diff --git a/src/components/ReportActionItem/ReportActionItemImage.tsx b/src/components/ReportActionItem/ReportActionItemImage.tsx
index 646e84a62a12..8c915eb161e6 100644
--- a/src/components/ReportActionItem/ReportActionItemImage.tsx
+++ b/src/components/ReportActionItem/ReportActionItemImage.tsx
@@ -134,8 +134,13 @@ function ReportActionItemImage({
         );
     }
 
-    const originalImageSource = tryResolveUrlFromApiRoot(image ?? '');
-    const thumbnailSource = tryResolveUrlFromApiRoot(thumbnail ?? '');
+    const localSource = transaction?.receipt?.localSource;
+    const effectiveIsLocalFile = isLocalFile || !!localSource;
+    const effectiveThumbnail = localSource ?? thumbnail;
+    const effectiveImage = localSource !== undefined && typeof image === 'string' ? localSource : image;
+
+    const originalImageSource = tryResolveUrlFromApiRoot(effectiveImage ?? '');
+    const thumbnailSource = tryResolveUrlFromApiRoot(effectiveThumbnail ?? '');
     const isEReceipt = transaction && !hasReceiptSource(transaction) && hasEReceipt(transaction);
     const isPDF = filename && Str.isPDF(filename);
 
@@ -143,7 +148,7 @@ function ReportActionItemImage({
 
     if (isEReceipt) {
         propsObj = {isEReceipt: true, transactionID: transaction.transactionID, iconSize: isSingleImage ? 'medium' : ('small' as IconSize), shouldUseFullHeight};
-    } else if (thumbnail && !isLocalFile) {
+    } else if (effectiveThumbnail && !effectiveIsLocalFile) {
         propsObj = {
             shouldUseThumbnailImage: shouldUseThumbnailImage ?? true,
 
@@ -158,7 +163,7 @@ function ReportActionItemImage({
             // If the image is full height, use initial position to make sure it will grow properly to fill the container
             shouldUseInitialObjectPosition: isMapDistanceRequest && !shouldUseFullHeight,
         };
-    } else if (isLocalFile && isPDF && typeof originalImageSource === 'string') {
+    } else if (effectiveIsLocalFile && isPDF && typeof originalImageSource === 'string') {
         propsObj = {isPDFThumbnail: true, source: originalImageSource};
     } else {
         propsObj = {
@@ -166,7 +171,7 @@ function ReportActionItemImage({
             ...(isThumbnail && {iconSize: (isSingleImage ? 'medium' : 'small') as IconSize, fileExtension}),
             shouldUseThumbnailImage: shouldUseThumbnailImage ?? true,
             isAuthTokenRequired: false,
-            source: shouldUseThumbnailImage ? (thumbnail ?? image ?? '') : originalImageSource,
+            source: shouldUseThumbnailImage ? (effectiveThumbnail ?? effectiveImage ?? '') : originalImageSource,
 
             // If the image is full height, use initial position to make sure it will grow properly to fill the container
             shouldUseInitialObjectPosition: isMapDistanceRequest && !shouldUseFullHeight,
diff --git a/src/libs/DebugUtils.ts b/src/libs/DebugUtils.ts
index cb9387c64e22..07de7e67a712 100644
--- a/src/libs/DebugUtils.ts
+++ b/src/libs/DebugUtils.ts
@@ -796,6 +796,7 @@ function validateReportActionDraftProperty(key: keyof ReportAction, value: strin
                 name: 'string',
                 receiptID: 'string',
                 source: 'string',
+                localSource: 'string',
                 filename: 'string',
                 reservationList: 'string',
                 isTestReceipt: 'boolean',
@@ -1138,6 +1139,7 @@ function validateTransactionDraftProperty(key: keyof Transaction, value: string)
             return validateObject<ObjectElement<Transaction, 'receipt'>>(value, {
                 type: 'string',
                 source: 'string',
+                localSource: 'string',
                 name: 'string',
                 filename: 'string',
                 state: CONST.IOU.RECEIPT_STATE,
diff --git a/src/libs/actions/IOU/index.ts b/src/libs/actions/IOU/index.ts
index 5e835767cd9c..5e5d7b1ccf3c 100644
--- a/src/libs/actions/IOU/index.ts
+++ b/src/libs/actions/IOU/index.ts
@@ -42,7 +42,7 @@ import DateUtils from '@libs/DateUtils';
 import {registerDeferredWrite} from '@libs/deferredLayoutWrite';
 import DistanceRequestUtils from '@libs/DistanceRequestUtils';
 import {getMicroSecondOnyxErrorObject, getMicroSecondOnyxErrorWithTranslationKey} from '@libs/ErrorUtils';
-import {readFileAsync} from '@libs/fileDownload/FileUtils';
+import {isLocalFile, readFileAsync} from '@libs/fileDownload/FileUtils';
 import type {MinimalTransaction} from '@libs/Formula';
 import getIsNarrowLayout from '@libs/getIsNarrowLayout';
 import GoogleTagManager from '@libs/GoogleTagManager';
@@ -1888,6 +1888,18 @@ type BuildOnyxDataForMoneyRequestKeys =
     | typeof ONYXKEYS.NVP_QUICK_ACTION_GLOBAL_CREATE
     | typeof ONYXKEYS.COLLECTION.SNAPSHOT;
 
+/**
+ * When a receipt is a local file (e.g. taken from camera or picked from gallery), its `source` is a local URI
+ * that will be lost once the optimistic transaction is replaced by the server response. We stash it in
+ * `localSource` so the UI can continue showing the local image while SmartScan is in progress.
+ */
+function getTransactionWithPreservedLocalReceiptSource(transaction: OnyxTypes.Transaction, isScanRequest: boolean): OnyxTypes.Transaction {
+    if (isScanRequest && isLocalFile(transaction.receipt?.source)) {
+        return {...transaction, receipt: {...transaction.receipt, localSource: String(transaction.receipt?.source)}};
+    }
+    return transaction;
+}
+
 /** Builds the Onyx data for an expense */
 function buildOnyxDataForMoneyRequest(moneyRequestParams: BuildOnyxDataForMoneyRequestParams): OnyxData<BuildOnyxDataForMoneyRequestKeys> {
     const {
@@ -1925,7 +1937,6 @@ function buildOnyxDataForMoneyRequest(moneyRequestParams: BuildOnyxDataForMoneyR
     const outstandingChildRequest = getOutstandingChildRequest(iou.report);
     const clearedPendingFields = Object.fromEntries(Object.keys(transaction.pendingFields ?? {}).map((key) => [key, null]));
     const isMoneyRequestToManagerMcTest = isTestTransactionReport(iou.report);
-
     const onyxData: OnyxData<BuildOnyxDataForMoneyRequestKeys> = {
         optimisticData: [],
         successData: [],
@@ -1980,7 +1991,7 @@ function buildOnyxDataForMoneyRequest(moneyRequestParams: BuildOnyxDataForMoneyR
         {
             onyxMethod: Onyx.METHOD.SET,
             key: `${ONYXKEYS.COLLECTION.TRANSACTION}${transaction.transactionID}`,
-            value: transaction,
+            value: getTransactionWithPreservedLocalReceiptSource(transaction, isScanRequest),
         },
         isNewChatReport
             ? {
@@ -2615,7 +2626,6 @@ function buildOnyxDataForTrackExpense({
     const isScanRequest = isScanRequestTransactionUtils(transaction);
     const isDistanceRequest = isDistanceRequestTransactionUtils(transaction);
     const clearedPendingFields = Object.fromEntries(Object.keys(transaction.pendingFields ?? {}).map((key) => [key, null]));
-
     const onyxData: OnyxData<BuildOnyxDataForTrackExpenseKeys> = {
         optimisticData: [],
         successData: [],
@@ -2750,7 +2760,7 @@ function buildOnyxDataForTrackExpense({
         {
             onyxMethod: Onyx.METHOD.SET,
             key: `${ONYXKEYS.COLLECTION.TRANSACTION}${transaction.transactionID}`,
-            value: transaction,
+            value: getTransactionWithPreservedLocalReceiptSource(transaction, isScanRequest),
         },
         {
             onyxMethod: Onyx.METHOD.MERGE,
diff --git a/src/types/onyx/Transaction.ts b/src/types/onyx/Transaction.ts
index 383de5bc27ed..da3d22bea107 100644
--- a/src/types/onyx/Transaction.ts
+++ b/src/types/onyx/Transaction.ts
@@ -218,6 +218,9 @@ type Receipt = {
     /** Path of the receipt file */
     source?: ReceiptSource;
 
+    /** Local file URI preserved on the creating device so the remote source from the server does not cause a reload */
+    localSource?: string;
+
     /** Name of receipt file */
     filename?: string;