diff --git a/cmd/api/api/instances_test.go b/cmd/api/api/instances_test.go
index 96d25a38..3c2be35e 100644
--- a/cmd/api/api/instances_test.go
+++ b/cmd/api/api/instances_test.go
@@ -40,6 +40,56 @@ func TestGetInstance_NotFound(t *testing.T) {
 	require.Error(t, err)
 }
 
+func TestCreateInstance_AutoPullImage(t *testing.T) {
+	t.Parallel()
+	if _, err := os.Stat("/dev/kvm"); os.IsNotExist(err) {
+		t.Skip("/dev/kvm not available, skipping on this platform")
+	}
+
+	svc := newTestService(t)
+
+	// NOTE: intentionally NOT calling createAndWaitForImage here.
+	// The auto-pull logic in CreateInstance should handle pulling the image.
+	// The auto-pull has a 5s timeout — alpine:latest is small enough to
+	// complete within that window.
+
+	// Ensure system files (kernel and initramfs) are available
+	t.Log("Ensuring system files (kernel and initramfs)...")
+	systemMgr := system.NewManager(paths.New(svc.Config.DataDir))
+	err := systemMgr.EnsureSystemFiles(ctx())
+	require.NoError(t, err)
+
+	t.Log("Creating instance without pre-pulling image (testing auto-pull)...")
+	networkEnabled := false
+	resp, err := svc.CreateInstance(ctx(), oapi.CreateInstanceRequestObject{
+		Body: &oapi.CreateInstanceRequest{
+			Name:  "test-auto-pull",
+			Image: "docker.io/library/alpine:latest",
+			Network: &struct {
+				BandwidthDownload *string `json:"bandwidth_download,omitempty"`
+				BandwidthUpload   *string `json:"bandwidth_upload,omitempty"`
+				Enabled           *bool   `json:"enabled,omitempty"`
+			}{
+				Enabled: &networkEnabled,
+			},
+		},
+	})
+	require.NoError(t, err)
+
+	created, ok := resp.(oapi.CreateInstance201JSONResponse)
+	require.True(t, ok, "expected 201 response — auto-pull should have fetched the image")
+	t.Logf("Instance created via auto-pull: %s", created.Id)
+
+	// Cleanup: delete the instance
+	instanceID := created.Id
+	t.Log("Deleting instance...")
+	deleteResp, err := svc.DeleteInstance(ctxWithInstance(svc, instanceID), oapi.DeleteInstanceRequestObject{Id: instanceID})
+	require.NoError(t, err)
+	_, ok = deleteResp.(oapi.DeleteInstance204Response)
+	require.True(t, ok, "expected 204 response for delete")
+	t.Log("Instance deleted successfully")
+}
+
 func TestCreateInstance_ParsesHumanReadableSizes(t *testing.T) {
 	t.Parallel()
 	// Require KVM access for VM creation
diff --git a/lib/instances/create.go b/lib/instances/create.go
index 1cc93876..a5a2aa21 100644
--- a/lib/instances/create.go
+++ b/lib/instances/create.go
@@ -89,15 +89,37 @@ func (m *manager) createInstance(
 		return nil, err
 	}
 
-	// 2. Validate image exists and is ready
+	// 2. Validate image exists and is ready; auto-pull if not found
 	log.DebugContext(ctx, "validating image", "image", req.Image)
 	imageInfo, err := m.imageManager.GetImage(ctx, req.Image)
 	if err != nil {
-		log.ErrorContext(ctx, "failed to get image", "image", req.Image, "error", err)
 		if err == images.ErrNotFound {
-			return nil, fmt.Errorf("image %s: %w", req.Image, err)
+			// Auto-pull: image not found locally, kick off the pull in the
+			// background and wait up to 5 seconds for it to complete.
+			log.InfoContext(ctx, "image not found locally, auto-pulling", "image", req.Image)
+			_, pullErr := m.imageManager.CreateImage(ctx, images.CreateImageRequest{Name: req.Image})
+			if pullErr != nil {
+				log.ErrorContext(ctx, "failed to auto-pull image", "image", req.Image, "error", pullErr)
+				return nil, fmt.Errorf("auto-pull image %s: %w", req.Image, pullErr)
+			}
+			// Wait with a short timeout — if the pull doesn't finish in time
+			// we return an error but let it continue in the background.
+			pullCtx, pullCancel := context.WithTimeout(ctx, 5*time.Second)
+			defer pullCancel()
+			if waitErr := m.imageManager.WaitForReady(pullCtx, req.Image); waitErr != nil {
+				log.InfoContext(ctx, "image pull not ready within timeout, pull continues in background", "image", req.Image, "error", waitErr)
+				return nil, fmt.Errorf("%w: image %s is being pulled, please try again shortly", ErrImageNotReady, req.Image)
+			}
+			// Re-fetch after successful pull
+			imageInfo, err = m.imageManager.GetImage(ctx, req.Image)
+			if err != nil {
+				log.ErrorContext(ctx, "failed to get image after auto-pull", "image", req.Image, "error", err)
+				return nil, fmt.Errorf("get image after auto-pull: %w", err)
+			}
+		} else {
+			log.ErrorContext(ctx, "failed to get image", "image", req.Image, "error", err)
+			return nil, fmt.Errorf("get image: %w", err)
 		}
-		return nil, fmt.Errorf("get image: %w", err)
 	}
 
 	if imageInfo.Status != images.StatusReady {