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..2b84797e57 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
+  return (
+    path.length >= 4 &&
+    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..24c128c474 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 { getGetV2DownloadFileByIdUrl } 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 +31,90 @@ 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.
+ */
+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 = getGetV2DownloadFileByIdUrl(fileId);
+    // Route through the Next.js proxy (same pattern as customMutator for client-side)
+    return `/api/proxy${apiPath}`;
+  }
+  return src;
+}
+
+/**
+ * URL transformer for ReactMarkdown.
+ * Transforms workspace:// URLs to backend API download URLs before rendering.
+ * This is needed because ReactMarkdown sanitizes URLs and only allows
+ * http, https, mailto, and tel protocols by default.
+ */
+function transformUrl(url: string): string {
+  return resolveWorkspaceUrl(url);
+}
+
+/**
+ * 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={transformUrl}
         components={{
           code: ({ children, className, ...props }: CodeProps) => {
             const isInline = !className?.includes("language-");
@@ -206,6 +286,9 @@ 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..d6667c96de 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 +37,77 @@ 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.
+ */
+function isLikelyImageRef(value: string, outputKey?: string): boolean {
+  if (!isWorkspaceRef(value)) return false;
+
+  // Check output key name for image-related hints
+  const imageKeywords = [
+    "image",
+    "img",
+    "photo",
+    "picture",
+    "thumbnail",
+    "avatar",
+    "icon",
+    "screenshot",
+    "output",
+    "result",
+    "generated",
+  ];
+  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 +198,26 @@ 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.`;