diff --git a/packages/tui/CHANGELOG.md b/packages/tui/CHANGELOG.md
index feeb9c8e..204d6a39 100644
--- a/packages/tui/CHANGELOG.md
+++ b/packages/tui/CHANGELOG.md
@@ -2,6 +2,10 @@
 
 ## [Unreleased]
 
+### Fixed
+
+- Fixed inline image rendering to cap portrait images by height instead of always scaling them to the configured maximum width.
+
 ## [0.74.0] - 2026-05-07
 
 ## [0.73.1] - 2026-05-07
diff --git a/packages/tui/src/components/image.ts b/packages/tui/src/components/image.ts
index 6b25df4e..eb68757d 100644
--- a/packages/tui/src/components/image.ts
+++ b/packages/tui/src/components/image.ts
@@ -1,6 +1,7 @@
 import {
 	allocateImageId,
 	getCapabilities,
+	getCellDimensions,
 	getImageDimensions,
 	type ImageDimensions,
 	imageFallback,
@@ -61,7 +62,10 @@ export class Image implements Component {
 			return this.cachedLines;
 		}
 
-		const maxWidth = Math.min(width - 2, this.options.maxWidthCells ?? 60);
+		const maxWidth = Math.max(1, Math.min(width - 2, this.options.maxWidthCells ?? 60));
+		const cellDimensions = getCellDimensions();
+		const defaultMaxHeight = Math.max(1, Math.ceil((maxWidth * cellDimensions.widthPx) / cellDimensions.heightPx));
+		const maxHeight = this.options.maxHeightCells ?? defaultMaxHeight;
 
 		const caps = getCapabilities();
 		let lines: string[];
@@ -72,6 +76,7 @@ export class Image implements Component {
 			}
 			const result = renderImage(this.base64Data, this.dimensions, {
 				maxWidthCells: maxWidth,
+				maxHeightCells: maxHeight,
 				imageId: this.imageId,
 				moveCursor: false,
 			});
diff --git a/packages/tui/src/terminal-image.ts b/packages/tui/src/terminal-image.ts
index 6a84716c..b355f0f3 100644
--- a/packages/tui/src/terminal-image.ts
+++ b/packages/tui/src/terminal-image.ts
@@ -211,16 +211,43 @@ export function encodeITerm2(
 	return `\x1b]1337;File=${params.join(";")}:${base64Data}\x07`;
 }
 
+export interface ImageCellSize {
+	columns: number;
+	rows: number;
+}
+
+export function calculateImageCellSize(
+	imageDimensions: ImageDimensions,
+	maxWidthCells: number,
+	maxHeightCells?: number,
+	cellDimensions: CellDimensions = { widthPx: 9, heightPx: 18 },
+): ImageCellSize {
+	const maxWidth = Math.max(1, Math.floor(maxWidthCells));
+	const maxHeight = maxHeightCells === undefined ? undefined : Math.max(1, Math.floor(maxHeightCells));
+	const imageWidth = Math.max(1, imageDimensions.widthPx);
+	const imageHeight = Math.max(1, imageDimensions.heightPx);
+
+	const widthScale = (maxWidth * cellDimensions.widthPx) / imageWidth;
+	const heightScale = maxHeight === undefined ? widthScale : (maxHeight * cellDimensions.heightPx) / imageHeight;
+	const scale = Math.min(widthScale, heightScale);
+
+	const scaledWidthPx = imageWidth * scale;
+	const scaledHeightPx = imageHeight * scale;
+	const columns = Math.ceil(scaledWidthPx / cellDimensions.widthPx);
+	const rows = Math.ceil(scaledHeightPx / cellDimensions.heightPx);
+
+	return {
+		columns: Math.max(1, Math.min(maxWidth, columns)),
+		rows: Math.max(1, maxHeight === undefined ? rows : Math.min(maxHeight, rows)),
+	};
+}
+
 export function calculateImageRows(
 	imageDimensions: ImageDimensions,
 	targetWidthCells: number,
 	cellDimensions: CellDimensions = { widthPx: 9, heightPx: 18 },
 ): number {
-	const targetWidthPx = targetWidthCells * cellDimensions.widthPx;
-	const scale = targetWidthPx / imageDimensions.widthPx;
-	const scaledHeightPx = imageDimensions.heightPx * scale;
-	const rows = Math.ceil(scaledHeightPx / cellDimensions.heightPx);
-	return Math.max(1, rows);
+	return calculateImageCellSize(imageDimensions, targetWidthCells, undefined, cellDimensions).rows;
 }
 
 export function getPngDimensions(base64Data: string): ImageDimensions | null {
@@ -376,25 +403,25 @@ export function renderImage(
 	}
 
 	const maxWidth = options.maxWidthCells ?? 80;
-	const rows = calculateImageRows(imageDimensions, maxWidth, getCellDimensions());
+	const size = calculateImageCellSize(imageDimensions, maxWidth, options.maxHeightCells, getCellDimensions());
 
 	if (caps.images === "kitty") {
 		const sequence = encodeKitty(base64Data, {
-			columns: maxWidth,
-			rows,
+			columns: size.columns,
+			rows: size.rows,
 			imageId: options.imageId,
 			moveCursor: options.moveCursor,
 		});
-		return { sequence, rows, imageId: options.imageId };
+		return { sequence, rows: size.rows, imageId: options.imageId };
 	}
 
 	if (caps.images === "iterm2") {
 		const sequence = encodeITerm2(base64Data, {
-			width: maxWidth,
+			width: size.columns,
 			height: "auto",
 			preserveAspectRatio: options.preserveAspectRatio ?? true,
 		});
-		return { sequence, rows };
+		return { sequence, rows: size.rows };
 	}
 
 	return null;
diff --git a/packages/tui/test/terminal-image.test.ts b/packages/tui/test/terminal-image.test.ts
index e483b64f..68c576bd 100644
--- a/packages/tui/test/terminal-image.test.ts
+++ b/packages/tui/test/terminal-image.test.ts
@@ -312,6 +312,40 @@ describe("Kitty image cursor movement", () => {
 		}
 	});
 
+	it("honors maxHeightCells by reducing rendered width", () => {
+		setCapabilities({ images: "kitty", trueColor: true, hyperlinks: true });
+		setCellDimensions({ widthPx: 10, heightPx: 10 });
+		try {
+			const result = renderImage("AAAA", { widthPx: 10, heightPx: 100 }, { maxWidthCells: 10, maxHeightCells: 5 });
+			assert.ok(result);
+			assert.strictEqual(result.rows, 5);
+			assert.ok(result.sequence.includes(",c=1,r=5"));
+		} finally {
+			resetCapabilitiesCache();
+			setCellDimensions({ widthPx: 9, heightPx: 18 });
+		}
+	});
+
+	it("caps Image component height to a square pixel box by default", () => {
+		setCapabilities({ images: "kitty", trueColor: true, hyperlinks: true });
+		setCellDimensions({ widthPx: 10, heightPx: 20 });
+		try {
+			const image = new Image(
+				"AAAA",
+				"image/png",
+				{ fallbackColor: (value) => value },
+				{ maxWidthCells: 10 },
+				{ widthPx: 10, heightPx: 100 },
+			);
+			const lines = image.render(12);
+			assert.strictEqual(lines.length, 5);
+			assert.ok(lines[0].includes(",c=1,r=5"));
+		} finally {
+			resetCapabilitiesCache();
+			setCellDimensions({ widthPx: 9, heightPx: 18 });
+		}
+	});
+
 	it("places image sequence on first line with empty padding rows", () => {
 		setCapabilities({ images: "kitty", trueColor: true, hyperlinks: true });
 		setCellDimensions({ widthPx: 10, heightPx: 10 });