diff --git a/package.json b/package.json
index 041bd56bbf9d5..74cd4c06040f8 100644
--- a/package.json
+++ b/package.json
@@ -89,6 +89,7 @@
     "vscode-textmate": "8.0.0",
     "xterm": "5.2.0-beta.10",
     "xterm-addon-canvas": "0.4.0-beta.6",
+    "xterm-addon-image": "0.3.1",
     "xterm-addon-search": "0.11.0",
     "xterm-addon-serialize": "0.9.0",
     "xterm-addon-unicode11": "0.5.0",
diff --git a/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts b/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts
index 0a8a1eea68bcb..1c3725a8710a3 100644
--- a/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts
+++ b/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts
@@ -9,6 +9,7 @@ import type { ISearchOptions, SearchAddon as SearchAddonType } from 'xterm-addon
 import type { Unicode11Addon as Unicode11AddonType } from 'xterm-addon-unicode11';
 import type { WebglAddon as WebglAddonType } from 'xterm-addon-webgl';
 import type { SerializeAddon as SerializeAddonType } from 'xterm-addon-serialize';
+import { ImageAddon } from 'xterm-addon-image';
 import { IXtermCore } from 'vs/workbench/contrib/terminal/browser/xterm-private';
 import { ConfigurationTarget, IConfigurationService } from 'vs/platform/configuration/common/configuration';
 import { TerminalConfigHelper } from 'vs/workbench/contrib/terminal/browser/terminalConfigHelper';
@@ -129,6 +130,7 @@ export class XtermTerminal extends DisposableStore implements IXtermTerminal, II
 	private _shellIntegrationAddon: ShellIntegrationAddon;
 
 	private _decorationAddon: DecorationAddon;
+	private _imageAddon: ImageAddon;
 
 	// Optional addons
 	private _canvasAddon?: CanvasAddonType;
@@ -255,6 +257,8 @@ export class XtermTerminal extends DisposableStore implements IXtermTerminal, II
 		this._decorationAddon = this._instantiationService.createInstance(DecorationAddon, this._capabilities);
 		this._decorationAddon.onDidRequestRunCommand(e => this._onDidRequestRunCommand.fire(e));
 		this.raw.loadAddon(this._decorationAddon);
+		this._imageAddon = this._instantiationService.createInstance(ImageAddon);
+		this.raw.loadAddon(this._imageAddon);
 		this._shellIntegrationAddon = this._instantiationService.createInstance(ShellIntegrationAddon, disableShellIntegrationReporting, this._telemetryService);
 		this.raw.loadAddon(this._shellIntegrationAddon);
 	}
diff --git a/yarn.lock b/yarn.lock
index ad0fc4d516148..433487fee598d 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -11717,6 +11717,11 @@ xterm-addon-canvas@0.4.0-beta.6:
   resolved "https://registry.yarnpkg.com/xterm-addon-canvas/-/xterm-addon-canvas-0.4.0-beta.6.tgz#f8cb09ef980f1fa9d73f067e00f7a879c374ad68"
   integrity sha512-x5OY0VOJxqvXdyXpW9aug3vaeQX/+r7TZk13MujReuJRLRAjCHaH6ep6g9ZOVlqa8VCBWPwmm/eXH05SGUbnQQ==
 
+xterm-addon-image@0.3.1:
+  version "0.3.1"
+  resolved "https://registry.yarnpkg.com/xterm-addon-image/-/xterm-addon-image-0.3.1.tgz#970b4003d1239b541ace7643f4f7e72a7f90a07d"
+  integrity sha512-7wLkYAoMCMwcvOhzqVlMK1wRHPQa1ZiFRdJ82oQVdnkp0ktV2LNmNu0JPu6H0Fr0eUfxUmcrqwhI9BMiZuPyrw==
+
 xterm-addon-search@0.11.0:
   version "0.11.0"
   resolved "https://registry.yarnpkg.com/xterm-addon-search/-/xterm-addon-search-0.11.0.tgz#2a00ff7f9848f6140e7c4d1782486b0b18b06e0d"