diff --git a/Gems/Atom/Feature/Common/Code/Source/Material/MaterialAssignmentSerializer.cpp b/Gems/Atom/Feature/Common/Code/Source/Material/MaterialAssignmentSerializer.cpp
index b757e4bd7e..85dc26089f 100644
--- a/Gems/Atom/Feature/Common/Code/Source/Material/MaterialAssignmentSerializer.cpp
+++ b/Gems/Atom/Feature/Common/Code/Source/Material/MaterialAssignmentSerializer.cpp
@@ -16,7 +16,9 @@ namespace AZ
         AZ_CLASS_ALLOCATOR_IMPL(JsonMaterialAssignmentSerializer, AZ::SystemAllocator, 0);
 
         JsonSerializationResult::Result JsonMaterialAssignmentSerializer::Load(
-            void* outputValue, [[maybe_unused]] const Uuid& outputValueTypeId, const rapidjson::Value& inputValue,
+            void* outputValue,
+            [[maybe_unused]] const Uuid& outputValueTypeId,
+            const rapidjson::Value& inputValue,
             JsonDeserializerContext& context)
         {
             namespace JSR = JsonSerializationResult;
@@ -62,6 +64,7 @@ namespace AZ
                             LoadAny<AZ::Color>(propertyValue, inputPropertyPair.value, context, result) ||
                             LoadAny<AZStd::string>(propertyValue, inputPropertyPair.value, context, result) ||
                             LoadAny<AZ::Data::AssetId>(propertyValue, inputPropertyPair.value, context, result) ||
+                            LoadAny<AZ::Data::Asset<AZ::Data::AssetData>>(propertyValue, inputPropertyPair.value, context, result) ||
                             LoadAny<AZ::Data::Asset<AZ::RPI::ImageAsset>>(propertyValue, inputPropertyPair.value, context, result) ||
                             LoadAny<AZ::Data::Asset<AZ::RPI::StreamingImageAsset>>(propertyValue, inputPropertyPair.value, context, result))
                         {
@@ -78,7 +81,10 @@ namespace AZ
         }
 
         JsonSerializationResult::Result JsonMaterialAssignmentSerializer::Store(
-            rapidjson::Value& outputValue, const void* inputValue, const void* defaultValue, [[maybe_unused]] const Uuid& valueTypeId,
+            rapidjson::Value& outputValue,
+            const void* inputValue,
+            const void* defaultValue,
+            [[maybe_unused]] const Uuid& valueTypeId,
             JsonSerializerContext& context)
         {
             namespace JSR = AZ::JsonSerializationResult;
@@ -138,9 +144,9 @@ namespace AZ
                                 StoreAny<AZ::Color>(propertyValue, outputPropertyValue, context, result) ||
                                 StoreAny<AZStd::string>(propertyValue, outputPropertyValue, context, result) ||
                                 StoreAny<AZ::Data::AssetId>(propertyValue, outputPropertyValue, context, result) ||
+                                StoreAny<AZ::Data::Asset<AZ::Data::AssetData>>(propertyValue, outputPropertyValue, context, result) ||
                                 StoreAny<AZ::Data::Asset<AZ::RPI::ImageAsset>>(propertyValue, outputPropertyValue, context, result) ||
-                                StoreAny<AZ::Data::Asset<AZ::RPI::StreamingImageAsset>>(
-                                    propertyValue, outputPropertyValue, context, result))
+                                StoreAny<AZ::Data::Asset<AZ::RPI::StreamingImageAsset>>(propertyValue, outputPropertyValue, context, result))
                             {
                                 outputPropertyValueContainer.AddMember(
                                     rapidjson::Value::StringRefType(propertyName.GetCStr()), outputPropertyValue,
@@ -164,7 +170,9 @@ namespace AZ
 
         template<typename T>
         bool JsonMaterialAssignmentSerializer::LoadAny(
-            AZStd::any& propertyValue, const rapidjson::Value& inputPropertyValue, AZ::JsonDeserializerContext& context,
+            AZStd::any& propertyValue,
+            const rapidjson::Value& inputPropertyValue,
+            AZ::JsonDeserializerContext& context,
             AZ::JsonSerializationResult::ResultCode& result)
         {
             if (inputPropertyValue.IsObject() && inputPropertyValue.HasMember("Value") && inputPropertyValue.HasMember("$type"))
@@ -187,7 +195,9 @@ namespace AZ
 
         template<typename T>
         bool JsonMaterialAssignmentSerializer::StoreAny(
-            const AZStd::any& propertyValue, rapidjson::Value& outputPropertyValue, AZ::JsonSerializerContext& context,
+            const AZStd::any& propertyValue,
+            rapidjson::Value& outputPropertyValue,
+            AZ::JsonSerializerContext& context,
             AZ::JsonSerializationResult::ResultCode& result)
         {
             if (propertyValue.is<T>())
@@ -199,7 +209,7 @@ namespace AZ
                 result.Combine(StoreTypeId(typeValue, azrtti_typeid<T>(), context));
                 outputPropertyValue.AddMember("$type", typeValue, context.GetJsonAllocator());
 
-                T value = AZStd::any_cast<T>(propertyValue);
+                const T& value = AZStd::any_cast<T>(propertyValue);
                 result.Combine(
                     ContinueStoringToJsonObjectField(outputPropertyValue, "Value", &value, nullptr, azrtti_typeid<T>(), context));
                 return true;
diff --git a/Gems/Atom/Feature/Common/Code/Source/Material/MaterialAssignmentSerializer.h b/Gems/Atom/Feature/Common/Code/Source/Material/MaterialAssignmentSerializer.h
index e92d756639..069b4d4cdb 100644
--- a/Gems/Atom/Feature/Common/Code/Source/Material/MaterialAssignmentSerializer.h
+++ b/Gems/Atom/Feature/Common/Code/Source/Material/MaterialAssignmentSerializer.h
@@ -25,21 +25,31 @@ namespace AZ
             AZ_CLASS_ALLOCATOR_DECL;
 
             JsonSerializationResult::Result Load(
-                void* outputValue, const Uuid& outputValueTypeId, const rapidjson::Value& inputValue,
+                void* outputValue,
+                const Uuid& outputValueTypeId,
+                const rapidjson::Value& inputValue,
                 JsonDeserializerContext& context) override;
 
             JsonSerializationResult::Result Store(
-                rapidjson::Value& outputValue, const void* inputValue, const void* defaultValue, const Uuid& valueTypeId,
+                rapidjson::Value& outputValue,
+                const void* inputValue,
+                const void* defaultValue,
+                const Uuid& valueTypeId,
                 JsonSerializerContext& context) override;
 
         private:
             template<typename T>
             bool LoadAny(
-                AZStd::any& propertyValue, const rapidjson::Value& inputPropertyValue, AZ::JsonDeserializerContext& context,
+                AZStd::any& propertyValue,
+                const rapidjson::Value& inputPropertyValue,
+                AZ::JsonDeserializerContext& context,
                 AZ::JsonSerializationResult::ResultCode& result);
+
             template<typename T>
             bool StoreAny(
-                const AZStd::any& propertyValue, rapidjson::Value& outputPropertyValue, AZ::JsonSerializerContext& context,
+                const AZStd::any& propertyValue,
+                rapidjson::Value& outputPropertyValue,
+                AZ::JsonSerializerContext& context,
                 AZ::JsonSerializationResult::ResultCode& result);
         };
     } // namespace Render
diff --git a/Gems/Atom/Tools/AtomToolsFramework/Code/Source/Util/MaterialPropertyUtil.cpp b/Gems/Atom/Tools/AtomToolsFramework/Code/Source/Util/MaterialPropertyUtil.cpp
index 3ffd8efa6e..2ad4522094 100644
--- a/Gems/Atom/Tools/AtomToolsFramework/Code/Source/Util/MaterialPropertyUtil.cpp
+++ b/Gems/Atom/Tools/AtomToolsFramework/Code/Source/Util/MaterialPropertyUtil.cpp
@@ -33,11 +33,13 @@ namespace AtomToolsFramework
     {
         if (value.Is<AZ::Data::Asset<AZ::RPI::ImageAsset>>())
         {
-            const AZ::Data::Asset<AZ::RPI::ImageAsset>& imageAsset = value.GetValue<AZ::Data::Asset<AZ::RPI::ImageAsset>>();
-            return AZStd::any(AZ::Data::Asset<AZ::RPI::StreamingImageAsset>(
-                imageAsset.GetId(),
-                azrtti_typeid<AZ::RPI::StreamingImageAsset>(),
-                imageAsset.GetHint()));
+            const auto& imageAsset = value.GetValue<AZ::Data::Asset<AZ::RPI::ImageAsset>>();
+            return AZStd::any(AZ::Data::Asset<AZ::RPI::StreamingImageAsset>(imageAsset.GetId(), azrtti_typeid<AZ::RPI::StreamingImageAsset>(), imageAsset.GetHint()));
+        }
+        else if (value.Is<AZ::Data::Instance<AZ::RPI::Image>>())
+        {
+            const auto& image = value.GetValue<AZ::Data::Instance<AZ::RPI::Image>>();
+            return AZStd::any(AZ::Data::Asset<AZ::RPI::StreamingImageAsset>(image->GetAssetId(), azrtti_typeid<AZ::RPI::StreamingImageAsset>()));
         }
 
         return AZ::RPI::MaterialPropertyValue::ToAny(value);
diff --git a/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/MaterialComponentController.cpp b/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/MaterialComponentController.cpp
index 0ccdae28de..996a575c69 100644
--- a/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/MaterialComponentController.cpp
+++ b/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/MaterialComponentController.cpp
@@ -104,6 +104,7 @@ namespace AZ
         MaterialComponentController::MaterialComponentController(const MaterialComponentConfig& config)
             : m_configuration(config)
         {
+            ConvertAssetsForSerialization();
         }
 
         void MaterialComponentController::Activate(EntityId entityId)
@@ -135,6 +136,7 @@ namespace AZ
         void MaterialComponentController::SetConfiguration(const MaterialComponentConfig& config)
         {
             m_configuration = config;
+            ConvertAssetsForSerialization();
         }
 
         const MaterialComponentConfig& MaterialComponentController::GetConfiguration() const
@@ -338,6 +340,7 @@ namespace AZ
             // before LoadMaterials() is called [LYN-2249]
             auto temp = m_configuration.m_materials;
             m_configuration.m_materials = materials;
+            ConvertAssetsForSerialization();
             LoadMaterials();
         }
 
@@ -489,6 +492,7 @@ namespace AZ
             auto& materialAssignment = m_configuration.m_materials[materialAssignmentId];
             const bool wasEmpty = materialAssignment.m_propertyOverrides.empty();
             materialAssignment.m_propertyOverrides[AZ::Name(propertyName)] = value;
+            ConvertAssetsForSerialization();
 
             if (materialAssignment.RequiresLoading())
             {
@@ -586,6 +590,7 @@ namespace AZ
             auto& materialAssignment = m_configuration.m_materials[materialAssignmentId];
             const bool wasEmpty = materialAssignment.m_propertyOverrides.empty();
             materialAssignment.m_propertyOverrides = propertyOverrides;
+            ConvertAssetsForSerialization();
 
             if (materialAssignment.RequiresLoading())
             {
@@ -667,5 +672,33 @@ namespace AZ
                 TickBus::Handler::BusConnect();
             }
         }
+
+        void MaterialComponentController::ConvertAssetsForSerialization()
+        {
+            for (auto& materialAssignmentPair : m_configuration.m_materials)
+            {
+                MaterialAssignment& materialAssignment = materialAssignmentPair.second;
+                for (auto& propertyPair : materialAssignment.m_propertyOverrides)
+                {
+                    auto& value = propertyPair.second;
+                    if (value.is<AZ::Data::Asset<AZ::Data::AssetData>>())
+                    {
+                        value = AZStd::any_cast<AZ::Data::Asset<AZ::Data::AssetData>>(value).GetId();
+                    }
+                    else if (value.is<AZ::Data::Asset<AZ::RPI::StreamingImageAsset>>())
+                    {
+                        value = AZStd::any_cast<AZ::Data::Asset<AZ::RPI::StreamingImageAsset>>(value).GetId();
+                    }
+                    else if (value.is<AZ::Data::Asset<AZ::RPI::ImageAsset>>())
+                    {
+                        value = AZStd::any_cast<AZ::Data::Asset<AZ::RPI::ImageAsset>>(value).GetId();
+                    }
+                    else if (value.is<AZ::Data::Instance<AZ::RPI::Image>>())
+                    {
+                        value = AZStd::any_cast<AZ::Data::Instance<AZ::RPI::Image>>(value)->GetAssetId();
+                    }
+                }
+            }
+        }
     } // namespace Render
 } // namespace AZ
diff --git a/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/MaterialComponentController.h b/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/MaterialComponentController.h
index 74b1cfda4d..d3eaa4433d 100644
--- a/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/MaterialComponentController.h
+++ b/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/MaterialComponentController.h
@@ -99,6 +99,11 @@ namespace AZ
             //! Queue material instance recreation notifiucations until tick
             void QueueMaterialUpdateNotification();
 
+            //! Converts property overrides storing image asset references into asset IDs. This addresses a problem where image property
+            //! overrides are lost during prefab serialization and patching. This suboptimal function will be removed once the underlying
+            //! problem is resolved.
+            void ConvertAssetsForSerialization();
+
             EntityId m_entityId;
             MaterialComponentConfig m_configuration;
             AZStd::unordered_set<MaterialAssignmentId> m_materialsWithDirtyProperties;