diff --git a/src/handlers/filesystem-handlers.ts b/src/handlers/filesystem-handlers.ts
index 77649986..a7d81a48 100644
--- a/src/handlers/filesystem-handlers.ts
+++ b/src/handlers/filesystem-handlers.ts
@@ -153,10 +153,16 @@ export async function handleReadFile(args: unknown): Promise<ServerResult> {
             // Return the image bytes in the MCP content array so the host model can
             // actually see the image. structuredContent additionally carries the bytes
             // for the preview widget to render.
+            //
+            // Setting DC_NO_IMAGE_STRUCTURED_BASE64=true suppresses the duplicate image
+            // base64 from structuredContent. This avoids context bloat in MCP clients
+            // that serialize structuredContent into the model's text input alongside
+            // the rendered image block. See #521.
             const imageData = typeof fileResult.content === 'string'
                 ? fileResult.content
                 : fileResult.content.toString('base64');
             const imageSummary = `Image file: ${parsed.path} (${fileResult.mimeType})\n`;
+            const omitStructuredBase64 = process.env.DC_NO_IMAGE_STRUCTURED_BASE64 === 'true';
             return {
                 content: [
                     {
@@ -175,8 +181,9 @@ export async function handleReadFile(args: unknown): Promise<ServerResult> {
                     fileType: 'image',
                     sourceTool: 'read_file',
                     ...await getDefaultEditorMetadata(resolvedFilePath),
-                    content: imageData,
-                    imageData,
+                    ...(omitStructuredBase64
+                        ? {}
+                        : { content: imageData, imageData }),
                     mimeType: fileResult.mimeType
                 }
             };
diff --git a/test/test-image-structured-content-toggle.js b/test/test-image-structured-content-toggle.js
new file mode 100644
index 00000000..23e0ccc5
--- /dev/null
+++ b/test/test-image-structured-content-toggle.js
@@ -0,0 +1,213 @@
+/**
+ * Test: DC_NO_IMAGE_STRUCTURED_BASE64 env var toggles whether the image base64
+ * is duplicated into structuredContent for read_file image responses.
+ *
+ * The content[image] block stays present in all cases so the host model can
+ * see the image natively. See #521.
+ */
+
+import { configManager } from '../dist/config-manager.js';
+import fs from 'fs/promises';
+import path from 'path';
+import { fileURLToPath } from 'url';
+import assert from 'assert';
+import { handleReadFile } from '../dist/handlers/filesystem-handlers.js';
+
+const __filename = fileURLToPath(import.meta.url);
+const __dirname = path.dirname(__filename);
+
+const TEST_DIR = path.join(__dirname, 'test_image_structured_content_toggle');
+const IMAGE_FILE = path.join(TEST_DIR, 'tiny.png');
+// 1x1 transparent PNG, used in other handler tests as well.
+const TINY_PNG_BASE64 =
+  'iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAQAAAC1HAwCAAAAC0lEQVR42mP8/x8AAwMCAO6p6xkAAAAASUVORK5CYII=';
+
+async function cleanupTestDirectory() {
+  try {
+    await fs.rm(TEST_DIR, { recursive: true, force: true });
+  } catch (error) {
+    if (error.code !== 'ENOENT') {
+      console.error('Error during cleanup:', error);
+    }
+  }
+}
+
+async function setup() {
+  await cleanupTestDirectory();
+  await fs.mkdir(TEST_DIR, { recursive: true });
+  await fs.writeFile(IMAGE_FILE, Buffer.from(TINY_PNG_BASE64, 'base64'));
+
+  const originalConfig = await configManager.getConfig();
+  await configManager.setValue('allowedDirectories', [TEST_DIR]);
+  return originalConfig;
+}
+
+async function teardown(originalConfig) {
+  try {
+    await cleanupTestDirectory();
+  } catch (error) {
+    console.error('Warning: cleanup failed:', error?.message ?? error);
+  }
+  if (originalConfig) {
+    try {
+      await configManager.updateConfig(originalConfig);
+    } catch (error) {
+      console.error('Warning: config restore failed:', error?.message ?? error);
+    }
+  }
+}
+
+function captureEnv(name) {
+  const previous = process.env[name];
+  return () => {
+    if (previous === undefined) {
+      delete process.env[name];
+    } else {
+      process.env[name] = previous;
+    }
+  };
+}
+
+async function testDefaultIncludesBase64InStructuredContent() {
+  console.log('\n--- Test: default keeps image base64 in structuredContent ---');
+  const restoreEnv = captureEnv('DC_NO_IMAGE_STRUCTURED_BASE64');
+  delete process.env.DC_NO_IMAGE_STRUCTURED_BASE64;
+  try {
+    const result = await handleReadFile({ path: IMAGE_FILE });
+    assert.ok(result.structuredContent, 'structuredContent should exist');
+    assert.strictEqual(
+      typeof result.structuredContent.content,
+      'string',
+      'structuredContent.content should be a string by default'
+    );
+    assert.ok(
+      result.structuredContent.content.length > 0,
+      'structuredContent.content should be non-empty by default'
+    );
+    assert.strictEqual(
+      typeof result.structuredContent.imageData,
+      'string',
+      'structuredContent.imageData should be a string by default'
+    );
+    assert.strictEqual(
+      result.structuredContent.content,
+      result.structuredContent.imageData,
+      'structuredContent.content and imageData should match by default'
+    );
+    console.log('✓ default behavior carries image base64 in structuredContent');
+  } finally {
+    restoreEnv();
+  }
+}
+
+async function testOptInOmitsBase64FromStructuredContent() {
+  console.log('\n--- Test: DC_NO_IMAGE_STRUCTURED_BASE64=true omits image base64 ---');
+  const restoreEnv = captureEnv('DC_NO_IMAGE_STRUCTURED_BASE64');
+  process.env.DC_NO_IMAGE_STRUCTURED_BASE64 = 'true';
+  try {
+    const result = await handleReadFile({ path: IMAGE_FILE });
+    assert.ok(result.structuredContent, 'structuredContent should still exist');
+    assert.strictEqual(
+      result.structuredContent.content,
+      undefined,
+      'structuredContent.content should be omitted when opt-in is set'
+    );
+    assert.strictEqual(
+      result.structuredContent.imageData,
+      undefined,
+      'structuredContent.imageData should be omitted when opt-in is set'
+    );
+
+    const imageBlock = result.content.find((item) => item.type === 'image');
+    assert.ok(
+      imageBlock,
+      'content[] should still include the image block so the model can see the image'
+    );
+    assert.ok(
+      typeof imageBlock.data === 'string' && imageBlock.data.length > 0,
+      'image block should carry non-empty base64 data'
+    );
+    assert.strictEqual(
+      imageBlock.mimeType,
+      'image/png',
+      'image block should carry the png mimeType'
+    );
+
+    assert.strictEqual(
+      result.structuredContent.fileType,
+      'image',
+      'structuredContent.fileType should remain "image"'
+    );
+    assert.strictEqual(
+      result.structuredContent.mimeType,
+      'image/png',
+      'structuredContent.mimeType should remain present'
+    );
+    assert.strictEqual(
+      result.structuredContent.filePath,
+      IMAGE_FILE,
+      'structuredContent.filePath should remain present'
+    );
+    assert.strictEqual(
+      result.structuredContent.sourceTool,
+      'read_file',
+      'structuredContent.sourceTool should remain present'
+    );
+    console.log(
+      '✓ opt-in omits image base64 from structuredContent while keeping content[image] and metadata'
+    );
+  } finally {
+    restoreEnv();
+  }
+}
+
+async function testNonTrueValuesKeepBase64() {
+  console.log('\n--- Test: only the literal string "true" enables the opt-in ---');
+  const restoreEnv = captureEnv('DC_NO_IMAGE_STRUCTURED_BASE64');
+  try {
+    for (const value of ['1', 'yes', 'TRUE', 'false', '']) {
+      process.env.DC_NO_IMAGE_STRUCTURED_BASE64 = value;
+      const result = await handleReadFile({ path: IMAGE_FILE });
+      assert.strictEqual(
+        typeof result.structuredContent.content,
+        'string',
+        `value=${JSON.stringify(value)}: structuredContent.content should still be present (only the literal "true" opts in)`
+      );
+    }
+    console.log('✓ only the literal string "true" enables the opt-in');
+  } finally {
+    restoreEnv();
+  }
+}
+
+export default async function runTests() {
+  let originalConfig;
+  try {
+    originalConfig = await setup();
+    await testDefaultIncludesBase64InStructuredContent();
+    await testOptInOmitsBase64FromStructuredContent();
+    await testNonTrueValuesKeepBase64();
+    console.log('\n✅ Image structuredContent toggle tests passed!');
+    return true;
+  } catch (error) {
+    const message = error instanceof Error ? error.message : String(error);
+    console.error('❌ Test failed:', message);
+    if (error instanceof Error && error.stack) {
+      console.error(error.stack);
+    }
+    return false;
+  } finally {
+    await teardown(originalConfig);
+  }
+}
+
+if (import.meta.url === `file://${process.argv[1]}`) {
+  runTests()
+    .then((success) => {
+      process.exit(success ? 0 : 1);
+    })
+    .catch((error) => {
+      console.error('❌ Unhandled error:', error);
+      process.exit(1);
+    });
+}