diff --git a/apps/admin/src/components/steps/StepEdit.tsx b/apps/admin/src/components/steps/StepEdit.tsx
index a317d5e..cb389bc 100644
--- a/apps/admin/src/components/steps/StepEdit.tsx
+++ b/apps/admin/src/components/steps/StepEdit.tsx
@@ -1,8 +1,9 @@
 import { useState } from 'react';
-import { Box, Button, Alert, Stack, Dialog, DialogTitle, DialogContent, DialogActions, List, ListItem, ListItemButton, ListItemText } from '@mui/material';
+import { Box, Button, Alert, Stack, Dialog, DialogTitle, DialogContent, DialogActions, List, ListItem, ListItemButton, ListItemText, CircularProgress, Typography, FormControlLabel, Checkbox } from '@mui/material';
 import RichEditor, { type RichEditorHandle } from '../RichEditor';
 import StepHeader from './StepHeader';
 import type { ForwardedRef } from 'react';
+import { generateAltText } from '../../services/ai';
 
 export default function StepEdit({
   editorRef,
@@ -23,6 +24,9 @@ export default function StepEdit({
 }) {
   const [showImagePicker, setShowImagePicker] = useState(false);
   const [currentPlaceholder, setCurrentPlaceholder] = useState<string>('');
+  const [generatingAltText, setGeneratingAltText] = useState(false);
+  const [altTextCache, setAltTextCache] = useState<Record<string, { altText: string; caption: string }>>({});
+  const [includeCaptions, setIncludeCaptions] = useState(true);
 
   const loadGeneratedDraft = () => {
     if (!generatedDraft) return;
@@ -32,16 +36,61 @@ export default function StepEdit({
     onChangeDraft(generatedDraft);
   };
 
-  const replacePlaceholder = (placeholder: string, imageKey: string) => {
-    const imageUrl = `/api/media/obj?key=${encodeURIComponent(imageKey)}`;
-    const placeholderPattern = `{{IMAGE:${placeholder}}}`;
-    const replacement = `<img src="${imageUrl}" alt="${placeholder.replace(/_/g, ' ')}" />`;
-    const newHtml = draftHtml.replace(placeholderPattern, replacement);
-    onChangeDraft(newHtml);
-    setShowImagePicker(false);
-    // Trigger auto-save after replacing placeholder
-    if (onAutoSave) {
-      setTimeout(() => onAutoSave(), 0);
+  const replacePlaceholder = async (placeholder: string, imageKey: string) => {
+    setGeneratingAltText(true);
+    
+    try {
+      // Check cache first
+      let cached = altTextCache[placeholder];
+      
+      // Generate AI alt text and caption if not cached
+      if (!cached) {
+        const result = await generateAltText({
+          placeholderDescription: placeholder,
+          contentHtml: draftHtml,
+          includeCaption: includeCaptions,
+        });
+        cached = { altText: result.altText, caption: result.caption };
+        
+        // Cache the result
+        setAltTextCache(prev => ({ ...prev, [placeholder]: cached }));
+      }
+      
+      const imageUrl = `/api/media/obj?key=${encodeURIComponent(imageKey)}`;
+      const placeholderPattern = `{{IMAGE:${placeholder}}}`;
+      
+      // Use figure/figcaption if caption exists, otherwise plain img
+      let replacement: string;
+      if (includeCaptions && cached.caption) {
+        replacement = `<figure><img src="${imageUrl}" alt="${cached.altText}" /><figcaption>${cached.caption}</figcaption></figure>`;
+      } else {
+        replacement = `<img src="${imageUrl}" alt="${cached.altText}" />`;
+      }
+      
+      const newHtml = draftHtml.replace(placeholderPattern, replacement);
+      onChangeDraft(newHtml);
+      setShowImagePicker(false);
+      
+      // Trigger auto-save after replacing placeholder
+      if (onAutoSave) {
+        setTimeout(() => onAutoSave(), 0);
+      }
+    } catch (err) {
+      console.error('Failed to generate image text:', err);
+      // Fallback to simple alt text
+      const imageUrl = `/api/media/obj?key=${encodeURIComponent(imageKey)}`;
+      const placeholderPattern = `{{IMAGE:${placeholder}}}`;
+      const fallbackAlt = placeholder.replace(/_/g, ' ');
+      const replacement = `<img src="${imageUrl}" alt="${fallbackAlt}" />`;
+      const newHtml = draftHtml.replace(placeholderPattern, replacement);
+      onChangeDraft(newHtml);
+      setShowImagePicker(false);
+      
+      if (onAutoSave) {
+        setTimeout(() => onAutoSave(), 0);
+      }
+    } finally {
+      setGeneratingAltText(false);
     }
   };
 
@@ -99,15 +148,43 @@ export default function StepEdit({
       <Box sx={{
         overflowX: 'auto',
         '& img': { maxWidth: '100%', height: 'auto' },
-        '& figure img': { display: 'block', margin: '0 auto' },
+        '& figure': { margin: '2rem 0', textAlign: 'center' },
+        '& figure img': { display: 'block', margin: '0 auto', maxWidth: '100%' },
+        '& figcaption': { 
+          marginTop: '0.5rem', 
+          fontSize: '0.9rem', 
+          color: 'text.secondary',
+          fontStyle: 'italic',
+        },
         '& video, & iframe': { maxWidth: '100%' },
       }}>
         <RichEditor ref={editorRef} value={draftHtml} onChange={onChangeDraft} placeholder="Write your post..." />
       </Box>
 
       {/* Image picker dialog */}
-      <Dialog open={showImagePicker} onClose={() => setShowImagePicker(false)} maxWidth="sm" fullWidth>
-        <DialogTitle>Replace: {`{{IMAGE:${currentPlaceholder}}}`}</DialogTitle>
+      <Dialog open={showImagePicker} onClose={() => !generatingAltText && setShowImagePicker(false)} maxWidth="sm" fullWidth>
+        <DialogTitle>
+          <Box>
+            Replace: {`{{IMAGE:${currentPlaceholder}}}`}
+            {generatingAltText && (
+              <Typography variant="caption" display="block" sx={{ mt: 1, color: 'text.secondary' }}>
+                <CircularProgress size={12} sx={{ mr: 1 }} />
+                Generating AI {includeCaptions ? 'alt text & caption' : 'alt text'}...
+              </Typography>
+            )}
+          </Box>
+          <FormControlLabel
+            control={
+              <Checkbox 
+                checked={includeCaptions} 
+                onChange={(e) => setIncludeCaptions(e.target.checked)}
+                size="small"
+              />
+            }
+            label="Generate captions (SEO boost)"
+            sx={{ mt: 1 }}
+          />
+        </DialogTitle>
         <DialogContent>
           {selectedImageKeys && selectedImageKeys.length > 0 ? (
             <List>
diff --git a/apps/admin/src/services/ai.ts b/apps/admin/src/services/ai.ts
index 3a2e270..c7ce40a 100644
--- a/apps/admin/src/services/ai.ts
+++ b/apps/admin/src/services/ai.ts
@@ -30,3 +30,18 @@ export async function generateMetadata(contentHtml: string) {
     canonicalUrl: string;
   }>;
 }
+
+export async function generateAltText(payload: {
+  placeholderDescription: string;
+  contentHtml?: string;
+  surroundingText?: string;
+  includeCaption?: boolean;
+}) {
+  const res = await fetch('/api/ai/generate-alt-text', {
+    method: 'POST',
+    headers: { 'Content-Type': 'application/json' },
+    body: JSON.stringify(payload),
+  });
+  if (!res.ok) throw new Error(await res.text());
+  return res.json() as Promise<{ altText: string; caption: string }>;
+}
diff --git a/apps/api/src/ai-generate.ts b/apps/api/src/ai-generate.ts
index 11e8591..6edbb2d 100644
--- a/apps/api/src/ai-generate.ts
+++ b/apps/api/src/ai-generate.ts
@@ -222,4 +222,142 @@ Return ONLY valid JSON, no markdown, no explanation.`,
   }
 });
 
+// Generate alt text and caption for image placeholder based on context
+router.post('/generate-alt-text', async (req, res) => {
+  try {
+    const { placeholderDescription, contentHtml, surroundingText, includeCaption = true } = req.body as {
+      placeholderDescription: string;
+      contentHtml?: string;
+      surroundingText?: string;
+      includeCaption?: boolean;
+    };
+
+    if (!placeholderDescription) {
+      return res.status(400).json({ error: 'placeholderDescription is required' });
+    }
+
+    const apiKey = process.env.OPENAI_API_KEY;
+    if (!apiKey) {
+      return res.status(500).json({ error: 'OpenAI API key not configured' });
+    }
+
+    const openai = new OpenAI({ apiKey });
+
+    // Build context
+    let context = `Placeholder description: ${placeholderDescription}`;
+    
+    if (surroundingText) {
+      context += `\n\nSurrounding text:\n${surroundingText}`;
+    } else if (contentHtml) {
+      // Extract text from HTML for context
+      const textContent = contentHtml.replace(/<[^>]*>/g, ' ').replace(/\s+/g, ' ').trim();
+      const preview = textContent.slice(0, 1000);
+      context += `\n\nArticle context:\n${preview}`;
+    }
+
+    console.log('[AI Image Text] Generating for:', placeholderDescription);
+
+    const systemPrompt = includeCaption 
+      ? `You are an accessibility and SEO expert. Generate alt text AND caption for images.
+
+REQUIREMENTS:
+Alt Text:
+- Descriptive and specific (50-125 characters)
+- Include relevant keywords naturally
+- Describe what's IN the image, not around it
+- Don't start with "Image of" or "Picture of"
+- Concise but informative
+
+Caption:
+- Engaging and contextual (1-2 sentences)
+- Add value beyond the alt text
+- Can include context, explanation, or insight
+- SEO-friendly with natural keywords
+- Reader-friendly and informative
+
+OUTPUT FORMAT (JSON):
+{
+  "altText": "Your alt text here",
+  "caption": "Your engaging caption here"
+}
+
+EXAMPLES:
+Input: "dashboard_screenshot"
+Output: {
+  "altText": "Analytics dashboard showing user engagement metrics and conversion rates",
+  "caption": "Our analytics platform provides real-time insights into user behavior and conversion patterns."
+}
+
+Input: "team_photo"
+Output: {
+  "altText": "Development team collaborating in modern office space",
+  "caption": "The engineering team during our quarterly planning session, where we align on product roadmap priorities."
+}
+
+Return ONLY valid JSON, no markdown, no explanation.`
+      : `You are an accessibility and SEO expert. Generate descriptive alt text for images.
+
+REQUIREMENTS:
+1. Be descriptive and specific (50-125 characters ideal)
+2. Include relevant keywords naturally
+3. Describe what's IN the image, not around it
+4. Don't start with "Image of" or "Picture of"
+5. Be concise but informative
+6. Consider the article context
+
+Return ONLY the alt text, no quotes, no explanation.`;
+
+    const completion = await openai.chat.completions.create({
+      model: 'gpt-4o',
+      messages: [
+        {
+          role: 'system',
+          content: systemPrompt,
+        },
+        {
+          role: 'user',
+          content: context,
+        },
+      ],
+      temperature: 0.7,
+      max_tokens: includeCaption ? 200 : 100,
+    });
+
+    const response = completion.choices[0]?.message?.content?.trim() || '';
+    
+    if (!response) {
+      return res.status(500).json({ error: 'No content generated' });
+    }
+
+    if (includeCaption) {
+      // Parse JSON response
+      try {
+        const cleaned = response.replace(/```json\n?/g, '').replace(/```\n?/g, '').trim();
+        const parsed = JSON.parse(cleaned);
+        
+        console.log('[AI Image Text] Generated:', parsed);
+        
+        return res.json({
+          altText: parsed.altText || '',
+          caption: parsed.caption || '',
+        });
+      } catch (parseErr) {
+        console.error('[AI Image Text] JSON parse error:', parseErr);
+        // Fallback: treat as alt text only
+        return res.json({ altText: response, caption: '' });
+      }
+    } else {
+      // Alt text only
+      console.log('[AI Image Text] Generated alt text:', response);
+      return res.json({ altText: response, caption: '' });
+    }
+  } catch (err: any) {
+    console.error('[AI Image Text] Error:', err);
+    return res.status(500).json({ 
+      error: 'Image text generation failed', 
+      details: err?.message || 'Unknown error' 
+    });
+  }
+});
+
 export default router;