    Args:
+        user_id: The user's ID
+
+    Returns:
+        UserWorkspace instance or None
+    """
+    return await UserWorkspace.prisma().find_unique(where={"userId": user_id})
+
+
+async def create_workspace_file(
+    workspace_id: str,
+    file_id: str,
+    name: str,
+    path: str,
+    storage_path: str,
+    mime_type: str,
+    size_bytes: int,
+    checksum: Optional[str] = None,
+    metadata: Optional[dict] = None,
+) -> UserWorkspaceFile:
+    """
+    Create a new workspace file record.
+
+    Args:
+        workspace_id: The workspace ID
+        file_id: The file ID (same as used in storage path for consistency)
+        name: User-visible filename
+        path: Virtual path (e.g., "/documents/report.pdf")
+        storage_path: Actual storage path (GCS or local)
+        mime_type: MIME type of the file
+        size_bytes: File size in bytes
+        checksum: Optional SHA256 checksum
+        metadata: Optional additional metadata
+
+    Returns:
+        Created UserWorkspaceFile instance
+    """
+    # Normalize path to start with /
+    if not path.startswith("/"):
+        path = f"/{path}"
+
+    file = await UserWorkspaceFile.prisma().create(
+        data={
+            "id": file_id,
+            "workspaceId": workspace_id,
+            "name": name,
+            "path": path,
+            "storagePath": storage_path,
+            "mimeType": mime_type,
+            "sizeBytes": size_bytes,
+            "checksum": checksum,
+            "metadata": SafeJson(metadata or {}),
+        }
+    )
+
+    logger.info(
+        f"Created workspace file {file.id} at path {path} "
+        f"in workspace {workspace_id}"
+    )
+    return file
+
+
+async def get_workspace_file(
+    file_id: str,
+    workspace_id: Optional[str] = None,
+) -> Optional[UserWorkspaceFile]:
+    """
+    Get a workspace file by ID.
+
+    Args:
+        file_id: The file ID
+        workspace_id: Optional workspace ID for validation
+
+    Returns:
+        UserWorkspaceFile instance or None
+    """
+    where_clause: dict = {"id": file_id, "isDeleted": False}
+    if workspace_id:
+        where_clause["workspaceId"] = workspace_id
+
+    return await UserWorkspaceFile.prisma().find_first(where=where_clause)
+
+
+async def get_workspace_file_by_path(
+    workspace_id: str,
+    path: str,
+) -> Optional[UserWorkspaceFile]:
+    """
+    Get a workspace file by its virtual path.
+
+    Args:
+        workspace_id: The workspace ID
+        path: Virtual path
+
+    Returns:
+        UserWorkspaceFile instance or None
+    """
+    # Normalize path
+    if not path.startswith("/"):
+        path = f"/{path}"
+
+    return await UserWorkspaceFile.prisma().find_first(
+        where={
+            "workspaceId": workspace_id,
+            "path": path,
+            "isDeleted": False,
+        }
+    )
+
+
+async def list_workspace_files(
+    workspace_id: str,
+    path_prefix: Optional[str] = None,
+    include_deleted: bool = False,
+    limit: Optional[int] = None,
+    offset: int = 0,
+) -> list[UserWorkspaceFile]:
+    """
+    List files in a workspace.
+
+    Args:
+        workspace_id: The workspace ID
+        path_prefix: Optional path prefix to filter (e.g., "/documents/")
+        include_deleted: Whether to include soft-deleted files
+        limit: Maximum number of files to return
+        offset: Number of files to skip
+
+    Returns:
+        List of UserWorkspaceFile instances
+    """
+    where_clause: UserWorkspaceFileWhereInput = {"workspaceId": workspace_id}
+
+    if not include_deleted:
+        where_clause["isDeleted"] = False
+
+    if path_prefix:
+        # Normalize prefix
+        if not path_prefix.startswith("/"):
+            path_prefix = f"/{path_prefix}"
+        where_clause["path"] = {"startswith": path_prefix}
+
+    return await UserWorkspaceFile.prisma().find_many(
+        where=where_clause,
+        order={"createdAt": "desc"},
+        take=limit,
+        skip=offset,
+    )
+
+
+async def count_workspace_files(
+    workspace_id: str,
+    path_prefix: Optional[str] = None,
+    include_deleted: bool = False,
+) -> int:
+    """
+    Count files in a workspace.
+
+    Args:
+        workspace_id: The workspace ID
+        path_prefix: Optional path prefix to filter (e.g., "/sessions/abc123/")
+        include_deleted: Whether to include soft-deleted files
+
+    Returns:
+        Number of files
+    """
+    where_clause: dict = {"workspaceId": workspace_id}
+    if not include_deleted:
+        where_clause["isDeleted"] = False
+
+    if path_prefix:
+        # Normalize prefix
+        if not path_prefix.startswith("/"):
+            path_prefix = f"/{path_prefix}"
+        where_clause["path"] = {"startswith": path_prefix}
+
+    return await UserWorkspaceFile.prisma().count(where=where_clause)
+
+
+async def soft_delete_workspace_file(
+    file_id: str,
+    workspace_id: Optional[str] = None,
+) -> Optional[UserWorkspaceFile]:
+    """
+    Soft-delete a workspace file.
+
+    The path is modified to include a deletion timestamp to free up the original
+    path for new files while preserving the record for potential recovery.
+
+    Args:
+        file_id: The file ID
+        workspace_id: Optional workspace ID for validation
+
+    Returns:
+        Updated UserWorkspaceFile instance or None if not found
+    """
+    # First verify the file exists and belongs to workspace
+    file = await get_workspace_file(file_id, workspace_id)
+    if file is None:
+        return None
+
+    deleted_at = datetime.now(timezone.utc)
+    # Modify path to free up the unique constraint for new files at original path
+    # Format: {original_path}__deleted__{timestamp}
+    deleted_path = f"{file.path}__deleted__{int(deleted_at.timestamp())}"
+
+    updated = await UserWorkspaceFile.prisma().update(
+        where={"id": file_id},
+        data={
+            "isDeleted": True,
+            "deletedAt": deleted_at,
+            "path": deleted_path,
+        },
+    )
+
+    logger.info(f"Soft-deleted workspace file {file_id}")
+    return updated
+
+
+async def get_workspace_total_size(workspace_id: str) -> int:
+    """
+    Get the total size of all files in a workspace.
+
+    Args:
+        workspace_id: The workspace ID
+
+    Returns:
+        Total size in bytes
+    """
+    files = await list_workspace_files(workspace_id)
+    return sum(file.sizeBytes for file in files)
diff --git a/autogpt_platform/backend/backend/executor/manager.py b/autogpt_platform/backend/backend/executor/manager.py
index 39d4f984eb..8362dae828 100644
--- a/autogpt_platform/backend/backend/executor/manager.py
+++ b/autogpt_platform/backend/backend/executor/manager.py
@@ -236,7 +236,14 @@ async def execute_node(
     input_size = len(input_data_str)
     log_metadata.debug("Executed node with input", input=input_data_str)
 
+    # Create node-specific execution context to avoid race conditions
+    # (multiple nodes can execute concurrently and would otherwise mutate shared state)
+    execution_context = execution_context.model_copy(
+        update={"node_id": node_id, "node_exec_id": node_exec_id}
+    )
+
     # Inject extra execution arguments for the blocks via kwargs
+    # Keep individual kwargs for backwards compatibility with existing blocks
     extra_exec_kwargs: dict = {
         "graph_id": graph_id,
         "graph_version": graph_version,
diff --git a/autogpt_platform/backend/backend/executor/utils.py b/autogpt_platform/backend/backend/executor/utils.py
index f35bebb125..fa264c30a7 100644
--- a/autogpt_platform/backend/backend/executor/utils.py
+++ b/autogpt_platform/backend/backend/executor/utils.py
@@ -892,11 +892,19 @@ async def add_graph_execution(
         settings = await gdb.get_graph_settings(user_id=user_id, graph_id=graph_id)
 
         execution_context = ExecutionContext(
+            # Execution identity
+            user_id=user_id,
+            graph_id=graph_id,
+            graph_exec_id=graph_exec.id,
+            graph_version=graph_exec.graph_version,
+            # Safety settings
             human_in_the_loop_safe_mode=settings.human_in_the_loop_safe_mode,
             sensitive_action_safe_mode=settings.sensitive_action_safe_mode,
+            # User settings
             user_timezone=(
                 user.timezone if user.timezone != USER_TIMEZONE_NOT_SET else "UTC"
             ),
+            # Execution hierarchy
             root_execution_id=graph_exec.id,
         )
 
diff --git a/autogpt_platform/backend/backend/executor/utils_test.py b/autogpt_platform/backend/backend/executor/utils_test.py
index 4761a18c63..db33249583 100644
--- a/autogpt_platform/backend/backend/executor/utils_test.py
+++ b/autogpt_platform/backend/backend/executor/utils_test.py
@@ -348,6 +348,7 @@ async def test_add_graph_execution_is_repeatable(mocker: MockerFixture):
     mock_graph_exec.id = "execution-id-123"
     mock_graph_exec.node_executions = []  # Add this to avoid AttributeError
     mock_graph_exec.status = ExecutionStatus.QUEUED  # Required for race condition check
+    mock_graph_exec.graph_version = graph_version
     mock_graph_exec.to_graph_execution_entry.return_value = mocker.MagicMock()
 
     # Mock the queue and event bus
@@ -434,6 +435,9 @@ async def test_add_graph_execution_is_repeatable(mocker: MockerFixture):
     # Create a second mock execution for the sanity check
     mock_graph_exec_2 = mocker.MagicMock(spec=GraphExecutionWithNodes)
     mock_graph_exec_2.id = "execution-id-456"
+    mock_graph_exec_2.node_executions = []
+    mock_graph_exec_2.status = ExecutionStatus.QUEUED
+    mock_graph_exec_2.graph_version = graph_version
     mock_graph_exec_2.to_graph_execution_entry.return_value = mocker.MagicMock()
 
     # Reset mocks and set up for second call
@@ -614,6 +618,7 @@ async def test_add_graph_execution_with_nodes_to_skip(mocker: MockerFixture):
     mock_graph_exec.id = "execution-id-123"
     mock_graph_exec.node_executions = []
     mock_graph_exec.status = ExecutionStatus.QUEUED  # Required for race condition check
+    mock_graph_exec.graph_version = graph_version
 
     # Track what's passed to to_graph_execution_entry
     captured_kwargs = {}
diff --git a/autogpt_platform/backend/backend/util/cloud_storage.py b/autogpt_platform/backend/backend/util/cloud_storage.py
index 93fb9039ec..28423d003d 100644
--- a/autogpt_platform/backend/backend/util/cloud_storage.py
+++ b/autogpt_platform/backend/backend/util/cloud_storage.py
@@ -13,6 +13,7 @@ import aiohttp
 from gcloud.aio import storage as async_gcs_storage
 from google.cloud import storage as gcs_storage
 
+from backend.util.gcs_utils import download_with_fresh_session, generate_signed_url
 from backend.util.settings import Config
 
 logger = logging.getLogger(__name__)
@@ -251,7 +252,7 @@ class CloudStorageHandler:
             f"in_task: {current_task is not None}"
         )
 
-        # Parse bucket and blob name from path
+        # Parse bucket and blob name from path (path already has gcs:// prefix removed)
         parts = path.split("/", 1)
         if len(parts) != 2:
             raise ValueError(f"Invalid GCS path: {path}")
@@ -261,50 +262,19 @@ class CloudStorageHandler:
         # Authorization check
         self._validate_file_access(blob_name, user_id, graph_exec_id)
 
-        # Use a fresh client for each download to avoid session issues
-        # This is less efficient but more reliable with the executor's event loop
-        logger.info("[CloudStorage] Creating fresh GCS client for download")
-
-        # Create a new session specifically for this download
-        session = aiohttp.ClientSession(
-            connector=aiohttp.TCPConnector(limit=10, force_close=True)
+        logger.info(
+            f"[CloudStorage] About to download from GCS - bucket: {bucket_name}, blob: {blob_name}"
         )
 
-        async_client = None
         try:
-            # Create a new GCS client with the fresh session
-            async_client = async_gcs_storage.Storage(session=session)
-
-            logger.info(
-                f"[CloudStorage] About to download from GCS - bucket: {bucket_name}, blob: {blob_name}"
-            )
-
-            # Download content using the fresh client
-            content = await async_client.download(bucket_name, blob_name)
+            content = await download_with_fresh_session(bucket_name, blob_name)
             logger.info(
                 f"[CloudStorage] GCS download successful - size: {len(content)} bytes"
             )
-
-            # Clean up
-            await async_client.close()
-            await session.close()
-
             return content
-
+        except FileNotFoundError:
+            raise
         except Exception as e:
-            # Always try to clean up
-            if async_client is not None:
-                try:
-                    await async_client.close()
-                except Exception as cleanup_error:
-                    logger.warning(
-                        f"[CloudStorage] Error closing GCS client: {cleanup_error}"
-                    )
-            try:
-                await session.close()
-            except Exception as cleanup_error:
-                logger.warning(f"[CloudStorage] Error closing session: {cleanup_error}")
-
             # Log the specific error for debugging
             logger.error(
                 f"[CloudStorage] GCS download failed - error: {str(e)}, "
@@ -319,10 +289,6 @@ class CloudStorageHandler:
                     f"current_task: {current_task}, "
                     f"bucket: {bucket_name}, blob: redacted for privacy"
                 )
-
-            # Convert gcloud-aio exceptions to standard ones
-            if "404" in str(e) or "Not Found" in str(e):
-                raise FileNotFoundError(f"File not found: gcs://{path}")
             raise
 
     def _validate_file_access(
@@ -445,8 +411,7 @@ class CloudStorageHandler:
         graph_exec_id: str | None = None,
     ) -> str:
         """Generate signed URL for GCS with authorization."""
-
-        # Parse bucket and blob name from path
+        # Parse bucket and blob name from path (path already has gcs:// prefix removed)
         parts = path.split("/", 1)
         if len(parts) != 2:
             raise ValueError(f"Invalid GCS path: {path}")
@@ -456,21 +421,11 @@ class CloudStorageHandler:
         # Authorization check
         self._validate_file_access(blob_name, user_id, graph_exec_id)
 
-        # Use sync client for signed URLs since gcloud-aio doesn't support them
         sync_client = self._get_sync_gcs_client()
-        bucket = sync_client.bucket(bucket_name)
-        blob = bucket.blob(blob_name)
-
-        # Generate signed URL asynchronously using sync client
-        url = await asyncio.to_thread(
-            blob.generate_signed_url,
-            version="v4",
-            expiration=datetime.now(timezone.utc) + timedelta(hours=expiration_hours),
-            method="GET",
+        return await generate_signed_url(
+            sync_client, bucket_name, blob_name, expiration_hours * 3600
         )
 
-        return url
-
     async def delete_expired_files(self, provider: str = "gcs") -> int:
         """
         Delete files that have passed their expiration time.
diff --git a/autogpt_platform/backend/backend/util/file.py b/autogpt_platform/backend/backend/util/file.py
index dc8f86ea41..baa9225629 100644
--- a/autogpt_platform/backend/backend/util/file.py
+++ b/autogpt_platform/backend/backend/util/file.py
@@ -5,13 +5,26 @@ import shutil
 import tempfile
 import uuid
 from pathlib import Path
+from typing import TYPE_CHECKING, Literal
 from urllib.parse import urlparse
 
 from backend.util.cloud_storage import get_cloud_storage_handler
 from backend.util.request import Requests
+from backend.util.settings import Config
 from backend.util.type import MediaFileType
 from backend.util.virus_scanner import scan_content_safe
 
+if TYPE_CHECKING:
+    from backend.data.execution import ExecutionContext
+
+# Return format options for store_media_file
+# - "for_local_processing": Returns local file path - use with ffmpeg, MoviePy, PIL, etc.
+# - "for_external_api": Returns data URI (base64) - use when sending content to external APIs
+# - "for_block_output": Returns best format for output - workspace:// in CoPilot, data URI in graphs
+MediaReturnFormat = Literal[
+    "for_local_processing", "for_external_api", "for_block_output"
+]
+
 TEMP_DIR = Path(tempfile.gettempdir()).resolve()
 
 # Maximum filename length (conservative limit for most filesystems)
@@ -67,42 +80,56 @@ def clean_exec_files(graph_exec_id: str, file: str = "") -> None:
 
 
 async def store_media_file(
-    graph_exec_id: str,
     file: MediaFileType,
-    user_id: str,
-    return_content: bool = False,
+    execution_context: "ExecutionContext",
+    *,
+    return_format: MediaReturnFormat,
 ) -> MediaFileType:
     """
-    Safely handle 'file' (a data URI, a URL, or a local path relative to {temp}/exec_file/{exec_id}),
-    placing or verifying it under:
+    Safely handle 'file' (a data URI, a URL, a workspace:// reference, or a local path
+    relative to {temp}/exec_file/{exec_id}), placing or verifying it under:
         {tempdir}/exec_file/{exec_id}/...
 
-    If 'return_content=True', return a data URI (data:<mime>;base64,<content>).
-    Otherwise, returns the file media path relative to the exec_id folder.
+    For each MediaFileType input:
+    - Data URI: decode and store locally
+    - URL: download and store locally
+    - workspace:// reference: read from workspace, store locally
+    - Local path: verify it exists in exec_file directory
 
-    For each MediaFileType type:
-    - Data URI:
-      -> decode and store in a new random file in that folder
-    - URL:
-      -> download and store in that folder
-    - Local path:
-      -> interpret as relative to that folder; verify it exists
-         (no copying, as it's presumably already there).
-         We realpath-check so no symlink or '..' can escape the folder.
+    Return format options:
+    - "for_local_processing": Returns local file path - use with ffmpeg, MoviePy, PIL, etc.
+    - "for_external_api": Returns data URI (base64) - use when sending to external APIs
+    - "for_block_output": Returns best format for output - workspace:// in CoPilot, data URI in graphs
 
-
-    :param graph_exec_id:  The unique ID of the graph execution.
-    :param file:           Data URI, URL, or local (relative) path.
-    :param return_content: If True, return a data URI of the file content.
-                           If False, return the *relative* path inside the exec_id folder.
-    :return:               The requested result: data URI or relative path of the media.
+    :param file:               Data URI, URL, workspace://, or local (relative) path.
+    :param execution_context:  ExecutionContext with user_id, graph_exec_id, workspace_id.
+    :param return_format:      What to return: "for_local_processing", "for_external_api", or "for_block_output".
+    :return:                   The requested result based on return_format.
     """
+    # Extract values from execution_context
+    graph_exec_id = execution_context.graph_exec_id
+    user_id = execution_context.user_id
+
+    if not graph_exec_id:
+        raise ValueError("execution_context.graph_exec_id is required")
+    if not user_id:
+        raise ValueError("execution_context.user_id is required")
+
+    # Create workspace_manager if we have workspace_id (with session scoping)
+    # Import here to avoid circular import (file.py → workspace.py → data → blocks → file.py)
+    from backend.util.workspace import WorkspaceManager
+
+    workspace_manager: WorkspaceManager | None = None
+    if execution_context.workspace_id:
+        workspace_manager = WorkspaceManager(
+            user_id, execution_context.workspace_id, execution_context.session_id
+        )
     # Build base path
     base_path = Path(get_exec_file_path(graph_exec_id, ""))
     base_path.mkdir(parents=True, exist_ok=True)
 
     # Security fix: Add disk space limits to prevent DoS
-    MAX_FILE_SIZE = 100 * 1024 * 1024  # 100MB per file
+    MAX_FILE_SIZE_BYTES = Config().max_file_size_mb * 1024 * 1024
     MAX_TOTAL_DISK_USAGE = 1024 * 1024 * 1024  # 1GB total per execution directory
 
     # Check total disk usage in base_path
@@ -142,9 +169,57 @@ async def store_media_file(
         """
         return str(absolute_path.relative_to(base))
 
-    # Check if this is a cloud storage path
+    # Get cloud storage handler for checking cloud paths
     cloud_storage = await get_cloud_storage_handler()
-    if cloud_storage.is_cloud_path(file):
+
+    # Track if the input came from workspace (don't re-save it)
+    is_from_workspace = file.startswith("workspace://")
+
+    # Check if this is a workspace file reference
+    if is_from_workspace:
+        if workspace_manager is None:
+            raise ValueError(
+                "Workspace file reference requires workspace context. "
+                "This file type is only available in CoPilot sessions."
+            )
+
+        # Parse workspace reference
+        # workspace://abc123 - by file ID
+        # workspace:///path/to/file.txt - by virtual path
+        file_ref = file[12:]  # Remove "workspace://"
+
+        if file_ref.startswith("/"):
+            # Path reference
+            workspace_content = await workspace_manager.read_file(file_ref)
+            file_info = await workspace_manager.get_file_info_by_path(file_ref)
+            filename = sanitize_filename(
+                file_info.name if file_info else f"{uuid.uuid4()}.bin"
+            )
+        else:
+            # ID reference
+            workspace_content = await workspace_manager.read_file_by_id(file_ref)
+            file_info = await workspace_manager.get_file_info(file_ref)
+            filename = sanitize_filename(
+                file_info.name if file_info else f"{uuid.uuid4()}.bin"
+            )
+
+        try:
+            target_path = _ensure_inside_base(base_path / filename, base_path)
+        except OSError as e:
+            raise ValueError(f"Invalid file path '{filename}': {e}") from e
+
+        # Check file size limit
+        if len(workspace_content) > MAX_FILE_SIZE_BYTES:
+            raise ValueError(
+                f"File too large: {len(workspace_content)} bytes > {MAX_FILE_SIZE_BYTES} bytes"
+            )
+
+        # Virus scan the workspace content before writing locally
+        await scan_content_safe(workspace_content, filename=filename)
+        target_path.write_bytes(workspace_content)
+
+    # Check if this is a cloud storage path
+    elif cloud_storage.is_cloud_path(file):
         # Download from cloud storage and store locally
         cloud_content = await cloud_storage.retrieve_file(
             file, user_id=user_id, graph_exec_id=graph_exec_id
@@ -159,9 +234,9 @@ async def store_media_file(
             raise ValueError(f"Invalid file path '{filename}': {e}") from e
 
         # Check file size limit
-        if len(cloud_content) > MAX_FILE_SIZE:
+        if len(cloud_content) > MAX_FILE_SIZE_BYTES:
             raise ValueError(
-                f"File too large: {len(cloud_content)} bytes > {MAX_FILE_SIZE} bytes"
+                f"File too large: {len(cloud_content)} bytes > {MAX_FILE_SIZE_BYTES} bytes"
             )
 
         # Virus scan the cloud content before writing locally
@@ -189,9 +264,9 @@ async def store_media_file(
         content = base64.b64decode(b64_content)
 
         # Check file size limit
-        if len(content) > MAX_FILE_SIZE:
+        if len(content) > MAX_FILE_SIZE_BYTES:
             raise ValueError(
-                f"File too large: {len(content)} bytes > {MAX_FILE_SIZE} bytes"
+                f"File too large: {len(content)} bytes > {MAX_FILE_SIZE_BYTES} bytes"
             )
 
         # Virus scan the base64 content before writing
@@ -199,23 +274,31 @@ async def store_media_file(
         target_path.write_bytes(content)
 
     elif file.startswith(("http://", "https://")):
-        # URL
+        # URL - download first to get Content-Type header
+        resp = await Requests().get(file)
+
+        # Check file size limit
+        if len(resp.content) > MAX_FILE_SIZE_BYTES:
+            raise ValueError(
+                f"File too large: {len(resp.content)} bytes > {MAX_FILE_SIZE_BYTES} bytes"
+            )
+
+        # Extract filename from URL path
         parsed_url = urlparse(file)
         filename = sanitize_filename(Path(parsed_url.path).name or f"{uuid.uuid4()}")
+
+        # If filename lacks extension, add one from Content-Type header
+        if "." not in filename:
+            content_type = resp.headers.get("Content-Type", "").split(";")[0].strip()
+            if content_type:
+                ext = _extension_from_mime(content_type)
+                filename = f"{filename}{ext}"
+
         try:
             target_path = _ensure_inside_base(base_path / filename, base_path)
         except OSError as e:
             raise ValueError(f"Invalid file path '{filename}': {e}") from e
 
-        # Download and save
-        resp = await Requests().get(file)
-
-        # Check file size limit
-        if len(resp.content) > MAX_FILE_SIZE:
-            raise ValueError(
-                f"File too large: {len(resp.content)} bytes > {MAX_FILE_SIZE} bytes"
-            )
-
         # Virus scan the downloaded content before writing
         await scan_content_safe(resp.content, filename=filename)
         target_path.write_bytes(resp.content)
@@ -230,12 +313,44 @@ async def store_media_file(
         if not target_path.is_file():
             raise ValueError(f"Local file does not exist: {target_path}")
 
-    # Return result
-    if return_content:
-        return MediaFileType(_file_to_data_uri(target_path))
-    else:
+    # Return based on requested format
+    if return_format == "for_local_processing":
+        # Use when processing files locally with tools like ffmpeg, MoviePy, PIL
+        # Returns: relative path in exec_file directory (e.g., "image.png")
         return MediaFileType(_strip_base_prefix(target_path, base_path))
 
+    elif return_format == "for_external_api":
+        # Use when sending content to external APIs that need base64
+        # Returns: data URI (e.g., "data:image/png;base64,iVBORw0...")
+        return MediaFileType(_file_to_data_uri(target_path))
+
+    elif return_format == "for_block_output":
+        # Use when returning output from a block to user/next block
+        # Returns: workspace:// ref (CoPilot) or data URI (graph execution)
+        if workspace_manager is None:
+            # No workspace available (graph execution without CoPilot)
+            # Fallback to data URI so the content can still be used/displayed
+            return MediaFileType(_file_to_data_uri(target_path))
+
+        # Don't re-save if input was already from workspace
+        if is_from_workspace:
+            # Return original workspace reference
+            return MediaFileType(file)
+
+        # Save new content to workspace
+        content = target_path.read_bytes()
+        filename = target_path.name
+
+        file_record = await workspace_manager.write_file(
+            content=content,
+            filename=filename,
+            overwrite=True,
+        )
+        return MediaFileType(f"workspace://{file_record.id}")
+
+    else:
+        raise ValueError(f"Invalid return_format: {return_format}")
+
 
 def get_dir_size(path: Path) -> int:
     """Get total size of directory."""
diff --git a/autogpt_platform/backend/backend/util/file_test.py b/autogpt_platform/backend/backend/util/file_test.py
index cd4fc69706..9fe672d155 100644
--- a/autogpt_platform/backend/backend/util/file_test.py
+++ b/autogpt_platform/backend/backend/util/file_test.py
@@ -7,10 +7,22 @@ from unittest.mock import AsyncMock, MagicMock, patch
 
 import pytest
 
+from backend.data.execution import ExecutionContext
 from backend.util.file import store_media_file
 from backend.util.type import MediaFileType
 
 
+def make_test_context(
+    graph_exec_id: str = "test-exec-123",
+    user_id: str = "test-user-123",
+) -> ExecutionContext:
+    """Helper to create test ExecutionContext."""
+    return ExecutionContext(
+        user_id=user_id,
+        graph_exec_id=graph_exec_id,
+    )
+
+
 class TestFileCloudIntegration:
     """Test cases for cloud storage integration in file utilities."""
 
@@ -70,10 +82,9 @@ class TestFileCloudIntegration:
             mock_path_class.side_effect = path_constructor
 
             result = await store_media_file(
-                graph_exec_id,
-                MediaFileType(cloud_path),
-                "test-user-123",
-                return_content=False,
+                file=MediaFileType(cloud_path),
+                execution_context=make_test_context(graph_exec_id=graph_exec_id),
+                return_format="for_local_processing",
             )
 
             # Verify cloud storage operations
@@ -144,10 +155,9 @@ class TestFileCloudIntegration:
             mock_path_obj.name = "image.png"
             with patch("backend.util.file.Path", return_value=mock_path_obj):
                 result = await store_media_file(
-                    graph_exec_id,
-                    MediaFileType(cloud_path),
-                    "test-user-123",
-                    return_content=True,
+                    file=MediaFileType(cloud_path),
+                    execution_context=make_test_context(graph_exec_id=graph_exec_id),
+                    return_format="for_external_api",
                 )
 
             # Verify result is a data URI
@@ -198,10 +208,9 @@ class TestFileCloudIntegration:
             mock_resolved_path.relative_to.return_value = Path("test-uuid-789.txt")
 
             await store_media_file(
-                graph_exec_id,
-                MediaFileType(data_uri),
-                "test-user-123",
-                return_content=False,
+                file=MediaFileType(data_uri),
+                execution_context=make_test_context(graph_exec_id=graph_exec_id),
+                return_format="for_local_processing",
             )
 
             # Verify cloud handler was checked but not used for retrieval
@@ -234,5 +243,7 @@ class TestFileCloudIntegration:
                 FileNotFoundError, match="File not found in cloud storage"
             ):
                 await store_media_file(
-                    graph_exec_id, MediaFileType(cloud_path), "test-user-123"
+                    file=MediaFileType(cloud_path),
+                    execution_context=make_test_context(graph_exec_id=graph_exec_id),
+                    return_format="for_local_processing",
                 )
diff --git a/autogpt_platform/backend/backend/util/gcs_utils.py b/autogpt_platform/backend/backend/util/gcs_utils.py
new file mode 100644
index 0000000000..3f91f21897
--- /dev/null
+++ b/autogpt_platform/backend/backend/util/gcs_utils.py
@@ -0,0 +1,108 @@
+"""
+Shared GCS utilities for workspace and cloud storage backends.
+
+This module provides common functionality for working with Google Cloud Storage,
+including path parsing, client management, and signed URL generation.
+"""
+
+import asyncio
+import logging
+from datetime import datetime, timedelta, timezone
+
+import aiohttp
+from gcloud.aio import storage as async_gcs_storage
+from google.cloud import storage as gcs_storage
+
+logger = logging.getLogger(__name__)
+
+
+def parse_gcs_path(path: str) -> tuple[str, str]:
+    """
+    Parse a GCS path in the format 'gcs://bucket/blob' to (bucket, blob).
+
+    Args:
+        path: GCS path string (e.g., "gcs://my-bucket/path/to/file")
+
+    Returns:
+        Tuple of (bucket_name, blob_name)
+
+    Raises:
+        ValueError: If the path format is invalid
+    """
+    if not path.startswith("gcs://"):
+        raise ValueError(f"Invalid GCS path: {path}")
+
+    path_without_prefix = path[6:]  # Remove "gcs://"
+    parts = path_without_prefix.split("/", 1)
+    if len(parts) != 2:
+        raise ValueError(f"Invalid GCS path format: {path}")
+
+    return parts[0], parts[1]
+
+
+async def download_with_fresh_session(bucket: str, blob: str) -> bytes:
+    """
+    Download file content using a fresh session.
+
+    This approach avoids event loop issues that can occur when reusing
+    sessions across different async contexts (e.g., in executors).
+
+    Args:
+        bucket: GCS bucket name
+        blob: Blob path within the bucket
+
+    Returns:
+        File content as bytes
+
+    Raises:
+        FileNotFoundError: If the file doesn't exist
+    """
+    session = aiohttp.ClientSession(
+        connector=aiohttp.TCPConnector(limit=10, force_close=True)
+    )
+    client: async_gcs_storage.Storage | None = None
+    try:
+        client = async_gcs_storage.Storage(session=session)
+        content = await client.download(bucket, blob)
+        return content
+    except Exception as e:
+        if "404" in str(e) or "Not Found" in str(e):
+            raise FileNotFoundError(f"File not found: gcs://{bucket}/{blob}")
+        raise
+    finally:
+        if client:
+            try:
+                await client.close()
+            except Exception:
+                pass  # Best-effort cleanup
+        await session.close()
+
+
+async def generate_signed_url(
+    sync_client: gcs_storage.Client,
+    bucket_name: str,
+    blob_name: str,
+    expires_in: int,
+) -> str:
+    """
+    Generate a signed URL for temporary access to a GCS file.
+
+    Uses asyncio.to_thread() to run the sync operation without blocking.
+
+    Args:
+        sync_client: Sync GCS client with service account credentials
+        bucket_name: GCS bucket name
+        blob_name: Blob path within the bucket
+        expires_in: URL expiration time in seconds
+
+    Returns:
+        Signed URL string
+    """
+    bucket = sync_client.bucket(bucket_name)
+    blob = bucket.blob(blob_name)
+    return await asyncio.to_thread(
+        blob.generate_signed_url,
+        version="v4",
+        expiration=datetime.now(timezone.utc) + timedelta(seconds=expires_in),
+        method="GET",
+    )
diff --git a/autogpt_platform/backend/backend/util/settings.py b/autogpt_platform/backend/backend/util/settings.py
index a42a4d29b4..aa28a4c9ac 100644
--- a/autogpt_platform/backend/backend/util/settings.py
+++ b/autogpt_platform/backend/backend/util/settings.py
@@ -263,6 +263,12 @@ class Config(UpdateTrackingModel["Config"], BaseSettings):
         description="The name of the Google Cloud Storage bucket for media files",
     )
 
+    workspace_storage_dir: str = Field(
+        default="",
+        description="Local directory for workspace file storage when GCS is not configured. "
+        "If empty, defaults to {app_data}/workspaces. Used for self-hosted deployments.",
+    )
+
     reddit_user_agent: str = Field(
         default="web:AutoGPT:v0.6.0 (by /u/autogpt)",
         description="The user agent for the Reddit API",
@@ -389,6 +395,13 @@ class Config(UpdateTrackingModel["Config"], BaseSettings):
         description="Maximum file size in MB for file uploads (1-1024 MB)",
     )
 
+    max_file_size_mb: int = Field(
+        default=100,
+        ge=1,
+        le=1024,
+        description="Maximum file size in MB for workspace files (1-1024 MB)",
+    )
+
     # AutoMod configuration
     automod_enabled: bool = Field(
         default=False,
diff --git a/autogpt_platform/backend/backend/util/test.py b/autogpt_platform/backend/backend/util/test.py
index 0a539644ee..23d7c24147 100644
--- a/autogpt_platform/backend/backend/util/test.py
+++ b/autogpt_platform/backend/backend/util/test.py
@@ -140,14 +140,29 @@ async def execute_block_test(block: Block):
             setattr(block, mock_name, mock_obj)
 
     # Populate credentials argument(s)
+    # Generate IDs for execution context
+    graph_id = str(uuid.uuid4())
+    node_id = str(uuid.uuid4())
+    graph_exec_id = str(uuid.uuid4())
+    node_exec_id = str(uuid.uuid4())
+    user_id = str(uuid.uuid4())
+    graph_version = 1  # Default version for tests
+
     extra_exec_kwargs: dict = {
-        "graph_id": str(uuid.uuid4()),
-        "node_id": str(uuid.uuid4()),
-        "graph_exec_id": str(uuid.uuid4()),
-        "node_exec_id": str(uuid.uuid4()),
-        "user_id": str(uuid.uuid4()),
-        "graph_version": 1,  # Default version for tests
-        "execution_context": ExecutionContext(),
+        "graph_id": graph_id,
+        "node_id": node_id,
+        "graph_exec_id": graph_exec_id,
+        "node_exec_id": node_exec_id,
+        "user_id": user_id,
+        "graph_version": graph_version,
+        "execution_context": ExecutionContext(
+            user_id=user_id,
+            graph_id=graph_id,
+            graph_exec_id=graph_exec_id,
+            graph_version=graph_version,
+            node_id=node_id,
+            node_exec_id=node_exec_id,
+        ),
     }
     input_model = cast(type[BlockSchema], block.input_schema)
 
diff --git a/autogpt_platform/backend/backend/util/workspace.py b/autogpt_platform/backend/backend/util/workspace.py
new file mode 100644
index 0000000000..a2f1a61b9e
--- /dev/null
+++ b/autogpt_platform/backend/backend/util/workspace.py
@@ -0,0 +1,419 @@
+"""
+WorkspaceManager for managing user workspace file operations.
+
+This module provides a high-level interface for workspace file operations,
+combining the storage backend and database layer.
+"""
+
+import logging
+import mimetypes
+import uuid
+from typing import Optional
+
+from prisma.errors import UniqueViolationError
+from prisma.models import UserWorkspaceFile
+
+from backend.data.workspace import (
+    count_workspace_files,
+    create_workspace_file,
+    get_workspace_file,
+    get_workspace_file_by_path,
+    list_workspace_files,
+    soft_delete_workspace_file,
+)
+from backend.util.settings import Config
+from backend.util.workspace_storage import compute_file_checksum, get_workspace_storage
+
+logger = logging.getLogger(__name__)
+
+
+class WorkspaceManager:
+    """
+    Manages workspace file operations.
+
+    Combines storage backend operations with database record management.
+    Supports session-scoped file segmentation where files are stored in
+    session-specific virtual paths: /sessions/{session_id}/{filename}
+    """
+
+    def __init__(
+        self, user_id: str, workspace_id: str, session_id: Optional[str] = None
+    ):
+        """
+        Initialize WorkspaceManager.
+
+        Args:
+            user_id: The user's ID
+            workspace_id: The workspace ID
+            session_id: Optional session ID for session-scoped file access
+        """
+        self.user_id = user_id
+        self.workspace_id = workspace_id
+        self.session_id = session_id
+        # Session path prefix for file isolation
+        self.session_path = f"/sessions/{session_id}" if session_id else ""
+
+    def _resolve_path(self, path: str) -> str:
+        """
+        Resolve a path, defaulting to session folder if session_id is set.
+
+        Cross-session access is allowed by explicitly using /sessions/other-session-id/...
+
+        Args:
+            path: Virtual path (e.g., "/file.txt" or "/sessions/abc123/file.txt")
+
+        Returns:
+            Resolved path with session prefix if applicable
+        """
+        # If path explicitly references a session folder, use it as-is
+        if path.startswith("/sessions/"):
+            return path
+
+        # If we have a session context, prepend session path
+        if self.session_path:
+            # Normalize the path
+            if not path.startswith("/"):
+                path = f"/{path}"
+            return f"{self.session_path}{path}"
+
+        # No session context, use path as-is
+        return path if path.startswith("/") else f"/{path}"
+
+    def _get_effective_path(
+        self, path: Optional[str], include_all_sessions: bool
+    ) -> Optional[str]:
+        """
+        Get effective path for list/count operations based on session context.
+
+        Args:
+            path: Optional path prefix to filter
+            include_all_sessions: If True, don't apply session scoping
+
+        Returns:
+            Effective path prefix for database query
+        """
+        if include_all_sessions:
+            # Normalize path to ensure leading slash (stored paths are normalized)
+            if path is not None and not path.startswith("/"):
+                return f"/{path}"
+            return path
+        elif path is not None:
+            # Resolve the provided path with session scoping
+            return self._resolve_path(path)
+        elif self.session_path:
+            # Default to session folder with trailing slash to prevent prefix collisions
+            # e.g., "/sessions/abc" should not match "/sessions/abc123"
+            return self.session_path.rstrip("/") + "/"
+        else:
+            # No session context, use path as-is
+            return path
+
+    async def read_file(self, path: str) -> bytes:
+        """
+        Read file from workspace by virtual path.
+
+        When session_id is set, paths are resolved relative to the session folder
+        unless they explicitly reference /sessions/...
+
+        Args:
+            path: Virtual path (e.g., "/documents/report.pdf")
+
+        Returns:
+            File content as bytes
+
+        Raises:
+            FileNotFoundError: If file doesn't exist
+        """
+        resolved_path = self._resolve_path(path)
+        file = await get_workspace_file_by_path(self.workspace_id, resolved_path)
+        if file is None:
+            raise FileNotFoundError(f"File not found at path: {resolved_path}")
+
+        storage = await get_workspace_storage()
+        return await storage.retrieve(file.storagePath)
+
+    async def read_file_by_id(self, file_id: str) -> bytes:
+        """
+        Read file from workspace by file ID.
+
+        Args:
+            file_id: The file's ID
+
+        Returns:
+            File content as bytes
+
+        Raises:
+            FileNotFoundError: If file doesn't exist
+        """
+        file = await get_workspace_file(file_id, self.workspace_id)
+        if file is None:
+            raise FileNotFoundError(f"File not found: {file_id}")
+
+        storage = await get_workspace_storage()
+        return await storage.retrieve(file.storagePath)
+
+    async def write_file(
+        self,
+        content: bytes,
+        filename: str,
+        path: Optional[str] = None,
+        mime_type: Optional[str] = None,
+        overwrite: bool = False,
+    ) -> UserWorkspaceFile:
+        """
+        Write file to workspace.
+
+        When session_id is set, files are written to /sessions/{session_id}/...
+        by default. Use explicit /sessions/... paths for cross-session access.
+
+        Args:
+            content: File content as bytes
+            filename: Filename for the file
+            path: Virtual path (defaults to "/{filename}", session-scoped if session_id set)
+            mime_type: MIME type (auto-detected if not provided)
+            overwrite: Whether to overwrite existing file at path
+
+        Returns:
+            Created UserWorkspaceFile instance
+
+        Raises:
+            ValueError: If file exceeds size limit or path already exists
+        """
+        # Enforce file size limit
+        max_file_size = Config().max_file_size_mb * 1024 * 1024
+        if len(content) > max_file_size:
+            raise ValueError(
+                f"File too large: {len(content)} bytes exceeds "
+                f"{Config().max_file_size_mb}MB limit"
+            )
+
+        # Determine path with session scoping
+        if path is None:
+            path = f"/{filename}"
+        elif not path.startswith("/"):
+            path = f"/{path}"
+
+        # Resolve path with session prefix
+        path = self._resolve_path(path)
+
+        # Check if file exists at path (only error for non-overwrite case)
+        # For overwrite=True, we let the write proceed and handle via UniqueViolationError
+        # This ensures the new file is written to storage BEFORE the old one is deleted,
+        # preventing data loss if the new write fails
+        if not overwrite:
+            existing = await get_workspace_file_by_path(self.workspace_id, path)
+            if existing is not None:
+                raise ValueError(f"File already exists at path: {path}")
+
+        # Auto-detect MIME type if not provided
+        if mime_type is None:
+            mime_type, _ = mimetypes.guess_type(filename)
+            mime_type = mime_type or "application/octet-stream"
+
+        # Compute checksum
+        checksum = compute_file_checksum(content)
+
+        # Generate unique file ID for storage
+        file_id = str(uuid.uuid4())
+
+        # Store file in storage backend
+        storage = await get_workspace_storage()
+        storage_path = await storage.store(
+            workspace_id=self.workspace_id,
+            file_id=file_id,
+            filename=filename,
+            content=content,
+        )
+
+        # Create database record - handle race condition where another request
+        # created a file at the same path between our check and create
+        try:
+            file = await create_workspace_file(
+                workspace_id=self.workspace_id,
+                file_id=file_id,
+                name=filename,
+                path=path,
+                storage_path=storage_path,
+                mime_type=mime_type,
+                size_bytes=len(content),
+                checksum=checksum,
+            )
+        except UniqueViolationError:
+            # Race condition: another request created a file at this path
+            if overwrite:
+                # Re-fetch and delete the conflicting file, then retry
+                existing = await get_workspace_file_by_path(self.workspace_id, path)
+                if existing:
+                    await self.delete_file(existing.id)
+                # Retry the create - if this also fails, clean up storage file
+                try:
+                    file = await create_workspace_file(
+                        workspace_id=self.workspace_id,
+                        file_id=file_id,
+                        name=filename,
+                        path=path,
+                        storage_path=storage_path,
+                        mime_type=mime_type,
+                        size_bytes=len(content),
+                        checksum=checksum,
+                    )
+                except Exception:
+                    # Clean up orphaned storage file on retry failure
+                    try:
+                        await storage.delete(storage_path)
+                    except Exception as e:
+                        logger.warning(f"Failed to clean up orphaned storage file: {e}")
+                    raise
+            else:
+                # Clean up the orphaned storage file before raising
+                try:
+                    await storage.delete(storage_path)
+                except Exception as e:
+                    logger.warning(f"Failed to clean up orphaned storage file: {e}")
+                raise ValueError(f"File already exists at path: {path}")
+        except Exception:
+            # Any other database error (connection, validation, etc.) - clean up storage
+            try:
+                await storage.delete(storage_path)
+            except Exception as e:
+                logger.warning(f"Failed to clean up orphaned storage file: {e}")
+            raise
+
+        logger.info(
+            f"Wrote file {file.id} ({filename}) to workspace {self.workspace_id} "
+            f"at path {path}, size={len(content)} bytes"
+        )
+
+        return file
+
+    async def list_files(
+        self,
+        path: Optional[str] = None,
+        limit: Optional[int] = None,
+        offset: int = 0,
+        include_all_sessions: bool = False,
+    ) -> list[UserWorkspaceFile]:
+        """
+        List files in workspace.
+
+        When session_id is set and include_all_sessions is False (default),
+        only files in the current session's folder are listed.
+
+        Args:
+            path: Optional path prefix to filter (e.g., "/documents/")
+            limit: Maximum number of files to return
+            offset: Number of files to skip
+            include_all_sessions: If True, list files from all sessions.
+                                  If False (default), only list current session's files.
+
+        Returns:
+            List of UserWorkspaceFile instances
+        """
+        effective_path = self._get_effective_path(path, include_all_sessions)
+
+        return await list_workspace_files(
+            workspace_id=self.workspace_id,
+            path_prefix=effective_path,
+            limit=limit,
+            offset=offset,
+        )
+
+    async def delete_file(self, file_id: str) -> bool:
+        """
+        Delete a file (soft-delete).
+
+        Args:
+            file_id: The file's ID
+
+        Returns:
+            True if deleted, False if not found
+        """
+        file = await get_workspace_file(file_id, self.workspace_id)
+        if file is None:
+            return False
+
+        # Delete from storage
+        storage = await get_workspace_storage()
+        try:
+            await storage.delete(file.storagePath)
+        except Exception as e:
+            logger.warning(f"Failed to delete file from storage: {e}")
+            # Continue with database soft-delete even if storage delete fails
+
+        # Soft-delete database record
+        result = await soft_delete_workspace_file(file_id, self.workspace_id)
+        return result is not None
+
+    async def get_download_url(self, file_id: str, expires_in: int = 3600) -> str:
+        """
+        Get download URL for a file.
+
+        Args:
+            file_id: The file's ID
+            expires_in: URL expiration in seconds (default 1 hour)
+
+        Returns:
+            Download URL (signed URL for GCS, API endpoint for local)
+
+        Raises:
+            FileNotFoundError: If file doesn't exist
+        """
+        file = await get_workspace_file(file_id, self.workspace_id)
+        if file is None:
+            raise FileNotFoundError(f"File not found: {file_id}")
+
+        storage = await get_workspace_storage()
+        return await storage.get_download_url(file.storagePath, expires_in)
+
+    async def get_file_info(self, file_id: str) -> Optional[UserWorkspaceFile]:
+        """
+        Get file metadata.
+
+        Args:
+            file_id: The file's ID
+
+        Returns:
+            UserWorkspaceFile instance or None
+        """
+        return await get_workspace_file(file_id, self.workspace_id)
+
+    async def get_file_info_by_path(self, path: str) -> Optional[UserWorkspaceFile]:
+        """
+        Get file metadata by path.
+
+        When session_id is set, paths are resolved relative to the session folder
+        unless they explicitly reference /sessions/...
+
+        Args:
+            path: Virtual path
+
+        Returns:
+            UserWorkspaceFile instance or None
+        """
+        resolved_path = self._resolve_path(path)
+        return await get_workspace_file_by_path(self.workspace_id, resolved_path)
+
+    async def get_file_count(
+        self,
+        path: Optional[str] = None,
+        include_all_sessions: bool = False,
+    ) -> int:
+        """
+        Get number of files in workspace.
+
+        When session_id is set and include_all_sessions is False (default),
+        only counts files in the current session's folder.
+
+        Args:
+            path: Optional path prefix to filter (e.g., "/documents/")
+            include_all_sessions: If True, count all files in workspace.
+                                  If False (default), only count current session's files.
+
+        Returns:
+            Number of files
+        """
+        effective_path = self._get_effective_path(path, include_all_sessions)
+
+        return await count_workspace_files(
+            self.workspace_id, path_prefix=effective_path
+        )
diff --git a/autogpt_platform/backend/backend/util/workspace_storage.py b/autogpt_platform/backend/backend/util/workspace_storage.py
new file mode 100644
index 0000000000..2f4c8ae2b5
--- /dev/null
+++ b/autogpt_platform/backend/backend/util/workspace_storage.py
@@ -0,0 +1,398 @@
+"""
+Workspace storage backend abstraction for supporting both cloud and local deployments.
+
+This module provides a unified interface for storing workspace files, with implementations
+for Google Cloud Storage (cloud deployments) and local filesystem (self-hosted deployments).
+"""
+
+import asyncio
+import hashlib
+import logging
+from abc import ABC, abstractmethod
+from datetime import datetime, timezone
+from pathlib import Path
+from typing import Optional
+
+import aiofiles
+import aiohttp
+from gcloud.aio import storage as async_gcs_storage
+from google.cloud import storage as gcs_storage
+
+from backend.util.data import get_data_path
+from backend.util.gcs_utils import (
+    download_with_fresh_session,
+    generate_signed_url,
+    parse_gcs_path,
+)
+from backend.util.settings import Config
+
+logger = logging.getLogger(__name__)
+
+
+class WorkspaceStorageBackend(ABC):
+    """Abstract interface for workspace file storage."""
+
+    @abstractmethod
+    async def store(
+        self,
+        workspace_id: str,
+        file_id: str,
+        filename: str,
+        content: bytes,
+    ) -> str:
+        """
+        Store file content, return storage path.
+
+        Args:
+            workspace_id: The workspace ID
+            file_id: Unique file ID for storage
+            filename: Original filename
+            content: File content as bytes
+
+        Returns:
+            Storage path string (cloud path or local path)
+        """
+        pass
+
+    @abstractmethod
+    async def retrieve(self, storage_path: str) -> bytes:
+        """
+        Retrieve file content from storage.
+
+        Args:
+            storage_path: The storage path returned from store()
+
+        Returns:
+            File content as bytes
+        """
+        pass
+
+    @abstractmethod
+    async def delete(self, storage_path: str) -> None:
+        """
+        Delete file from storage.
+
+        Args:
+            storage_path: The storage path to delete
+        """
+        pass
+
+    @abstractmethod
+    async def get_download_url(self, storage_path: str, expires_in: int = 3600) -> str:
+        """
+        Get URL for downloading the file.
+
+        Args:
+            storage_path: The storage path
+            expires_in: URL expiration time in seconds (default 1 hour)
+
+        Returns:
+            Download URL (signed URL for GCS, direct API path for local)
+        """
+        pass
+
+
+class GCSWorkspaceStorage(WorkspaceStorageBackend):
+    """Google Cloud Storage implementation for workspace storage."""
+
+    def __init__(self, bucket_name: str):
+        self.bucket_name = bucket_name
+        self._async_client: Optional[async_gcs_storage.Storage] = None
+        self._sync_client: Optional[gcs_storage.Client] = None
+        self._session: Optional[aiohttp.ClientSession] = None
+
+    async def _get_async_client(self) -> async_gcs_storage.Storage:
+        """Get or create async GCS client."""
+        if self._async_client is None:
+            self._session = aiohttp.ClientSession(
+                connector=aiohttp.TCPConnector(limit=100, force_close=False)
+            )
+            self._async_client = async_gcs_storage.Storage(session=self._session)
+        return self._async_client
+
+    def _get_sync_client(self) -> gcs_storage.Client:
+        """Get or create sync GCS client (for signed URLs)."""
+        if self._sync_client is None:
+            self._sync_client = gcs_storage.Client()
+        return self._sync_client
+
+    async def close(self) -> None:
+        """Close all client connections."""
+        if self._async_client is not None:
+            try:
+                await self._async_client.close()
+            except Exception as e:
+                logger.warning(f"Error closing GCS client: {e}")
+            self._async_client = None
+
+        if self._session is not None:
+            try:
+                await self._session.close()
+            except Exception as e:
+                logger.warning(f"Error closing session: {e}")
+            self._session = None
+
+    def _build_blob_name(self, workspace_id: str, file_id: str, filename: str) -> str:
+        """Build the blob path for workspace files."""
+        return f"workspaces/{workspace_id}/{file_id}/{filename}"
+
+    async def store(
+        self,
+        workspace_id: str,
+        file_id: str,
+        filename: str,
+        content: bytes,
+    ) -> str:
+        """Store file in GCS."""
+        client = await self._get_async_client()
+        blob_name = self._build_blob_name(workspace_id, file_id, filename)
+
+        # Upload with metadata
+        upload_time = datetime.now(timezone.utc)
+        await client.upload(
+            self.bucket_name,
+            blob_name,
+            content,
+            metadata={
+                "uploaded_at": upload_time.isoformat(),
+                "workspace_id": workspace_id,
+                "file_id": file_id,
+            },
+        )
+
+        return f"gcs://{self.bucket_name}/{blob_name}"
+
+    async def retrieve(self, storage_path: str) -> bytes:
+        """Retrieve file from GCS."""
+        bucket_name, blob_name = parse_gcs_path(storage_path)
+        return await download_with_fresh_session(bucket_name, blob_name)
+
+    async def delete(self, storage_path: str) -> None:
+        """Delete file from GCS."""
+        bucket_name, blob_name = parse_gcs_path(storage_path)
+        client = await self._get_async_client()
+
+        try:
+            await client.delete(bucket_name, blob_name)
+        except Exception as e:
+            if "404" not in str(e) and "Not Found" not in str(e):
+                raise
+            # File already deleted, that's fine
+
+    async def get_download_url(self, storage_path: str, expires_in: int = 3600) -> str:
+        """
+        Generate download URL for GCS file.
+
+        Attempts to generate a signed URL if running with service account credentials.
+        Falls back to an API proxy endpoint if signed URL generation fails
+        (e.g., when running locally with user OAuth credentials).
+        """
+        bucket_name, blob_name = parse_gcs_path(storage_path)
+
+        # Extract file_id from blob_name for fallback: workspaces/{workspace_id}/{file_id}/{filename}
+        blob_parts = blob_name.split("/")
+        file_id = blob_parts[2] if len(blob_parts) >= 3 else None
+
+        # Try to generate signed URL (requires service account credentials)
+        try:
+            sync_client = self._get_sync_client()
+            return await generate_signed_url(
+                sync_client, bucket_name, blob_name, expires_in
+            )
+        except AttributeError as e:
+            # Signed URL generation requires service account with private key.
+            # When running with user OAuth credentials, fall back to API proxy.
+            if "private key" in str(e) and file_id:
+                logger.debug(
+                    "Cannot generate signed URL (no service account credentials), "
+                    "falling back to API proxy endpoint"
+                )
+                return f"/api/workspace/files/{file_id}/download"
+            raise
+
+
+class LocalWorkspaceStorage(WorkspaceStorageBackend):
+    """Local filesystem implementation for workspace storage (self-hosted deployments)."""
+
+    def __init__(self, base_dir: Optional[str] = None):
+        """
+        Initialize local storage backend.
+
+        Args:
+            base_dir: Base directory for workspace storage.
+                     If None, defaults to {app_data}/workspaces
+        """
+        if base_dir:
+            self.base_dir = Path(base_dir)
+        else:
+            self.base_dir = Path(get_data_path()) / "workspaces"
+
+        # Ensure base directory exists
+        self.base_dir.mkdir(parents=True, exist_ok=True)
+
+    def _build_file_path(self, workspace_id: str, file_id: str, filename: str) -> Path:
+        """Build the local file path with path traversal protection."""
+        # Import here to avoid circular import
+        # (file.py imports workspace.py which imports workspace_storage.py)
+        from backend.util.file import sanitize_filename
+
+        # Sanitize filename to prevent path traversal (removes / and \ among others)
+        safe_filename = sanitize_filename(filename)
+        file_path = (self.base_dir / workspace_id / file_id / safe_filename).resolve()
+
+        # Verify the resolved path is still under base_dir
+        if not file_path.is_relative_to(self.base_dir.resolve()):
+            raise ValueError("Invalid filename: path traversal detected")
+
+        return file_path
+
+    def _parse_storage_path(self, storage_path: str) -> Path:
+        """Parse local storage path to filesystem path."""
+        if storage_path.startswith("local://"):
+            relative_path = storage_path[8:]  # Remove "local://"
+        else:
+            relative_path = storage_path
+
+        full_path = (self.base_dir / relative_path).resolve()
+
+        # Security check: ensure path is under base_dir
+        # Use is_relative_to() for robust path containment check
+        # (handles case-insensitive filesystems and edge cases)
+        if not full_path.is_relative_to(self.base_dir.resolve()):
+            raise ValueError("Invalid storage path: path traversal detected")
+
+        return full_path
+
+    async def store(
+        self,
+        workspace_id: str,
+        file_id: str,
+        filename: str,
+        content: bytes,
+    ) -> str:
+        """Store file locally."""
+        file_path = self._build_file_path(workspace_id, file_id, filename)
+
+        # Create parent directories
+        file_path.parent.mkdir(parents=True, exist_ok=True)
+
+        # Write file asynchronously
+        async with aiofiles.open(file_path, "wb") as f:
+            await f.write(content)
+
+        # Return relative path as storage path
+        relative_path = file_path.relative_to(self.base_dir)
+        return f"local://{relative_path}"
+
+    async def retrieve(self, storage_path: str) -> bytes:
+        """Retrieve file from local storage."""
+        file_path = self._parse_storage_path(storage_path)
+
+        if not file_path.exists():
+            raise FileNotFoundError(f"File not found: {storage_path}")
+
+        async with aiofiles.open(file_path, "rb") as f:
+            return await f.read()
+
+    async def delete(self, storage_path: str) -> None:
+        """Delete file from local storage."""
+        file_path = self._parse_storage_path(storage_path)
+
+        if file_path.exists():
+            # Remove file
+            file_path.unlink()
+
+            # Clean up empty parent directories
+            parent = file_path.parent
+            while parent != self.base_dir:
+                try:
+                    if parent.exists() and not any(parent.iterdir()):
+                        parent.rmdir()
+                    else:
+                        break
+                except OSError:
+                    break
+                parent = parent.parent
+
+    async def get_download_url(self, storage_path: str, expires_in: int = 3600) -> str:
+        """
+        Get download URL for local file.
+
+        For local storage, this returns an API endpoint path.
+        The actual serving is handled by the API layer.
+        """
+        # Parse the storage path to get the components
+        if storage_path.startswith("local://"):
+            relative_path = storage_path[8:]
+        else:
+            relative_path = storage_path
+
+        # Return the API endpoint for downloading
+        # The file_id is extracted from the path: {workspace_id}/{file_id}/{filename}
+        parts = relative_path.split("/")
+        if len(parts) >= 2:
+            file_id = parts[1]  # Second component is file_id
+            return f"/api/workspace/files/{file_id}/download"
+        else:
+            raise ValueError(f"Invalid storage path format: {storage_path}")
+
+
+# Global storage backend instance
+_workspace_storage: Optional[WorkspaceStorageBackend] = None
+_storage_lock = asyncio.Lock()
+
+
+async def get_workspace_storage() -> WorkspaceStorageBackend:
+    """
+    Get the workspace storage backend instance.
+
+    Uses GCS if media_gcs_bucket_name is configured, otherwise uses local storage.
+    """
+    global _workspace_storage
+
+    if _workspace_storage is None:
+        async with _storage_lock:
+            if _workspace_storage is None:
+                config = Config()
+
+                if config.media_gcs_bucket_name:
+                    logger.info(
+                        f"Using GCS workspace storage: {config.media_gcs_bucket_name}"
+                    )
+                    _workspace_storage = GCSWorkspaceStorage(
+                        config.media_gcs_bucket_name
+                    )
+                else:
+                    storage_dir = (
+                        config.workspace_storage_dir
+                        if config.workspace_storage_dir
+                        else None
+                    )
+                    logger.info(
+                        f"Using local workspace storage: {storage_dir or 'default'}"
+                    )
+                    _workspace_storage = LocalWorkspaceStorage(storage_dir)
+
+    return _workspace_storage
+
+
+async def shutdown_workspace_storage() -> None:
+    """
+    Properly shutdown the global workspace storage backend.
+
+    Closes aiohttp sessions and other resources for GCS backend.
+    Should be called during application shutdown.
+    """
+    global _workspace_storage
+
+    if _workspace_storage is not None:
+        async with _storage_lock:
+            if _workspace_storage is not None:
+                if isinstance(_workspace_storage, GCSWorkspaceStorage):
+                    await _workspace_storage.close()
+                _workspace_storage = None
+
+
+def compute_file_checksum(content: bytes) -> str:
+    """Compute SHA256 checksum of file content."""
+    return hashlib.sha256(content).hexdigest()
diff --git a/autogpt_platform/backend/migrations/20260127230419_add_user_workspace/migration.sql b/autogpt_platform/backend/migrations/20260127230419_add_user_workspace/migration.sql
new file mode 100644
index 0000000000..bb63dccb33
--- /dev/null
+++ b/autogpt_platform/backend/migrations/20260127230419_add_user_workspace/migration.sql
@@ -0,0 +1,52 @@
+-- CreateEnum
+CREATE TYPE "WorkspaceFileSource" AS ENUM ('UPLOAD', 'EXECUTION', 'COPILOT', 'IMPORT');
+
+-- CreateTable
+CREATE TABLE "UserWorkspace" (
+    "id" TEXT NOT NULL,
+    "createdAt" TIMESTAMP(3) NOT NULL DEFAULT CURRENT_TIMESTAMP,
+    "updatedAt" TIMESTAMP(3) NOT NULL,
+    "userId" TEXT NOT NULL,
+
+    CONSTRAINT "UserWorkspace_pkey" PRIMARY KEY ("id")
+);
+
+-- CreateTable
+CREATE TABLE "UserWorkspaceFile" (
+    "id" TEXT NOT NULL,
+    "createdAt" TIMESTAMP(3) NOT NULL DEFAULT CURRENT_TIMESTAMP,
+    "updatedAt" TIMESTAMP(3) NOT NULL,
+    "workspaceId" TEXT NOT NULL,
+    "name" TEXT NOT NULL,
+    "path" TEXT NOT NULL,
+    "storagePath" TEXT NOT NULL,
+    "mimeType" TEXT NOT NULL,
+    "sizeBytes" BIGINT NOT NULL,
+    "checksum" TEXT,
+    "isDeleted" BOOLEAN NOT NULL DEFAULT false,
+    "deletedAt" TIMESTAMP(3),
+    "source" "WorkspaceFileSource" NOT NULL DEFAULT 'UPLOAD',
+    "sourceExecId" TEXT,
+    "sourceSessionId" TEXT,
+    "metadata" JSONB NOT NULL DEFAULT '{}',
+
+    CONSTRAINT "UserWorkspaceFile_pkey" PRIMARY KEY ("id")
+);
+
+-- CreateIndex
+CREATE UNIQUE INDEX "UserWorkspace_userId_key" ON "UserWorkspace"("userId");
+
+-- CreateIndex
+CREATE INDEX "UserWorkspace_userId_idx" ON "UserWorkspace"("userId");
+
+-- CreateIndex
+CREATE INDEX "UserWorkspaceFile_workspaceId_isDeleted_idx" ON "UserWorkspaceFile"("workspaceId", "isDeleted");
+
+-- CreateIndex
+CREATE UNIQUE INDEX "UserWorkspaceFile_workspaceId_path_key" ON "UserWorkspaceFile"("workspaceId", "path");
+
+-- AddForeignKey
+ALTER TABLE "UserWorkspace" ADD CONSTRAINT "UserWorkspace_userId_fkey" FOREIGN KEY ("userId") REFERENCES "User"("id") ON DELETE CASCADE ON UPDATE CASCADE;
+
+-- AddForeignKey
+ALTER TABLE "UserWorkspaceFile" ADD CONSTRAINT "UserWorkspaceFile_workspaceId_fkey" FOREIGN KEY ("workspaceId") REFERENCES "UserWorkspace"("id") ON DELETE CASCADE ON UPDATE CASCADE;
diff --git a/autogpt_platform/backend/migrations/20260129011611_remove_workspace_file_source/migration.sql b/autogpt_platform/backend/migrations/20260129011611_remove_workspace_file_source/migration.sql
new file mode 100644
index 0000000000..2709bc8484
--- /dev/null
+++ b/autogpt_platform/backend/migrations/20260129011611_remove_workspace_file_source/migration.sql
@@ -0,0 +1,16 @@
+/*
+  Warnings:
+
+  - You are about to drop the column `source` on the `UserWorkspaceFile` table. All the data in the column will be lost.
+  - You are about to drop the column `sourceExecId` on the `UserWorkspaceFile` table. All the data in the column will be lost.
+  - You are about to drop the column `sourceSessionId` on the `UserWorkspaceFile` table. All the data in the column will be lost.
+
+*/
+
+-- AlterTable
+ALTER TABLE "UserWorkspaceFile" DROP COLUMN "source",
+DROP COLUMN "sourceExecId",
+DROP COLUMN "sourceSessionId";
+
+-- DropEnum
+DROP TYPE "WorkspaceFileSource";
diff --git a/autogpt_platform/backend/schema.prisma b/autogpt_platform/backend/schema.prisma
index 2c52528e3f..2da898a7ce 100644
--- a/autogpt_platform/backend/schema.prisma
+++ b/autogpt_platform/backend/schema.prisma
@@ -63,6 +63,7 @@ model User {
   IntegrationWebhooks   IntegrationWebhook[]
   NotificationBatches   UserNotificationBatch[]
   PendingHumanReviews   PendingHumanReview[]
+  Workspace             UserWorkspace?
 
   // OAuth Provider relations
   OAuthApplications       OAuthApplication[]
@@ -137,6 +138,53 @@ model CoPilotUnderstanding {
   @@index([userId])
 }
 
+////////////////////////////////////////////////////////////
+////////////////////////////////////////////////////////////
+////////////////   USER WORKSPACE TABLES   /////////////////
+////////////////////////////////////////////////////////////
+////////////////////////////////////////////////////////////
+
+// User's persistent file storage workspace
+model UserWorkspace {
+  id        String   @id @default(uuid())
+  createdAt DateTime @default(now())
+  updatedAt DateTime @updatedAt
+
+  userId String @unique
+  User   User   @relation(fields: [userId], references: [id], onDelete: Cascade)
+
+  Files UserWorkspaceFile[]
+
+  @@index([userId])
+}
+
+// Individual files in a user's workspace
+model UserWorkspaceFile {
+  id        String   @id @default(uuid())
+  createdAt DateTime @default(now())
+  updatedAt DateTime @updatedAt
+
+  workspaceId String
+  Workspace   UserWorkspace @relation(fields: [workspaceId], references: [id], onDelete: Cascade)
+
+  // File metadata
+  name        String // User-visible filename
+  path        String // Virtual path (e.g., "/documents/report.pdf")
+  storagePath String // Actual GCS or local storage path
+  mimeType    String
+  sizeBytes   BigInt
+  checksum    String? // SHA256 for integrity
+
+  // File state
+  isDeleted Boolean   @default(false)
+  deletedAt DateTime?
+
+  metadata Json @default("{}")
+
+  @@unique([workspaceId, path])
+  @@index([workspaceId, isDeleted])
+}
+
 model BuilderSearchHistory {
   id        String   @id @default(uuid())
   createdAt DateTime @default(now())
diff --git a/autogpt_platform/frontend/src/app/api/openapi.json b/autogpt_platform/frontend/src/app/api/openapi.json
index 2a9db1990d..6692c30e72 100644
--- a/autogpt_platform/frontend/src/app/api/openapi.json
+++ b/autogpt_platform/frontend/src/app/api/openapi.json
@@ -5912,6 +5912,40 @@
         }
       }
     },
+    "/api/workspace/files/{file_id}/download": {
+      "get": {
+        "tags": ["workspace"],
+        "summary": "Download file by ID",
+        "description": "Download a file by its ID.\n\nReturns the file content directly or redirects to a signed URL for GCS.",
+        "operationId": "getWorkspaceDownload file by id",
+        "security": [{ "HTTPBearerJWT": [] }],
+        "parameters": [
+          {
+            "name": "file_id",
+            "in": "path",
+            "required": true,
+            "schema": { "type": "string", "title": "File Id" }
+          }
+        ],
+        "responses": {
+          "200": {
+            "description": "Successful Response",
+            "content": { "application/json": { "schema": {} } }
+          },
+          "401": {
+            "$ref": "#/components/responses/HTTP401NotAuthenticatedError"
+          },
+          "422": {
+            "description": "Validation Error",
+            "content": {
+              "application/json": {
+                "schema": { "$ref": "#/components/schemas/HTTPValidationError" }
+              }
+            }
+          }
+        }
+      }
+    },
     "/health": {
       "get": {
         "tags": ["health"],
diff --git a/autogpt_platform/frontend/src/app/api/proxy/[...path]/route.ts b/autogpt_platform/frontend/src/app/api/proxy/[...path]/route.ts
index 293c406373..442bd77e0f 100644
--- a/autogpt_platform/frontend/src/app/api/proxy/[...path]/route.ts
+++ b/autogpt_platform/frontend/src/app/api/proxy/[...path]/route.ts
@@ -1,5 +1,6 @@
 import {
   ApiError,
+  getServerAuthToken,
   makeAuthenticatedFileUpload,
   makeAuthenticatedRequest,
 } from "@/lib/autogpt-server-api/helpers";
@@ -15,6 +16,69 @@ function buildBackendUrl(path: string[], queryString: string): string {
   return `${environment.getAGPTServerBaseUrl()}/${backendPath}${queryString}`;
 }
 
+/**
+ * Check if this is a workspace file download request that needs binary response handling.
+ */
+function isWorkspaceDownloadRequest(path: string[]): boolean {
+  // Match pattern: api/workspace/files/{id}/download (5 segments)
+  return (
+    path.length == 5 &&
+    path[0] === "api" &&
+    path[1] === "workspace" &&
+    path[2] === "files" &&
+    path[path.length - 1] === "download"
+  );
+}
+
+/**
+ * Handle workspace file download requests with proper binary response streaming.
+ */
+async function handleWorkspaceDownload(
+  req: NextRequest,
+  backendUrl: string,
+): Promise<NextResponse> {
+  const token = await getServerAuthToken();
+
+  const headers: Record<string, string> = {};
+  if (token && token !== "no-token-found") {
+    headers["Authorization"] = `Bearer ${token}`;
+  }
+
+  const response = await fetch(backendUrl, {
+    method: "GET",
+    headers,
+    redirect: "follow", // Follow redirects to signed URLs
+  });
+
+  if (!response.ok) {
+    return NextResponse.json(
+      { error: `Failed to download file: ${response.statusText}` },
+      { status: response.status },
+    );
+  }
+
+  // Get the content type from the backend response
+  const contentType =
+    response.headers.get("Content-Type") || "application/octet-stream";
+  const contentDisposition = response.headers.get("Content-Disposition");
+
+  // Stream the response body
+  const responseHeaders: Record<string, string> = {
+    "Content-Type": contentType,
+  };
+
+  if (contentDisposition) {
+    responseHeaders["Content-Disposition"] = contentDisposition;
+  }
+
+  // Return the binary content
+  const arrayBuffer = await response.arrayBuffer();
+  return new NextResponse(arrayBuffer, {
+    status: 200,
+    headers: responseHeaders,
+  });
+}
+
 async function handleJsonRequest(
   req: NextRequest,
   method: string,
@@ -180,6 +244,11 @@ async function handler(
   };
 
   try {
+    // Handle workspace file downloads separately (binary response)
+    if (method === "GET" && isWorkspaceDownloadRequest(path)) {
+      return await handleWorkspaceDownload(req, backendUrl);
+    }
+
     if (method === "GET" || method === "DELETE") {
       responseBody = await handleGetDeleteRequest(method, backendUrl, req);
     } else if (contentType?.includes("application/json")) {
diff --git a/autogpt_platform/frontend/src/components/contextual/Chat/components/MarkdownContent/MarkdownContent.tsx b/autogpt_platform/frontend/src/components/contextual/Chat/components/MarkdownContent/MarkdownContent.tsx
index 51a0794090..3dd5eca692 100644
--- a/autogpt_platform/frontend/src/components/contextual/Chat/components/MarkdownContent/MarkdownContent.tsx
+++ b/autogpt_platform/frontend/src/components/contextual/Chat/components/MarkdownContent/MarkdownContent.tsx
@@ -1,6 +1,8 @@
 "use client";
 
+import { getGetWorkspaceDownloadFileByIdUrl } from "@/app/api/__generated__/endpoints/workspace/workspace";
 import { cn } from "@/lib/utils";
+import { EyeSlash } from "@phosphor-icons/react";
 import React from "react";
 import ReactMarkdown from "react-markdown";
 import remarkGfm from "remark-gfm";
@@ -29,12 +31,88 @@ interface InputProps extends React.InputHTMLAttributes<HTMLInputElement> {
   type?: string;
 }
 
+/**
+ * Converts a workspace:// URL to a proxy URL that routes through Next.js to the backend.
+ * workspace://abc123 -> /api/proxy/api/workspace/files/abc123/download
+ *
+ * Uses the generated API URL helper and routes through the Next.js proxy
+ * which handles authentication and proper backend routing.
+ */
+/**
+ * URL transformer for ReactMarkdown.
+ * Converts workspace:// URLs to proxy URLs that route through Next.js to the backend.
+ * workspace://abc123 -> /api/proxy/api/workspace/files/abc123/download
+ *
+ * This is needed because ReactMarkdown sanitizes URLs and only allows
+ * http, https, mailto, and tel protocols by default.
+ */
+function resolveWorkspaceUrl(src: string): string {
+  if (src.startsWith("workspace://")) {
+    const fileId = src.replace("workspace://", "");
+    // Use the generated API URL helper to get the correct path
+    const apiPath = getGetWorkspaceDownloadFileByIdUrl(fileId);
+    // Route through the Next.js proxy (same pattern as customMutator for client-side)
+    return `/api/proxy${apiPath}`;
+  }
+  return src;
+}
+
+/**
+ * Check if the image URL is a workspace file (AI cannot see these yet).
+ * After URL transformation, workspace files have URLs like /api/proxy/api/workspace/files/...
+ */
+function isWorkspaceImage(src: string | undefined): boolean {
+  return src?.includes("/workspace/files/") ?? false;
+}
+
+/**
+ * Custom image component that shows an indicator when the AI cannot see the image.
+ * Note: src is already transformed by urlTransform, so workspace:// is now /api/workspace/...
+ */
+function MarkdownImage(props: Record<string, unknown>) {
+  const src = props.src as string | undefined;
+  const alt = props.alt as string | undefined;
+
+  const aiCannotSee = isWorkspaceImage(src);
+
+  // If no src, show a placeholder
+  if (!src) {
+    return (
+      <span className="my-2 inline-block rounded border border-amber-200 bg-amber-50 px-2 py-1 text-sm text-amber-700">
+        [Image: {alt || "missing src"}]
+      </span>
+    );
+  }
+
+  return (
+    <span className="relative my-2 inline-block">
+      {/* eslint-disable-next-line @next/next/no-img-element */}
+      <img
+        src={src}
+        alt={alt || "Image"}
+        className="h-auto max-w-full rounded-md border border-zinc-200"
+        loading="lazy"
+      />
+      {aiCannotSee && (
+        <span
+          className="absolute bottom-2 right-2 flex items-center gap-1 rounded bg-black/70 px-2 py-1 text-xs text-white"
+          title="The AI cannot see this image"
+        >
+          <EyeSlash size={14} />
+          <span>AI cannot see this image</span>
+        </span>
+      )}
+    </span>
+  );
+}
+
 export function MarkdownContent({ content, className }: MarkdownContentProps) {
   return (
     <div className={cn("markdown-content", className)}>
       <ReactMarkdown
         skipHtml={true}
         remarkPlugins={[remarkGfm]}
+        urlTransform={resolveWorkspaceUrl}
         components={{
           code: ({ children, className, ...props }: CodeProps) => {
             const isInline = !className?.includes("language-");
@@ -206,6 +284,9 @@ export function MarkdownContent({ content, className }: MarkdownContentProps) {
               {children}
             </td>
           ),
+          img: ({ src, alt, ...props }) => (
+            <MarkdownImage src={src} alt={alt} {...props} />
+          ),
         }}
       >
         {content}
diff --git a/autogpt_platform/frontend/src/components/contextual/Chat/components/ToolResponseMessage/helpers.ts b/autogpt_platform/frontend/src/components/contextual/Chat/components/ToolResponseMessage/helpers.ts
index 400f32936e..e886e1a28c 100644
--- a/autogpt_platform/frontend/src/components/contextual/Chat/components/ToolResponseMessage/helpers.ts
+++ b/autogpt_platform/frontend/src/components/contextual/Chat/components/ToolResponseMessage/helpers.ts
@@ -37,6 +37,87 @@ export function getErrorMessage(result: unknown): string {
   return "An error occurred";
 }
 
+/**
+ * Check if a value is a workspace file reference.
+ */
+function isWorkspaceRef(value: unknown): value is string {
+  return typeof value === "string" && value.startsWith("workspace://");
+}
+
+/**
+ * Check if a workspace reference appears to be an image based on common patterns.
+ * Since workspace refs don't have extensions, we check the context or assume image
+ * for certain block types.
+ *
+ * TODO: Replace keyword matching with MIME type encoded in workspace ref.
+ * e.g., workspace://abc123#image/png or workspace://abc123#video/mp4
+ * This would let frontend render correctly without fragile keyword matching.
+ */
+function isLikelyImageRef(value: string, outputKey?: string): boolean {
+  if (!isWorkspaceRef(value)) return false;
+
+  // Check output key name for video-related hints (these are NOT images)
+  const videoKeywords = ["video", "mp4", "mov", "avi", "webm", "movie", "clip"];
+  if (outputKey) {
+    const lowerKey = outputKey.toLowerCase();
+    if (videoKeywords.some((kw) => lowerKey.includes(kw))) {
+      return false;
+    }
+  }
+
+  // Check output key name for image-related hints
+  const imageKeywords = [
+    "image",
+    "img",
+    "photo",
+    "picture",
+    "thumbnail",
+    "avatar",
+    "icon",
+    "screenshot",
+  ];
+  if (outputKey) {
+    const lowerKey = outputKey.toLowerCase();
+    if (imageKeywords.some((kw) => lowerKey.includes(kw))) {
+      return true;
+    }
+  }
+
+  // Default to treating workspace refs as potential images
+  // since that's the most common case for generated content
+  return true;
+}
+
+/**
+ * Format a single output value, converting workspace refs to markdown images.
+ */
+function formatOutputValue(value: unknown, outputKey?: string): string {
+  if (isWorkspaceRef(value) && isLikelyImageRef(value, outputKey)) {
+    // Format as markdown image
+    return `![${outputKey || "Generated image"}](${value})`;
+  }
+
+  if (typeof value === "string") {
+    // Check for data URIs (images)
+    if (value.startsWith("data:image/")) {
+      return `![${outputKey || "Generated image"}](${value})`;
+    }
+    return value;
+  }
+
+  if (Array.isArray(value)) {
+    return value
+      .map((item, idx) => formatOutputValue(item, `${outputKey}_${idx}`))
+      .join("\n\n");
+  }
+
+  if (typeof value === "object" && value !== null) {
+    return JSON.stringify(value, null, 2);
+  }
+
+  return String(value);
+}
+
 function getToolCompletionPhrase(toolName: string): string {
   const toolCompletionPhrases: Record<string, string> = {
     add_understanding: "Updated your business information",
@@ -127,10 +208,26 @@ export function formatToolResponse(result: unknown, toolName: string): string {
 
     case "block_output":
       const blockName = (response.block_name as string) || "Block";
-      const outputs = response.outputs as Record<string, unknown> | undefined;
+      const outputs = response.outputs as Record<string, unknown[]> | undefined;
       if (outputs && Object.keys(outputs).length > 0) {
-        const outputKeys = Object.keys(outputs);
-        return `${blockName} executed successfully. Outputs: ${outputKeys.join(", ")}`;
+        const formattedOutputs: string[] = [];
+
+        for (const [key, values] of Object.entries(outputs)) {
+          if (!Array.isArray(values) || values.length === 0) continue;
+
+          // Format each value in the output array
+          for (const value of values) {
+            const formatted = formatOutputValue(value, key);
+            if (formatted) {
+              formattedOutputs.push(formatted);
+            }
+          }
+        }
+
+        if (formattedOutputs.length > 0) {
+          return `${blockName} executed successfully.\n\n${formattedOutputs.join("\n\n")}`;
+        }
+        return `${blockName} executed successfully.`;
       }
       return `${blockName} executed successfully.`;
 
diff --git a/docs/integrations/README.md b/docs/integrations/README.md
index 192405156c..263d7e6365 100644
--- a/docs/integrations/README.md
+++ b/docs/integrations/README.md
@@ -53,7 +53,7 @@ Below is a comprehensive list of all available blocks, categorized by their prim
 | [Block Installation](block-integrations/basic.md#block-installation) | Given a code string, this block allows the verification and installation of a block code into the system |
 | [Concatenate Lists](block-integrations/basic.md#concatenate-lists) | Concatenates multiple lists into a single list |
 | [Dictionary Is Empty](block-integrations/basic.md#dictionary-is-empty) | Checks if a dictionary is empty |
-| [File Store](block-integrations/basic.md#file-store) | Stores the input file in the temporary directory |
+| [File Store](block-integrations/basic.md#file-store) | Downloads and stores a file from a URL, data URI, or local path |
 | [Find In Dictionary](block-integrations/basic.md#find-in-dictionary) | A block that looks up a value in a dictionary, list, or object by key or index and returns the corresponding value |
 | [Find In List](block-integrations/basic.md#find-in-list) | Finds the index of the value in the list |
 | [Get All Memories](block-integrations/basic.md#get-all-memories) | Retrieve all memories from Mem0 with optional conversation filtering |
diff --git a/docs/integrations/block-integrations/basic.md b/docs/integrations/block-integrations/basic.md
index f92d19002f..5a73fd5a03 100644
--- a/docs/integrations/block-integrations/basic.md
+++ b/docs/integrations/block-integrations/basic.md
@@ -709,7 +709,7 @@ This is useful for conditional logic where you need to verify if data was return
 ## File Store
 
 ### What it is
-Stores the input file in the temporary directory.
+Downloads and stores a file from a URL, data URI, or local path. Use this to fetch images, documents, or other files for processing. In CoPilot: saves to workspace (use list_workspace_files to see it). In graphs: outputs a data URI to pass to other blocks.
 
 ### How it works
 <!-- MANUAL: how_it_works -->
@@ -722,15 +722,15 @@ The block outputs a file path that other blocks can use to access the stored fil
 
 | Input | Description | Type | Required |
 |-------|-------------|------|----------|
-| file_in | The file to store in the temporary directory, it can be a URL, data URI, or local path. | str (file) | Yes |
-| base_64 | Whether produce an output in base64 format (not recommended, you can pass the string path just fine accross blocks). | bool | No |
+| file_in | The file to download and store. Can be a URL (https://...), data URI, or local path. | str (file) | Yes |
+| base_64 | Whether to produce output in base64 format (not recommended, you can pass the file reference across blocks). | bool | No |
 
 ### Outputs
 
 | Output | Description | Type |
 |--------|-------------|------|
 | error | Error message if the operation failed | str |
-| file_out | The relative path to the stored file in the temporary directory. | str (file) |
+| file_out | Reference to the stored file. In CoPilot: workspace:// URI (visible in list_workspace_files). In graphs: data URI for passing to other blocks. | str (file) |
 
 ### Possible use case
 <!-- MANUAL: use_case -->
diff --git a/docs/integrations/block-integrations/multimedia.md b/docs/integrations/block-integrations/multimedia.md
index e2d11cfbf7..6b8f261346 100644
--- a/docs/integrations/block-integrations/multimedia.md
+++ b/docs/integrations/block-integrations/multimedia.md
@@ -12,7 +12,7 @@ Block to attach an audio file to a video file using moviepy.
 <!-- MANUAL: how_it_works -->
 This block combines a video file with an audio file using the moviepy library. The audio track is attached to the video, optionally with volume adjustment via the volume parameter (1.0 = original volume).
 
-Input files can be URLs, data URIs, or local paths. The output can be returned as either a file path or base64 data URI.
+Input files can be URLs, data URIs, or local paths. The output format is automatically determined: `workspace://` URLs in CoPilot, data URIs in graph executions.
 <!-- END MANUAL -->
 
 ### Inputs
@@ -22,7 +22,6 @@ Input files can be URLs, data URIs, or local paths. The output can be returned a
 | video_in | Video input (URL, data URI, or local path). | str (file) | Yes |
 | audio_in | Audio input (URL, data URI, or local path). | str (file) | Yes |
 | volume | Volume scale for the newly attached audio track (1.0 = original). | float | No |
-| output_return_type | Return the final output as a relative path or base64 data URI. | "file_path" \| "data_uri" | No |
 
 ### Outputs
 
@@ -51,7 +50,7 @@ Block to loop a video to a given duration or number of repeats.
 <!-- MANUAL: how_it_works -->
 This block extends a video by repeating it to reach a target duration or number of loops. Set duration to specify the total length in seconds, or use n_loops to repeat the video a specific number of times.
 
-The looped video is seamlessly concatenated and can be output as a file path or base64 data URI.
+The looped video is seamlessly concatenated. The output format is automatically determined: `workspace://` URLs in CoPilot, data URIs in graph executions.
 <!-- END MANUAL -->
 
 ### Inputs
@@ -61,7 +60,6 @@ The looped video is seamlessly concatenated and can be output as a file path or
 | video_in | The input video (can be a URL, data URI, or local path). | str (file) | Yes |
 | duration | Target duration (in seconds) to loop the video to. If omitted, defaults to no looping. | float | No |
 | n_loops | Number of times to repeat the video. If omitted, defaults to 1 (no repeat). | int | No |
-| output_return_type | How to return the output video. Either a relative path or base64 data URI. | "file_path" \| "data_uri" | No |
 
 ### Outputs
 
diff --git a/docs/platform/block-sdk-guide.md b/docs/platform/block-sdk-guide.md
index 5b3eda5184..42fd883251 100644
--- a/docs/platform/block-sdk-guide.md
+++ b/docs/platform/block-sdk-guide.md
@@ -277,6 +277,50 @@ async def run(
         token = credentials.api_key.get_secret_value()
 ```
 
+### Handling Files
+
+When your block works with files (images, videos, documents), use `store_media_file()`:
+
+```python
+from backend.data.execution import ExecutionContext
+from backend.util.file import store_media_file
+from backend.util.type import MediaFileType
+
+async def run(
+    self,
+    input_data: Input,
+    *,
+    execution_context: ExecutionContext,
+    **kwargs,
+):
+    # PROCESSING: Need local file path for tools like ffmpeg, MoviePy, PIL
+    local_path = await store_media_file(
+        file=input_data.video,
+        execution_context=execution_context,
+        return_format="for_local_processing",
+    )
+
+    # EXTERNAL API: Need base64 content for APIs like Replicate, OpenAI
+    image_b64 = await store_media_file(
+        file=input_data.image,
+        execution_context=execution_context,
+        return_format="for_external_api",
+    )
+
+    # OUTPUT: Return to user/next block (auto-adapts to context)
+    result = await store_media_file(
+        file=generated_url,
+        execution_context=execution_context,
+        return_format="for_block_output",  # workspace:// in CoPilot, data URI in graphs
+    )
+    yield "image_url", result
+```
+
+**Return format options:**
+- `"for_local_processing"` - Local file path for processing tools
+- `"for_external_api"` - Data URI for external APIs needing base64
+- `"for_block_output"` - **Always use for outputs** - automatically picks best format
+
 ## Testing Your Block
 
 ```bash
diff --git a/docs/platform/new_blocks.md b/docs/platform/new_blocks.md
index d9d329ff51..114ff8d9a4 100644
--- a/docs/platform/new_blocks.md
+++ b/docs/platform/new_blocks.md
@@ -111,6 +111,71 @@ Follow these steps to create and test a new block:
      - `graph_exec_id`: The ID of the execution of the agent. This changes every time the agent has a new "run"
      - `node_exec_id`: The ID of the execution of the node. This changes every time the node is executed
      - `node_id`: The ID of the node that is being executed. It changes every version of the graph, but not every time the node is executed.
+     - `execution_context`: An `ExecutionContext` object containing user_id, graph_exec_id, workspace_id, and session_id. Required for file handling.
+
+### Handling Files in Blocks
+
+When your block needs to work with files (images, videos, documents), use `store_media_file()` from `backend.util.file`. This function handles downloading, validation, virus scanning, and storage.
+
+**Import:**
+```python
+from backend.data.execution import ExecutionContext
+from backend.util.file import store_media_file
+from backend.util.type import MediaFileType
+```
+
+**The `return_format` parameter determines what you get back:**
+
+| Format | Use When | Returns |
+|--------|----------|---------|
+| `"for_local_processing"` | Processing with local tools (ffmpeg, MoviePy, PIL) | Local file path (e.g., `"image.png"`) |
+| `"for_external_api"` | Sending content to external APIs (Replicate, OpenAI) | Data URI (e.g., `"data:image/png;base64,..."`) |
+| `"for_block_output"` | Returning output from your block | Smart: `workspace://` in CoPilot, data URI in graphs |
+
+**Examples:**
+
+```python
+async def run(
+    self,
+    input_data: Input,
+    *,
+    execution_context: ExecutionContext,
+    **kwargs,
+) -> BlockOutput:
+    # PROCESSING: Need to work with file locally (ffmpeg, MoviePy, PIL)
+    local_path = await store_media_file(
+        file=input_data.video,
+        execution_context=execution_context,
+        return_format="for_local_processing",
+    )
+    # local_path = "video.mp4" - use with Path, ffmpeg, subprocess, etc.
+    full_path = get_exec_file_path(execution_context.graph_exec_id, local_path)
+
+    # EXTERNAL API: Need to send content to an API like Replicate
+    image_b64 = await store_media_file(
+        file=input_data.image,
+        execution_context=execution_context,
+        return_format="for_external_api",
+    )
+    # image_b64 = "data:image/png;base64,iVBORw0..." - send to external API
+
+    # OUTPUT: Returning result from block to user/next block
+    result_url = await store_media_file(
+        file=generated_image_url,
+        execution_context=execution_context,
+        return_format="for_block_output",
+    )
+    yield "image_url", result_url
+    # In CoPilot: result_url = "workspace://abc123" (persistent, context-efficient)
+    # In graphs:  result_url = "data:image/png;base64,..." (for next block/display)
+```
+
+**Key points:**
+
+- `for_block_output` is the **only** format that auto-adapts to execution context
+- Always use `for_block_output` for block outputs unless you have a specific reason not to
+- Never manually check for `workspace_id` - let `for_block_output` handle the logic
+- The function handles URLs, data URIs, `workspace://` references, and local paths as input
 
 ### Field Types