diff --git a/apps/obsidian/src/components/canvas/CustomContextMenu.tsx b/apps/obsidian/src/components/canvas/CustomContextMenu.tsx
new file mode 100644
index 000000000..bc557cbe1
--- /dev/null
+++ b/apps/obsidian/src/components/canvas/CustomContextMenu.tsx
@@ -0,0 +1,66 @@
+import {
+  DefaultContextMenu,
+  TldrawUiMenuGroup,
+  TldrawUiMenuSubmenu,
+  TldrawUiMenuItem,
+  useEditor,
+  TLUiContextMenuProps,
+  DefaultContextMenuContent,
+  useValue,
+} from "tldraw";
+import type { TFile } from "obsidian";
+import { usePlugin } from "~/components/PluginContext";
+import { convertToDiscourseNode } from "./utils/convertToDiscourseNode";
+
+type CustomContextMenuProps = {
+  canvasFile: TFile;
+  props: TLUiContextMenuProps;
+};
+
+export const CustomContextMenu = ({
+  canvasFile,
+  props,
+}: CustomContextMenuProps) => {
+  const editor = useEditor();
+  const plugin = usePlugin();
+
+  const selectedShape = useValue(
+    "selectedShape",
+    () => editor.getOnlySelectedShape(),
+    [editor],
+  );
+
+  const shouldShowConvertTo =
+    selectedShape &&
+    (selectedShape.type === "text" || selectedShape.type === "image");
+
+  return (
+    <DefaultContextMenu {...props}>
+      <DefaultContextMenuContent />
+      {shouldShowConvertTo && (
+        <TldrawUiMenuGroup id="convert-to">
+          <TldrawUiMenuSubmenu id="convert-to-submenu" label="Convert To">
+            {plugin.settings.nodeTypes.map((nodeType) => (
+              <TldrawUiMenuItem
+                key={nodeType.id}
+                id={`convert-to-${nodeType.id}`}
+                label={"Convert to " + nodeType.name}
+                icon="file-type"
+                onSelect={() => {
+                  void convertToDiscourseNode({
+                    editor,
+                    shape: selectedShape,
+                    nodeType,
+                    plugin,
+                    canvasFile,
+                  });
+                }}
+              />
+            ))}
+          </TldrawUiMenuSubmenu>
+        </TldrawUiMenuGroup>
+      )}
+    </DefaultContextMenu>
+  );
+};
+
diff --git a/apps/obsidian/src/components/canvas/TldrawViewComponent.tsx b/apps/obsidian/src/components/canvas/TldrawViewComponent.tsx
index 9149baf44..46c153f0c 100644
--- a/apps/obsidian/src/components/canvas/TldrawViewComponent.tsx
+++ b/apps/obsidian/src/components/canvas/TldrawViewComponent.tsx
@@ -50,6 +50,7 @@ import ToastListener from "./ToastListener";
 import { RelationsOverlay } from "./overlays/RelationOverlay";
 import { showToast } from "./utils/toastUtils";
 import { WHITE_LOGO_SVG } from "~/icons";
+import { CustomContextMenu } from "./CustomContextMenu";
 
 type TldrawPreviewProps = {
   store: TLStore;
@@ -337,7 +338,11 @@ export const TldrawPreviewComponent = ({
               },
             }}
             components={{
-              /* eslint-disable-next-line @typescript-eslint/naming-convention */
+              /* eslint-disable @typescript-eslint/naming-convention */
+              ContextMenu: (props) => (
+                <CustomContextMenu canvasFile={file} props={props} />
+              ),
+
               StylePanel: () => {
                 const tools = useTools();
                 const isDiscourseNodeSelected = useIsToolSelected(
@@ -353,9 +358,7 @@ export const TldrawPreviewComponent = ({
 
                 return <DiscourseToolPanel plugin={plugin} canvasFile={file} />;
               },
-              /* eslint-disable-next-line @typescript-eslint/naming-convention */
               OnTheCanvas: () => <ToastListener canvasId={file.path} />,
-              /* eslint-disable-next-line @typescript-eslint/naming-convention */
               Toolbar: (props) => {
                 const tools = useTools();
                 const isDiscourseNodeSelected = useIsToolSelected(
@@ -378,7 +381,6 @@ export const TldrawPreviewComponent = ({
                   </DefaultToolbar>
                 );
               },
-              /* eslint-disable-next-line @typescript-eslint/naming-convention */
               InFrontOfTheCanvas: () => (
                 <RelationsOverlay plugin={plugin} file={file} />
               ),
diff --git a/apps/obsidian/src/components/canvas/utils/convertToDiscourseNode.ts b/apps/obsidian/src/components/canvas/utils/convertToDiscourseNode.ts
new file mode 100644
index 000000000..686b2d3e0
--- /dev/null
+++ b/apps/obsidian/src/components/canvas/utils/convertToDiscourseNode.ts
@@ -0,0 +1,279 @@
+import {
+  Editor,
+  TLShape,
+  createShapeId,
+  TLAssetId,
+  TLTextShape,
+  TLShapeId,
+  renderPlaintextFromRichText,
+} from "tldraw";
+import type { TFile } from "obsidian";
+import { DiscourseNode } from "~/types";
+import DiscourseGraphPlugin from "~/index";
+import { createDiscourseNode as createDiscourseNodeFile } from "~/utils/createNode";
+import {
+  addWikilinkBlockrefForFile,
+  extractBlockRefId,
+  resolveLinkedTFileByBlockRef,
+} from "~/components/canvas/stores/assetStore";
+import { showToast } from "./toastUtils";
+import { CreateNodeModal } from "~/components/CreateNodeModal";
+
+type ConvertToDiscourseNodeArgs = {
+  editor: Editor;
+  shape: TLShape;
+  nodeType: DiscourseNode;
+  plugin: DiscourseGraphPlugin;
+  canvasFile: TFile;
+};
+
+export const convertToDiscourseNode = async (
+  args: ConvertToDiscourseNodeArgs,
+): Promise<string | undefined> => {
+  try {
+    const { shape } = args;
+
+    if (shape.type === "text") {
+      return await convertTextShapeToNode(args);
+    } else if (shape.type === "image") {
+      return await convertImageShapeToNode(args);
+    } else {
+      showToast({
+        severity: "warning",
+        title: "Cannot Convert",
+        description: "Only text and image shapes can be converted",
+        targetCanvasId: args.canvasFile.path,
+      });
+    }
+  } catch (error) {
+    console.error("Error converting shape to discourse node:", error);
+    showToast({
+      severity: "error",
+      title: "Conversion Failed",
+      description: `Could not convert shape: ${error instanceof Error ? error.message : "Unknown error"}`,
+      targetCanvasId: args.canvasFile.path,
+    });
+  }
+};
+
+const convertTextShapeToNode = async ({
+  editor,
+  shape,
+  nodeType,
+  plugin,
+  canvasFile,
+}: ConvertToDiscourseNodeArgs): Promise<TLShapeId | undefined> => {
+  const text = renderPlaintextFromRichText(
+    editor,
+    (shape as TLTextShape).props.richText,
+  );
+
+  if (!text.trim()) {
+    showToast({
+      severity: "warning",
+      title: "Cannot Convert",
+      description: "Text shape has no content to convert",
+      targetCanvasId: canvasFile.path,
+    });
+    return undefined;
+  }
+
+  const createdFile = await createDiscourseNodeFile({
+    plugin,
+    nodeType,
+    text: text.trim(),
+  });
+
+  if (!createdFile) {
+    throw new Error("Failed to create discourse node file");
+  }
+
+  const shapeId = await createDiscourseNodeShape({
+    editor,
+    shape,
+    createdFile,
+    nodeType,
+    plugin,
+    canvasFile,
+  });
+
+  showToast({
+    severity: "success",
+    title: "Shape Converted",
+    description: `Converted text to ${nodeType.name}`,
+    targetCanvasId: canvasFile.path,
+  });
+
+  return shapeId;
+};
+
+const convertImageShapeToNode = async ({
+  editor,
+  shape,
+  nodeType,
+  plugin,
+  canvasFile,
+}: ConvertToDiscourseNodeArgs): Promise<TLShapeId | undefined> => {
+  const imageFile = await getImageFileFromShape({
+    shape,
+    editor,
+    plugin,
+    canvasFile,
+  });
+
+  let shapeId: TLShapeId | undefined;
+
+  const modal = new CreateNodeModal(plugin.app, {
+    nodeTypes: plugin.settings.nodeTypes,
+    plugin,
+    initialNodeType: nodeType,
+    initialTitle: "",
+    onNodeCreate: async (selectedNodeType: DiscourseNode, title: string) => {
+      try {
+        const createdFile = await createDiscourseNodeFile({
+          plugin,
+          nodeType: selectedNodeType,
+          text: title,
+        });
+
+        if (!createdFile) {
+          throw new Error("Failed to create discourse node file");
+        }
+
+        if (imageFile) {
+          await embedImageInNode(createdFile, imageFile, plugin);
+        }
+
+        shapeId = await createDiscourseNodeShape({
+          editor,
+          shape,
+          createdFile,
+          nodeType: selectedNodeType,
+          plugin,
+          canvasFile,
+        });
+
+        showToast({
+          severity: "success",
+          title: "Shape Converted",
+          description: `Converted image to ${selectedNodeType.name}`,
+          targetCanvasId: canvasFile.path,
+        });
+      } catch (error) {
+        console.error("Error creating node from image:", error);
+        throw error;
+      }
+    },
+  });
+
+  modal.open();
+
+  return shapeId;
+};
+
+const createDiscourseNodeShape = async ({
+  editor,
+  shape,
+  createdFile,
+  nodeType,
+  plugin,
+  canvasFile,
+}: {
+  editor: Editor;
+  shape: TLShape;
+  createdFile: TFile;
+  nodeType: DiscourseNode;
+  plugin: DiscourseGraphPlugin;
+  canvasFile: TFile;
+}): Promise<TLShapeId> => {
+  const src = await addWikilinkBlockrefForFile({
+    app: plugin.app,
+    canvasFile,
+    linkedFile: createdFile,
+  });
+
+  // Get the position and size of the original shape
+  const { x, y } = shape;
+  const width = "w" in shape.props ? Number(shape.props.w) : 200;
+  const height = "h" in shape.props ? Number(shape.props.h) : 100;
+
+  const shapeId = createShapeId();
+  // TODO: Update the imageSrc, width and height of the shape after the key figure is merged
+  editor.createShape({
+    id: shapeId,
+    type: "discourse-node",
+    x,
+    y,
+    props: {
+      w: Math.max(width, 200),
+      h: Math.max(height, 100),
+      src: src ?? "",
+      title: createdFile.basename,
+      nodeTypeId: nodeType.id,
+    },
+  });
+
+  editor.deleteShape(shape.id);
+  editor.setSelectedShapes([shapeId]);
+
+  editor.markHistoryStoppingPoint(`convert ${shape.type} to discourse node`);
+
+  return shapeId;
+};
+
+const getImageFileFromShape = async ({
+  shape,
+  editor,
+  plugin,
+  canvasFile,
+}: {
+  shape: TLShape;
+  editor: Editor;
+  plugin: DiscourseGraphPlugin;
+  canvasFile: TFile;
+}): Promise<TFile | null> => {
+  if (shape.type !== "image") return null;
+
+  try {
+    const assetId =
+      "assetId" in shape.props ? (shape.props.assetId as TLAssetId) : null;
+    if (!assetId) return null;
+
+    const asset = editor.getAsset(assetId);
+    if (!asset) return null;
+
+    const src = asset.props.src;
+    if (!src) return null;
+
+    const blockRefId = extractBlockRefId(src);
+    if (!blockRefId) return null;
+
+    const canvasFileCache = plugin.app.metadataCache.getFileCache(canvasFile);
+    if (!canvasFileCache) return null;
+
+    return await resolveLinkedTFileByBlockRef({
+      app: plugin.app,
+      canvasFile,
+      blockRefId,
+      canvasFileCache,
+    });
+  } catch (error) {
+    console.error("Error getting image file from shape:", error);
+    return null;
+  }
+};
+const embedImageInNode = async (
+  nodeFile: TFile,
+  imageFile: TFile,
+  plugin: DiscourseGraphPlugin,
+): Promise<void> => {
+  const imageLink = plugin.app.metadataCache.fileToLinktext(
+    imageFile,
+    nodeFile.path,
+  );
+  const imageEmbed = `![[${imageLink}]]`;
+
+  await plugin.app.vault.process(nodeFile, (data: string) => {
+    return `${data}\n${imageEmbed}\n`;
+  });
+};