diff --git a/frontend/components/AssetLibrary.tsx b/frontend/components/AssetLibrary.tsx
index 2fde97d..cc3ead1 100644
--- a/frontend/components/AssetLibrary.tsx
+++ b/frontend/components/AssetLibrary.tsx
@@ -1,8 +1,9 @@
 'use client';
 
 import { useState, useEffect } from 'react';
-import api from '@/lib/api';
+import api, { assetsApi } from '@/lib/api';
 import { clsx } from 'clsx';
+import { toast } from 'react-hot-toast';
 import {
   X,
   Search,
@@ -13,7 +14,9 @@ import {
   Check,
   Loader2,
   FolderOpen,
+  Upload,
 } from 'lucide-react';
+import FileUpload from './FileUpload';
 
 interface Asset {
   id: string;
@@ -59,6 +62,8 @@ export default function AssetLibrary({
   const [page, setPage] = useState(1);
   const [totalPages, setTotalPages] = useState(1);
   const [selectedAssets, setSelectedAssets] = useState<Set<string>>(new Set());
+  const [showUpload, setShowUpload] = useState(false);
+  const [uploading, setUploading] = useState(false);
 
   useEffect(() => {
     if (isOpen) {
@@ -108,6 +113,25 @@ export default function AssetLibrary({
     onClose();
   };
 
+  const handleUpload = async (file: File) => {
+    setUploading(true);
+    try {
+      const response = await assetsApi.upload(file);
+      toast.success('File uploaded!');
+      loadAssets();  // Reload to show new file
+      // Auto-select the new file
+      if (!multiple) {
+        onSelect(response.data);
+        setShowUpload(false);
+        onClose();
+      }
+    } catch (error) {
+      toast.error('Failed to upload file');
+    } finally {
+      setUploading(false);
+    }
+  };
+
   if (!isOpen) return null;
 
   return (
@@ -119,12 +143,21 @@ export default function AssetLibrary({
             <FolderOpen className="w-5 h-5 text-forge-yellow" />
             <h2 className="text-lg font-semibold text-white">{title}</h2>
           </div>
-          <button
-            onClick={onClose}
-            className="p-2 text-gray-400 hover:text-white transition-colors"
-          >
-            <X className="w-5 h-5" />
-          </button>
+          <div className="flex items-center gap-2">
+            <button
+              onClick={() => setShowUpload(!showUpload)}
+              className="px-3 py-2 bg-forge-yellow/10 text-forge-yellow rounded-lg hover:bg-forge-yellow/20 transition-colors flex items-center gap-2 text-sm"
+            >
+              <Upload className="w-4 h-4" />
+              Upload New
+            </button>
+            <button
+              onClick={onClose}
+              className="p-2 text-gray-400 hover:text-white transition-colors"
+            >
+              <X className="w-5 h-5" />
+            </button>
+          </div>
         </div>
 
         {/* Filters */}
@@ -184,6 +217,29 @@ export default function AssetLibrary({
           </div>
         </div>
 
+        {/* Upload Section */}
+        {showUpload && (
+          <div className="p-4 border-b border-gray-800">
+            <FileUpload
+              onUpload={handleUpload}
+              accept={
+                fileTypes.includes('image')
+                  ? { 'image/*': ['.png', '.jpg', '.jpeg', '.webp', '.gif'] }
+                  : fileTypes.includes('video')
+                  ? { 'video/*': ['.mp4', '.webm', '.mov'] }
+                  : { 'audio/*': ['.mp3', '.wav', '.ogg'] }
+              }
+              label="Drop file here or click to upload"
+            />
+            {uploading && (
+              <div className="mt-2 flex items-center gap-2 text-forge-yellow text-sm">
+                <Loader2 className="w-4 h-4 animate-spin" />
+                Uploading...
+              </div>
+            )}
+          </div>
+        )}
+
         {/* Asset Grid */}
         <div className="flex-1 overflow-y-auto p-4">
           {loading ? (