diff --git a/dotnet/samples/Concepts/PromptTemplates/HandlebarsVisionPrompts.cs b/dotnet/samples/Concepts/PromptTemplates/HandlebarsVisionPrompts.cs
new file mode 100644
index 000000000000..195d281da570
--- /dev/null
+++ b/dotnet/samples/Concepts/PromptTemplates/HandlebarsVisionPrompts.cs
@@ -0,0 +1,51 @@
+// Copyright (c) Microsoft. All rights reserved.
+
+using Microsoft.SemanticKernel;
+using Microsoft.SemanticKernel.PromptTemplates.Handlebars;
+
+namespace PromptTemplates;
+
+// This example shows how to use chat completion handlebars template prompts with base64 encoded images as a parameter.
+public class HandlebarsVisionPrompts(ITestOutputHelper output) : BaseTest(output)
+{
+    [Fact]
+    public async Task RunAsync()
+    {
+        const string HandlebarsTemplate = """
+            <message role="system">You are an AI assistant designed to help with image recognition tasks.</message>
+            <message role="user">
+               <text>{{request}}</text>
+               <image>{{imageData}}</image>
+            </message>
+            """;
+
+        var kernel = Kernel.CreateBuilder()
+            .AddOpenAIChatCompletion(
+                modelId: TestConfiguration.OpenAI.ChatModelId,
+                apiKey: TestConfiguration.OpenAI.ApiKey)
+            .Build();
+
+        var templateFactory = new HandlebarsPromptTemplateFactory();
+        var promptTemplateConfig = new PromptTemplateConfig()
+        {
+            Template = HandlebarsTemplate,
+            TemplateFormat = "handlebars",
+            Name = "Vision_Chat_Prompt",
+        };
+        var function = kernel.CreateFunctionFromPrompt(promptTemplateConfig, templateFactory);
+
+        var arguments = new KernelArguments(new Dictionary<string, object?>
+        {
+            {"request","Describe this image:"},
+            {"imageData", "data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAoAAAAKCAYAAACNMs+9AAAAAXNSR0IArs4c6QAAACVJREFUKFNj/KTO/J+BCMA4iBUyQX1A0I10VAizCj1oMdyISyEAFoQbHwTcuS8AAAAASUVORK5CYII="}
+        });
+
+        var response = await kernel.InvokeAsync(function, arguments);
+        Console.WriteLine(response);
+
+        /*
+        Output:
+           The image is a solid block of bright red color. There are no additional features, shapes, or textures present.
+        */
+    }
+}
diff --git a/dotnet/samples/Concepts/README.md b/dotnet/samples/Concepts/README.md
index 26eef28982a7..937d832dfcba 100644
--- a/dotnet/samples/Concepts/README.md
+++ b/dotnet/samples/Concepts/README.md
@@ -142,7 +142,8 @@ Down below you can find the code snippets that demonstrate the usage of many Sem
 - [MultiplePromptTemplates](https://github.com/microsoft/semantic-kernel/blob/main/dotnet/samples/Concepts/PromptTemplates/MultiplePromptTemplates.cs)
 - [PromptFunctionsWithChatGPT](https://github.com/microsoft/semantic-kernel/blob/main/dotnet/samples/Concepts/PromptTemplates/PromptFunctionsWithChatGPT.cs)
 - [TemplateLanguage](https://github.com/microsoft/semantic-kernel/blob/main/dotnet/samples/Concepts/PromptTemplates/TemplateLanguage.cs)
-- [PromptyFunction](https://github.com/microsoft/semantic-kernel/blob/main/dotnet/samples/Concepts/PromptYemplates/PromptyFunction.cs)
+- [PromptyFunction](https://github.com/microsoft/semantic-kernel/blob/main/dotnet/samples/Concepts/PromptTemplates/PromptyFunction.cs)
+- [HandlebarsVisionPrompts](https://github.com/microsoft/semantic-kernel/blob/main/dotnet/samples/Concepts/PromptTemplates/HandlebarsVisionPrompts.cs)
 
 ## RAG - Retrieval-Augmented Generation
 
diff --git a/dotnet/src/SemanticKernel.Abstractions/AI/ChatCompletion/ChatPromptParser.cs b/dotnet/src/SemanticKernel.Abstractions/AI/ChatCompletion/ChatPromptParser.cs
index c9cae7acb070..12d63de28d3c 100644
--- a/dotnet/src/SemanticKernel.Abstractions/AI/ChatCompletion/ChatPromptParser.cs
+++ b/dotnet/src/SemanticKernel.Abstractions/AI/ChatCompletion/ChatPromptParser.cs
@@ -75,7 +75,14 @@ private static ChatMessageContent ParseChatNode(PromptNode node)
         {
             if (childNode.TagName.Equals(ImageTagName, StringComparison.OrdinalIgnoreCase))
             {
-                items.Add(new ImageContent(new Uri(childNode.Content!)));
+                if (childNode.Content!.StartsWith("data:", StringComparison.OrdinalIgnoreCase))
+                {
+                    items.Add(new ImageContent(childNode.Content));
+                }
+                else
+                {
+                    items.Add(new ImageContent(new Uri(childNode.Content!)));
+                }
             }
             else if (childNode.TagName.Equals(TextTagName, StringComparison.OrdinalIgnoreCase))
             {
diff --git a/dotnet/src/SemanticKernel.UnitTests/Prompt/ChatPromptParserTests.cs b/dotnet/src/SemanticKernel.UnitTests/Prompt/ChatPromptParserTests.cs
index ecb051b7d7b1..e3ad0cd53a5c 100644
--- a/dotnet/src/SemanticKernel.UnitTests/Prompt/ChatPromptParserTests.cs
+++ b/dotnet/src/SemanticKernel.UnitTests/Prompt/ChatPromptParserTests.cs
@@ -114,6 +114,40 @@ public void ItReturnsChatHistoryWithValidContentItemsIncludeCData()
                               """, c.Content));
     }
 
+    [Fact]
+    public void ItReturnsChatHistoryWithValidDataImageContent()
+    {
+        // Arrange
+        string prompt = GetValidPromptWithDataUriImageContent();
+
+        // Act
+        bool result = ChatPromptParser.TryParse(prompt, out var chatHistory);
+
+        // Assert
+        Assert.True(result);
+        Assert.NotNull(chatHistory);
+
+        Assert.Collection(chatHistory,
+            c => Assert.Equal("What can I help with?", c.Content),
+            c =>
+            {
+                Assert.Equal("Explain this image", c.Content);
+                Assert.Collection(c.Items,
+                    o =>
+                    {
+                        Assert.IsType<TextContent>(o);
+                        Assert.Equal("Explain this image", ((TextContent)o).Text);
+                    },
+                    o =>
+                    {
+                        Assert.IsType<ImageContent>(o);
+                        Assert.Equal("data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAoAAAAKCAYAAACNMs+9AAAAAXNSR0IArs4c6QAAACVJREFUKFNj/KTO/J+BCMA4iBUyQX1A0I10VAizCj1oMdyISyEAFoQbHwTcuS8AAAAASUVORK5CYII=", ((ImageContent)o).DataUri);
+                        Assert.Equal("image/png", ((ImageContent)o).MimeType);
+                        Assert.NotNull(((ImageContent)o).Data);
+                    });
+            });
+    }
+
     [Fact]
     public void ItReturnsChatHistoryWithValidContentItemsIncludeCode()
     {
@@ -210,6 +244,21 @@ Second line.
             """;
     }
 
+    private static string GetValidPromptWithDataUriImageContent()
+    {
+        return
+            """
+
+            <message role="assistant">What can I help with?</message>
+
+            <message role='user'>
+                <text>Explain this image</text>
+                <image>data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAoAAAAKCAYAAACNMs+9AAAAAXNSR0IArs4c6QAAACVJREFUKFNj/KTO/J+BCMA4iBUyQX1A0I10VAizCj1oMdyISyEAFoQbHwTcuS8AAAAASUVORK5CYII=</image>
+            </message>
+
+            """;
+    }
+
     private static string GetValidPromptWithCDataSection()
     {
         return