diff --git a/packages/addon-dev/src/rollup-keep-assets.ts b/packages/addon-dev/src/rollup-keep-assets.ts
index 3ea0d5727..29c50d988 100644
--- a/packages/addon-dev/src/rollup-keep-assets.ts
+++ b/packages/addon-dev/src/rollup-keep-assets.ts
@@ -1,6 +1,7 @@
 import type { Plugin } from 'rollup';
 import minimatch from 'minimatch';
 import { dirname, relative } from 'path';
+import { readFileSync } from 'fs';
 
 // randomly chosen, we're just looking to have high-entropy identifiers that
 // won't collide with anyting else in the source
@@ -15,17 +16,44 @@ export default function keepAssets({
   include: string[];
   exports?: undefined | 'default' | '*';
 }): Plugin {
-  const marker = `__copy_asset_marker_${counter++}__`;
+  const marker = `__keep_assets_marker_${counter++}__`;
 
   return {
-    name: 'copy-assets',
+    name: 'keep-assets',
+
+    // we implement a load hook for the assets we're keeping so that we can
+    // capture their true binary representations. If we fell through to the
+    // default rollup load hook we would get utf8 interpretations of them.
+    //
+    // Our plugin should be placed after any other plugins that have their own
+    // load hooks, in which case this will not run but our transform hook will
+    // still over from there.
+    load(id: string) {
+      if (include.some((pattern) => minimatch(id, pattern))) {
+        return {
+          code: readFileSync(id).toString('binary'),
+          meta: {
+            'keep-assets': {
+              binaryLoaded: true,
+            },
+          },
+        };
+      }
+    },
 
     transform(code: string, id: string) {
+      let output: Buffer | string = code;
+      let ourMeta = this.getModuleInfo(id)?.meta?.['keep-assets'];
+      if (ourMeta?.binaryLoaded) {
+        // when the code was produced by our own load hook it is binary-encoded
+        // string and we can emit the true bytes.
+        output = Buffer.from(code, 'binary');
+      }
       if (include.some((pattern) => minimatch(id, pattern))) {
         let ref = this.emitFile({
           type: 'asset',
           fileName: relative(from, id),
-          source: code,
+          source: output,
         });
         if (exports === '*') {
           return `export * from ${marker}("${ref}")`;
diff --git a/tests/scenarios/v2-addon-dev-test.ts b/tests/scenarios/v2-addon-dev-test.ts
index 36ae7eb24..21b854e54 100644
--- a/tests/scenarios/v2-addon-dev-test.ts
+++ b/tests/scenarios/v2-addon-dev-test.ts
@@ -1,10 +1,11 @@
-import path from 'path';
+import path, { resolve } from 'path';
 import { appScenarios, baseV2Addon } from './scenarios';
 import { PreparedApp, type Project } from 'scenario-tester';
 import QUnit from 'qunit';
 import merge from 'lodash/merge';
 import type { ExpectFile } from '@embroider/test-support/file-assertions/qunit';
 import { expectFilesAt } from '@embroider/test-support/file-assertions/qunit';
+import { writeFileSync } from 'fs';
 
 const { module: Qmodule, test } = QUnit;
 
@@ -85,11 +86,7 @@ appScenarios
             addon.gjs(),
             addon.dependencies(),
             addon.publicAssets('public'),
-            addon.keepAssets(["**/*.css"]),
 
-            // this works with custom-asset plugin below to exercise whether we can keepAssets
-            // for generated files that have exports
-            addon.keepAssets(["**/*.xyz"], "default"),
             {
               name: 'virtual-css',
               resolveId(source, importer) {
@@ -116,6 +113,12 @@ appScenarios
                 }
               }
             },
+
+            addon.keepAssets(["**/*.css"]),
+
+            // this works with custom-asset plugin above to exercise whether we can keepAssets
+            // for generated files that have exports
+            addon.keepAssets(["**/*.{xyz,png}"], "default"),
           ],
         };
       `,
@@ -205,6 +208,12 @@ appScenarios
               return value;
             }
           `,
+          'has-binary-import.js': `
+            import helloURL from './hello.png';
+            export default function() {
+              return helloURL;
+            }
+          `,
         },
       },
       public: {
@@ -335,6 +344,13 @@ appScenarios
 
               assert.dom().containsText('namespaced component');
             });
+
+            test('valid image asset is kept in addon', async function (assert) {
+              let module = await import('v2-addon/asset-examples/has-binary-import');
+              this.url = module.default();
+              await render(hbs\`<img alt="hello" src={{this.url}}>\`);
+              assert.dom('img').hasStyle({'width': '30px'});
+            })
           });
         `,
         'asset-test.js': `
@@ -391,6 +407,17 @@ appScenarios
 
       hooks.before(async () => {
         app = await scenario.prepare();
+        // fixturify (via scenario-tester) has no binary output support
+        let v2AddonPath = path.dirname(require.resolve(`v2-addon/package.json`, { paths: [app.dir] }));
+        console.log(`v2addonpath`, v2AddonPath);
+        console.log(`resolved`, resolve(v2AddonPath, 'src/asset-examples/hello.png'));
+        writeFileSync(
+          resolve(v2AddonPath, 'src/asset-examples/hello.png'),
+          Buffer.from(
+            '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',
+            'base64'
+          )
+        );
         let result = await inDependency(app, 'v2-addon').execute('pnpm build');
         if (result.exitCode !== 0) {
           throw new Error(result.output);