diff --git a/packages/app/src/components/dialog-edit-project.tsx b/packages/app/src/components/dialog-edit-project.tsx
index 2f0f7db1f6..8d389cef7c 100644
--- a/packages/app/src/components/dialog-edit-project.tsx
+++ b/packages/app/src/components/dialog-edit-project.tsx
@@ -3,15 +3,20 @@ import { useDialog } from "@opencode-ai/ui/context/dialog"
 import { Dialog } from "@opencode-ai/ui/dialog"
 import { TextField } from "@opencode-ai/ui/text-field"
 import { Icon } from "@opencode-ai/ui/icon"
+import { Avatar } from "@opencode-ai/ui/avatar"
 import { createMemo, createSignal, For, Show } from "solid-js"
 import { createStore } from "solid-js/store"
 import { useGlobalSDK } from "@/context/global-sdk"
 import { type LocalProject, getAvatarColors } from "@/context/layout"
-import { getFilename } from "@opencode-ai/util/path"
-import { Avatar } from "@opencode-ai/ui/avatar"
+import { ProjectIcon, isValidImageFile } from "@/components/project-icon"
 
 const AVATAR_COLOR_KEYS = ["pink", "mint", "orange", "purple", "cyan", "lime"] as const
 
+function getFilename(input: string) {
+  const parts = input.split("/")
+  return parts[parts.length - 1] || input
+}
+
 export function DialogEditProject(props: { project: LocalProject }) {
   const dialog = useDialog()
   const globalSDK = useGlobalSDK()
@@ -29,9 +34,11 @@ export function DialogEditProject(props: { project: LocalProject }) {
   const [dragOver, setDragOver] = createSignal(false)
 
   function handleFileSelect(file: File) {
-    if (!file.type.startsWith("image/")) return
+    if (!isValidImageFile(file)) return
     const reader = new FileReader()
-    reader.onload = (e) => setStore("iconUrl", e.target?.result as string)
+    reader.onload = (e) => {
+      setStore("iconUrl", e.target?.result as string)
+    }
     reader.readAsDataURL(file)
   }
 
@@ -94,7 +101,7 @@ export function DialogEditProject(props: { project: LocalProject }) {
             <div class="flex gap-3 items-start">
               <div class="relative">
                 <div
-                  class="size-16 rounded-lg overflow-hidden border border-dashed transition-colors cursor-pointer"
+                  class="size-12 rounded-lg overflow-hidden border border-dashed transition-colors cursor-pointer"
                   classList={{
                     "border-text-interactive-base bg-surface-info-base/20": dragOver(),
                     "border-border-base hover:border-border-strong": !dragOver(),
@@ -104,20 +111,13 @@ export function DialogEditProject(props: { project: LocalProject }) {
                   onDragLeave={handleDragLeave}
                   onClick={() => document.getElementById("icon-upload")?.click()}
                 >
-                  <Show
-                    when={store.iconUrl}
-                    fallback={
-                      <div class="size-full flex items-center justify-center">
-                        <Avatar
-                          fallback={store.name || defaultName()}
-                          {...getAvatarColors(store.color)}
-                          class="size-full"
-                        />
-                      </div>
-                    }
-                  >
-                    <img src={store.iconUrl} alt="Project icon" class="size-full object-cover" />
-                  </Show>
+                  <ProjectIcon
+                    name={store.name || defaultName()}
+                    projectId={props.project.id}
+                    iconUrl={store.iconUrl}
+                    iconColor={store.color}
+                    class="size-full"
+                  />
                 </div>
                 <Show when={store.iconUrl}>
                   <button
diff --git a/packages/app/src/components/project-icon.tsx b/packages/app/src/components/project-icon.tsx
new file mode 100644
index 0000000000..8b3927bdae
--- /dev/null
+++ b/packages/app/src/components/project-icon.tsx
@@ -0,0 +1,73 @@
+import { createMemo, splitProps, type ComponentProps, type JSX } from "solid-js"
+import { Avatar } from "@opencode-ai/ui/avatar"
+import { getAvatarColors } from "@/context/layout"
+
+const OPENCODE_PROJECT_ID = "4b0ea68d7af9a6031a7ffda7ad66e0cb83315750"
+const OPENCODE_FAVICON_URL = "https://opencode.ai/favicon.svg"
+
+export interface ProjectIconProps extends Omit<ComponentProps<"div">, "children"> {
+  name: string
+  iconUrl?: string
+  iconColor?: string
+  projectId?: string
+  size?: "small" | "normal" | "large"
+}
+
+export const isValidImageUrl = (url: string | undefined): boolean => {
+  if (!url) {
+    return false
+  }
+  if (url.startsWith("data:image/x-icon")) {
+    return false
+  }
+  if (url.startsWith("data:image/vnd.microsoft.icon")) {
+    return false
+  }
+  return true
+}
+
+export const isValidImageFile = (file: File): boolean => {
+  if (!file.type.startsWith("image/")) {
+    return false
+  }
+  if (file.type === "image/x-icon" || file.type === "image/vnd.microsoft.icon") {
+    return false
+  }
+  return true
+}
+
+export const ProjectIcon = (props: ProjectIconProps) => {
+  const [local, rest] = splitProps(props, [
+    "name",
+    "iconUrl",
+    "iconColor",
+    "projectId",
+    "size",
+    "class",
+    "classList",
+    "style",
+  ])
+  const colors = createMemo(() => getAvatarColors(local.iconColor))
+  const validSrc = createMemo(() => {
+    if (isValidImageUrl(local.iconUrl)) {
+      return local.iconUrl
+    }
+    if (local.projectId === OPENCODE_PROJECT_ID) {
+      return OPENCODE_FAVICON_URL
+    }
+    return undefined
+  })
+
+  return (
+    <Avatar
+      fallback={local.name}
+      src={validSrc()}
+      size={local.size}
+      {...colors()}
+      class={local.class}
+      classList={local.classList}
+      style={local.style as JSX.CSSProperties}
+      {...rest}
+    />
+  )
+}
diff --git a/packages/app/src/pages/layout.tsx b/packages/app/src/pages/layout.tsx
index cffefd5634..fa9330fc2a 100644
--- a/packages/app/src/pages/layout.tsx
+++ b/packages/app/src/pages/layout.tsx
@@ -18,7 +18,6 @@ import { A, useNavigate, useParams } from "@solidjs/router"
 import { useLayout, getAvatarColors, LocalProject } from "@/context/layout"
 import { useGlobalSync } from "@/context/global-sync"
 import { base64Decode, base64Encode } from "@opencode-ai/util/encode"
-import { Avatar } from "@opencode-ai/ui/avatar"
 import { ResizeHandle } from "@opencode-ai/ui/resize-handle"
 import { Button } from "@opencode-ai/ui/button"
 import { Icon } from "@opencode-ai/ui/icon"
@@ -56,6 +55,7 @@ import { DialogSelectProvider } from "@/components/dialog-select-provider"
 import { DialogEditProject } from "@/components/dialog-edit-project"
 import { DialogSelectServer } from "@/components/dialog-select-server"
 import { useCommand, type CommandOption } from "@/context/command"
+import { ProjectIcon } from "@/components/project-icon"
 import { ConstrainDragXAxis } from "@/utils/solid-dnd"
 import { navStart } from "@/utils/perf"
 import { DialogSelectDirectory } from "@/components/dialog-select-directory"
@@ -763,10 +763,12 @@ export default function Layout(props: ParentProps) {
 
     return (
       <div class="relative size-5 shrink-0 rounded-sm">
-        <Avatar
-          fallback={name()}
-          src={props.project.id === opencode ? "https://opencode.ai/favicon.svg" : props.project.icon?.url}
-          {...getAvatarColors(props.project.icon?.color)}
+        <ProjectIcon
+          name={name()}
+          projectId={props.project.id}
+          iconUrl={props.project.icon?.url}
+          iconColor={props.project.icon?.color}
+          size="small"
           class={`size-full ${props.class ?? ""}`}
           style={
             notifications().length > 0 && props.notify ? { "-webkit-mask-image": mask, "mask-image": mask } : undefined