diff --git a/templates/next-image/src/app/api/edit-image/route.ts b/templates/next-image/src/app/api/edit-image/route.ts
index 11c52b38e..26d2e5b9c 100644
--- a/templates/next-image/src/app/api/edit-image/route.ts
+++ b/templates/next-image/src/app/api/edit-image/route.ts
@@ -17,13 +17,8 @@ const providers = {
   gemini: handleGoogleEdit,
 };
 
-export const config = {
-  api: {
-    bodyParser: {
-      sizeLimit: '4mb',
-    },
-  },
-};
+// App Router route segment config
+export const maxDuration = 60;
 
 export async function POST(req: Request) {
   try {
diff --git a/templates/next-image/src/app/api/generate-image/route.ts b/templates/next-image/src/app/api/generate-image/route.ts
index 15bf30c3a..10a17af47 100644
--- a/templates/next-image/src/app/api/generate-image/route.ts
+++ b/templates/next-image/src/app/api/generate-image/route.ts
@@ -19,13 +19,8 @@ const providers = {
   gemini: handleGoogleGenerate,
 };
 
-export const config = {
-  api: {
-    bodyParser: {
-      sizeLimit: '4mb',
-    },
-  },
-};
+// App Router route segment config
+export const maxDuration = 60;
 
 export async function POST(req: Request) {
   try {
diff --git a/templates/next-image/src/components/image-generator.tsx b/templates/next-image/src/components/image-generator.tsx
index e585d3cc5..bfc42f958 100644
--- a/templates/next-image/src/components/image-generator.tsx
+++ b/templates/next-image/src/components/image-generator.tsx
@@ -25,7 +25,7 @@ import { Button } from '@/components/ui/button';
 import { X } from 'lucide-react';
 import { useCallback, useEffect, useRef, useState } from 'react';
 
-import { fileToDataUrl } from '@/lib/image-utils';
+import { fileToDataUrl, compressImageDataUrl } from '@/lib/image-utils';
 import type {
   EditImageRequest,
   GeneratedImage,
@@ -92,6 +92,20 @@ async function editImage(request: EditImageRequest): Promise<ImageResponse> {
   return response.json();
 }
 
+/**
+ * Helper: convert a PromptInput file attachment to a compressed data URL
+ */
+async function attachmentToCompressedDataUrl(
+  fileRef: { url: string; mediaType?: string; filename?: string }
+): Promise<string> {
+  const response = await fetch(fileRef.url);
+  const blob = await response.blob();
+  const raw = await fileToDataUrl(
+    new File([blob], fileRef.filename || 'image', { type: fileRef.mediaType })
+  );
+  return compressImageDataUrl(raw);
+}
+
 /**
  * Main ImageGenerator component
  *
@@ -170,13 +184,7 @@ export default function ImageGenerator() {
                 .filter(f => f.mediaType?.startsWith('image/'))
                 .map(async f => {
                   try {
-                    const response = await fetch(f.url);
-                    const blob = await response.blob();
-                    return await fileToDataUrl(
-                      new File([blob], f.filename || 'image', {
-                        type: f.mediaType,
-                      })
-                    );
+                    return await attachmentToCompressedDataUrl(f);
                   } catch (error) {
                     console.error(
                       'Failed to convert attachment to data URL:',
@@ -217,15 +225,9 @@ export default function ImageGenerator() {
           }
 
           try {
+            // Compress images before sending to avoid 413 errors
             const imageUrls = await Promise.all(
-              imageFiles.map(async imageFile => {
-                // Convert blob URL to data URL for API
-                const response = await fetch(imageFile.url);
-                const blob = await response.blob();
-                return await fileToDataUrl(
-                  new File([blob], 'image', { type: imageFile.mediaType })
-                );
-              })
+              imageFiles.map(f => attachmentToCompressedDataUrl(f))
             );
 
             const result = await editImage({
diff --git a/templates/next-image/src/lib/image-utils.ts b/templates/next-image/src/lib/image-utils.ts
index cefb219f3..46352b192 100644
--- a/templates/next-image/src/lib/image-utils.ts
+++ b/templates/next-image/src/lib/image-utils.ts
@@ -1,9 +1,19 @@
 /**
- * Minimal Image Utilities
+ * Image Utilities
  *
- * Simple, clean API with just data URLs. No complex conversions.
+ * Data URL helpers and client-side image compression to avoid
+ * "Request Entity Too Large" (HTTP 413) when sending base64 payloads.
  */
 
+/** Max dimension (width or height) for images sent to the API */
+const MAX_IMAGE_DIMENSION = 1024;
+
+/** JPEG quality used when compressing (0-1) */
+const COMPRESS_QUALITY = 0.85;
+
+/** Target max size in bytes for a single compressed image (~3MB) */
+const MAX_IMAGE_BYTES = 3 * 1024 * 1024;
+
 /**
  * Converts a File to a data URL
  */
@@ -16,6 +26,65 @@ export async function fileToDataUrl(file: File): Promise<string> {
   });
 }
 
+/**
+ * Compresses an image data URL by resizing and converting to JPEG.
+ * Falls back to the original if compression fails (e.g. in non-browser envs).
+ */
+export async function compressImageDataUrl(
+  dataUrl: string,
+  maxDimension: number = MAX_IMAGE_DIMENSION,
+  quality: number = COMPRESS_QUALITY
+): Promise<string> {
+  if (typeof document === 'undefined') return dataUrl;
+
+  return new Promise((resolve) => {
+    const img = new Image();
+    img.onload = () => {
+      let { width, height } = img;
+
+      // Scale down if either dimension exceeds the limit
+      if (width > maxDimension || height > maxDimension) {
+        const scale = maxDimension / Math.max(width, height);
+        width = Math.round(width * scale);
+        height = Math.round(height * scale);
+      }
+
+      const canvas = document.createElement('canvas');
+      canvas.width = width;
+      canvas.height = height;
+
+      const ctx = canvas.getContext('2d');
+      if (!ctx) {
+        resolve(dataUrl);
+        return;
+      }
+
+      ctx.drawImage(img, 0, 0, width, height);
+
+      // Try JPEG first for smaller size, iteratively reduce quality if needed
+      let compressed = canvas.toDataURL('image/jpeg', quality);
+      let currentQuality = quality;
+
+      while (estimateBase64Bytes(compressed) > MAX_IMAGE_BYTES && currentQuality > 0.3) {
+        currentQuality -= 0.1;
+        compressed = canvas.toDataURL('image/jpeg', currentQuality);
+      }
+
+      resolve(compressed);
+    };
+    img.onerror = () => resolve(dataUrl);
+    img.src = dataUrl;
+  });
+}
+
+/**
+ * Rough estimate of the decoded byte size of a base64 data URL
+ */
+function estimateBase64Bytes(dataUrl: string): number {
+  const base64 = dataUrl.split(',')[1] || '';
+  return Math.floor(base64.length * 0.75);
+}
+
 /**
  * Converts a data URL to a File object
  */