diff --git a/esphome/components/display/display_buffer.cpp b/esphome/components/display/display_buffer.cpp
index b97fb4ae23..bdf299e8f1 100644
--- a/esphome/components/display/display_buffer.cpp
+++ b/esphome/components/display/display_buffer.cpp
@@ -233,6 +233,14 @@ void DisplayBuffer::image(int x, int y, Image *image, Color color_on, Color colo
         }
       }
       break;
+    case IMAGE_TYPE_TRANSPARENT_BINARY:
+      for (int img_x = 0; img_x < image->get_width(); img_x++) {
+        for (int img_y = 0; img_y < image->get_height(); img_y++) {
+          if (image->get_pixel(img_x, img_y))
+            this->draw_pixel_at(x + img_x, y + img_y, color_on);
+        }
+      }
+      break;
   }
 }
 
diff --git a/esphome/components/display/display_buffer.h b/esphome/components/display/display_buffer.h
index c803180a2d..b275b43b0e 100644
--- a/esphome/components/display/display_buffer.h
+++ b/esphome/components/display/display_buffer.h
@@ -73,7 +73,12 @@ extern const Color COLOR_OFF;
 /// Turn the pixel ON.
 extern const Color COLOR_ON;
 
-enum ImageType { IMAGE_TYPE_BINARY = 0, IMAGE_TYPE_GRAYSCALE = 1, IMAGE_TYPE_RGB24 = 2 };
+enum ImageType {
+  IMAGE_TYPE_BINARY = 0,
+  IMAGE_TYPE_GRAYSCALE = 1,
+  IMAGE_TYPE_RGB24 = 2,
+  IMAGE_TYPE_TRANSPARENT_BINARY = 3,
+};
 
 enum DisplayRotation {
   DISPLAY_ROTATION_0_DEGREES = 0,
diff --git a/esphome/components/image/__init__.py b/esphome/components/image/__init__.py
index a721263dff..70d77dfd14 100644
--- a/esphome/components/image/__init__.py
+++ b/esphome/components/image/__init__.py
@@ -24,6 +24,7 @@ IMAGE_TYPE = {
     "BINARY": ImageType.IMAGE_TYPE_BINARY,
     "GRAYSCALE": ImageType.IMAGE_TYPE_GRAYSCALE,
     "RGB24": ImageType.IMAGE_TYPE_RGB24,
+    "TRANSPARENT_BINARY": ImageType.IMAGE_TYPE_TRANSPARENT_BINARY,
 }
 
 Image_ = display.display_ns.class_("Image")
@@ -99,6 +100,17 @@ async def to_code(config):
                 pos = x + y * width8
                 data[pos // 8] |= 0x80 >> (pos % 8)
 
+    elif config[CONF_TYPE] == "TRANSPARENT_BINARY":
+        image = image.convert("RGBA")
+        width8 = ((width + 7) // 8) * 8
+        data = [0 for _ in range(height * width8 // 8)]
+        for y in range(height):
+            for x in range(width):
+                if not image.getpixel((x, y))[3]:
+                    continue
+                pos = x + y * width8
+                data[pos // 8] |= 0x80 >> (pos % 8)
+
     rhs = [HexInt(x) for x in data]
     prog_arr = cg.progmem_array(config[CONF_RAW_DATA_ID], rhs)
     cg.new_Pvariable(