diff --git a/backend/packages/harness/deerflow/config/app_config.py b/backend/packages/harness/deerflow/config/app_config.py
index d034ffc4c..b8a2ae156 100644
--- a/backend/packages/harness/deerflow/config/app_config.py
+++ b/backend/packages/harness/deerflow/config/app_config.py
@@ -1,7 +1,7 @@
 import logging
 import os
 from pathlib import Path
-from typing import Any, Self
+from typing import Any, Literal, Self
 
 import yaml
 from dotenv import load_dotenv
@@ -28,11 +28,26 @@ load_dotenv()
 logger = logging.getLogger(__name__)
 
 
+class UploadsConfig(BaseModel):
+    """Configuration for file upload handling."""
+
+    pdf_converter: Literal["auto", "pymupdf4llm", "markitdown"] = Field(
+        default="auto",
+        description=(
+            "PDF-to-Markdown converter. "
+            "'auto': prefer pymupdf4llm when installed, fall back to MarkItDown for image-based PDFs; "
+            "'pymupdf4llm': always use pymupdf4llm (must be installed); "
+            "'markitdown': always use MarkItDown (original behaviour)."
+        ),
+    )
+
+
 class AppConfig(BaseModel):
     """Config for the DeerFlow application"""
 
     log_level: str = Field(default="info", description="Logging level for deerflow modules (debug/info/warning/error)")
     token_usage: TokenUsageConfig = Field(default_factory=TokenUsageConfig, description="Token usage tracking configuration")
+    uploads: UploadsConfig = Field(default_factory=UploadsConfig, description="File upload handling configuration")
     models: list[ModelConfig] = Field(default_factory=list, description="Available models")
     sandbox: SandboxConfig = Field(description="Sandbox configuration")
     tools: list[ToolConfig] = Field(default_factory=list, description="Available tools")
diff --git a/backend/packages/harness/deerflow/utils/file_conversion.py b/backend/packages/harness/deerflow/utils/file_conversion.py
index eae56599e..9a180883d 100644
--- a/backend/packages/harness/deerflow/utils/file_conversion.py
+++ b/backend/packages/harness/deerflow/utils/file_conversion.py
@@ -1,9 +1,20 @@
 """File conversion utilities.
 
-Converts document files (PDF, PPT, Excel, Word) to Markdown using markitdown.
+Converts document files (PDF, PPT, Excel, Word) to Markdown.
+
+PDF conversion strategy (auto mode):
+  1. Try pymupdf4llm if installed — better heading detection, faster on most files.
+  2. If output is suspiciously short (< _MIN_CHARS_PER_PAGE chars/page, or < 200 chars
+     total when page count is unavailable), treat as image-based and fall back to MarkItDown.
+  3. If pymupdf4llm is not installed, use MarkItDown directly (existing behaviour).
+
+Large files (> ASYNC_THRESHOLD_BYTES) are converted in a thread pool via
+asyncio.to_thread() to avoid blocking the event loop (fixes #1569).
+
 No FastAPI or HTTP dependencies — pure utility functions.
 """
 
+import asyncio
 import logging
 import re
 from pathlib import Path
@@ -21,30 +32,136 @@ CONVERTIBLE_EXTENSIONS = {
     ".docx",
 }
 
+# Files larger than this threshold are converted in a background thread.
+# Small files complete in < 1s synchronously; spawning a thread adds unnecessary
+# scheduling overhead for them.
+_ASYNC_THRESHOLD_BYTES = 1 * 1024 * 1024  # 1 MB
+
+# If pymupdf4llm produces fewer characters *per page* than this threshold,
+# the PDF is likely image-based or encrypted — fall back to MarkItDown.
+# Rationale: normal text PDFs yield 200-2000 chars/page; image-based PDFs
+# yield close to 0. 50 chars/page gives a wide safety margin.
+# Falls back to absolute 200-char check when page count is unavailable.
+_MIN_CHARS_PER_PAGE = 50
+
+
+def _pymupdf_output_too_sparse(text: str, file_path: Path) -> bool:
+    """Return True if pymupdf4llm output is suspiciously short (image-based PDF).
+
+    Uses chars-per-page rather than an absolute threshold so that both short
+    documents (few pages, few chars) and long documents (many pages, many chars)
+    are handled correctly.
+    """
+    chars = len(text.strip())
+    doc = None
+    pages: int | None = None
+    try:
+        import pymupdf
+
+        doc = pymupdf.open(str(file_path))
+        pages = len(doc)
+    except Exception:
+        pass
+    finally:
+        if doc is not None:
+            try:
+                doc.close()
+            except Exception:
+                pass
+    if pages is not None and pages > 0:
+        return (chars / pages) < _MIN_CHARS_PER_PAGE
+    # Fallback: absolute threshold when page count is unavailable
+    return chars < 200
+
+
+def _convert_pdf_with_pymupdf4llm(file_path: Path) -> str | None:
+    """Attempt PDF conversion with pymupdf4llm.
+
+    Returns the markdown text, or None if pymupdf4llm is not installed or
+    if conversion fails (e.g. encrypted/corrupt PDF).
+    """
+    try:
+        import pymupdf4llm
+    except ImportError:
+        return None
+
+    try:
+        return pymupdf4llm.to_markdown(str(file_path))
+    except Exception:
+        logger.exception("pymupdf4llm failed to convert %s; falling back to MarkItDown", file_path.name)
+        return None
+
+
+def _convert_with_markitdown(file_path: Path) -> str:
+    """Convert any supported file to markdown text using MarkItDown."""
+    from markitdown import MarkItDown
+
+    md = MarkItDown()
+    return md.convert(str(file_path)).text_content
+
+
+def _do_convert(file_path: Path, pdf_converter: str) -> str:
+    """Synchronous conversion — called directly or via asyncio.to_thread.
+
+    Args:
+        file_path: Path to the file.
+        pdf_converter: "auto" | "pymupdf4llm" | "markitdown"
+    """
+    is_pdf = file_path.suffix.lower() == ".pdf"
+
+    if is_pdf and pdf_converter != "markitdown":
+        # Try pymupdf4llm first (auto or explicit)
+        pymupdf_text = _convert_pdf_with_pymupdf4llm(file_path)
+
+        if pymupdf_text is not None:
+            # pymupdf4llm is installed
+            if pdf_converter == "pymupdf4llm":
+                # Explicit — use as-is regardless of output length
+                return pymupdf_text
+            # auto mode: fall back if output looks like a failed parse.
+            # Use chars-per-page to distinguish image-based PDFs (near 0) from
+            # legitimately short documents.
+            if not _pymupdf_output_too_sparse(pymupdf_text, file_path):
+                return pymupdf_text
+            logger.warning(
+                "pymupdf4llm produced only %d chars for %s (likely image-based PDF); falling back to MarkItDown",
+                len(pymupdf_text.strip()),
+                file_path.name,
+            )
+        # pymupdf4llm not installed or fallback triggered → use MarkItDown
+
+    return _convert_with_markitdown(file_path)
+
 
 async def convert_file_to_markdown(file_path: Path) -> Path | None:
-    """Convert a file to markdown using markitdown.
+    """Convert a supported document file to Markdown.
+
+    PDF files are handled with a two-converter strategy (see module docstring).
+    Large files (> 1 MB) are offloaded to a thread pool to avoid blocking the
+    event loop.
 
     Args:
         file_path: Path to the file to convert.
 
     Returns:
-        Path to the markdown file if conversion was successful, None otherwise.
+        Path to the generated .md file, or None if conversion failed.
     """
     try:
-        from markitdown import MarkItDown
+        pdf_converter = _get_pdf_converter()
+        file_size = file_path.stat().st_size
 
-        md = MarkItDown()
-        result = md.convert(str(file_path))
+        if file_size > _ASYNC_THRESHOLD_BYTES:
+            text = await asyncio.to_thread(_do_convert, file_path, pdf_converter)
+        else:
+            text = _do_convert(file_path, pdf_converter)
 
-        # Save as .md file with same name
         md_path = file_path.with_suffix(".md")
-        md_path.write_text(result.text_content, encoding="utf-8")
+        md_path.write_text(text, encoding="utf-8")
 
-        logger.info(f"Converted {file_path.name} to markdown: {md_path.name}")
+        logger.info("Converted %s to markdown: %s (%d chars)", file_path.name, md_path.name, len(text))
         return md_path
     except Exception as e:
-        logger.error(f"Failed to convert {file_path.name} to markdown: {e}")
+        logger.error("Failed to convert %s to markdown: %s", file_path.name, e)
         return None
 
 
@@ -69,6 +186,8 @@ _BOLD_HEADING_RE = re.compile(r"^\*\*((ITEM|PART|SECTION|SCHEDULE|EXHIBIT|APPEND
 # Keeps prompt size bounded even for very long documents.
 MAX_OUTLINE_ENTRIES = 50
 
+_ALLOWED_PDF_CONVERTERS = {"auto", "pymupdf4llm", "markitdown"}
+
 
 def extract_outline(md_path: Path) -> list[dict]:
     """Extract document outline (headings) from a Markdown file.
@@ -122,14 +241,23 @@ def extract_outline(md_path: Path) -> list[dict]:
 
 
 def _get_pdf_converter() -> str:
-    """Read pdf_converter setting from app config, defaulting to 'auto'."""
+    """Read pdf_converter setting from app config, defaulting to 'auto'.
+
+    Normalizes the value to lowercase and validates it against the allowed set
+    so that values like 'AUTO' or 'MarkItDown' from config.yaml don't silently
+    fall through to unexpected behaviour.
+    """
     try:
         from deerflow.config.app_config import get_app_config
 
         cfg = get_app_config()
         uploads_cfg = getattr(cfg, "uploads", None)
         if uploads_cfg is not None:
-            return str(getattr(uploads_cfg, "pdf_converter", "auto"))
+            raw = str(getattr(uploads_cfg, "pdf_converter", "auto")).strip().lower()
+            if raw not in _ALLOWED_PDF_CONVERTERS:
+                logger.warning("Invalid pdf_converter value %r; falling back to 'auto'", raw)
+                return "auto"
+            return raw
     except Exception:
         pass
     return "auto"
diff --git a/backend/packages/harness/pyproject.toml b/backend/packages/harness/pyproject.toml
index c0c37e3d2..cf8b15839 100644
--- a/backend/packages/harness/pyproject.toml
+++ b/backend/packages/harness/pyproject.toml
@@ -34,6 +34,9 @@ dependencies = [
     "langgraph-sdk>=0.1.51",
 ]
 
+[project.optional-dependencies]
+pymupdf = ["pymupdf4llm>=0.0.17"]
+
 [build-system]
 requires = ["hatchling"]
 build-backend = "hatchling.build"
diff --git a/backend/tests/test_file_conversion.py b/backend/tests/test_file_conversion.py
index 72b13edc6..b2ad2d035 100644
--- a/backend/tests/test_file_conversion.py
+++ b/backend/tests/test_file_conversion.py
@@ -1,12 +1,304 @@
-"""Tests for extract_outline() in file_conversion utilities (PR2: document outline injection)."""
+"""Tests for file_conversion utilities (PR1: pymupdf4llm + asyncio.to_thread; PR2: extract_outline)."""
 
 from __future__ import annotations
 
+import asyncio
+import sys
+from types import ModuleType
+from unittest.mock import MagicMock, patch
+
 from deerflow.utils.file_conversion import (
+    _ASYNC_THRESHOLD_BYTES,
+    _MIN_CHARS_PER_PAGE,
     MAX_OUTLINE_ENTRIES,
+    _do_convert,
+    _pymupdf_output_too_sparse,
+    convert_file_to_markdown,
     extract_outline,
 )
 
+
+def _make_pymupdf_mock(page_count: int) -> ModuleType:
+    """Return a fake *pymupdf* module whose ``open()`` reports *page_count* pages."""
+    mock_doc = MagicMock()
+    mock_doc.__len__ = MagicMock(return_value=page_count)
+    fake_pymupdf = ModuleType("pymupdf")
+    fake_pymupdf.open = MagicMock(return_value=mock_doc)  # type: ignore[attr-defined]
+    return fake_pymupdf
+
+
+def _run(coro):
+    loop = asyncio.new_event_loop()
+    try:
+        return loop.run_until_complete(coro)
+    finally:
+        loop.close()
+
+
+# ---------------------------------------------------------------------------
+# _pymupdf_output_too_sparse
+# ---------------------------------------------------------------------------
+
+
+class TestPymupdfOutputTooSparse:
+    """Check the chars-per-page sparsity heuristic."""
+
+    def test_dense_text_pdf_not_sparse(self, tmp_path):
+        """Normal text PDF: many chars per page → not sparse."""
+        pdf = tmp_path / "dense.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+
+        # 10 pages × 10 000 chars → 1000/page ≫ threshold
+        with patch.dict(sys.modules, {"pymupdf": _make_pymupdf_mock(page_count=10)}):
+            result = _pymupdf_output_too_sparse("x" * 10_000, pdf)
+        assert result is False
+
+    def test_image_based_pdf_is_sparse(self, tmp_path):
+        """Image-based PDF: near-zero chars per page → sparse."""
+        pdf = tmp_path / "image.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+
+        # 612 chars / 31 pages ≈ 19.7/page < _MIN_CHARS_PER_PAGE (50)
+        with patch.dict(sys.modules, {"pymupdf": _make_pymupdf_mock(page_count=31)}):
+            result = _pymupdf_output_too_sparse("x" * 612, pdf)
+        assert result is True
+
+    def test_fallback_when_pymupdf_unavailable(self, tmp_path):
+        """When pymupdf is not installed, fall back to absolute 200-char threshold."""
+        pdf = tmp_path / "broken.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+
+        # Remove pymupdf from sys.modules so the `import pymupdf` inside the
+        # function raises ImportError, triggering the absolute-threshold fallback.
+        with patch.dict(sys.modules, {"pymupdf": None}):
+            sparse = _pymupdf_output_too_sparse("x" * 100, pdf)
+            not_sparse = _pymupdf_output_too_sparse("x" * 300, pdf)
+
+        assert sparse is True
+        assert not_sparse is False
+
+    def test_exactly_at_threshold_is_not_sparse(self, tmp_path):
+        """Chars-per-page == threshold is treated as NOT sparse (boundary inclusive)."""
+        pdf = tmp_path / "boundary.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+
+        # 2 pages × _MIN_CHARS_PER_PAGE chars = exactly at threshold
+        with patch.dict(sys.modules, {"pymupdf": _make_pymupdf_mock(page_count=2)}):
+            result = _pymupdf_output_too_sparse("x" * (_MIN_CHARS_PER_PAGE * 2), pdf)
+        assert result is False
+
+
+# ---------------------------------------------------------------------------
+# _do_convert — routing logic
+# ---------------------------------------------------------------------------
+
+
+class TestDoConvert:
+    """Verify that _do_convert routes to the right sub-converter."""
+
+    def test_non_pdf_always_uses_markitdown(self, tmp_path):
+        """DOCX / XLSX / PPTX always go through MarkItDown regardless of setting."""
+        docx = tmp_path / "report.docx"
+        docx.write_bytes(b"PK fake docx")
+
+        with patch(
+            "deerflow.utils.file_conversion._convert_with_markitdown",
+            return_value="# Markdown from MarkItDown",
+        ) as mock_md:
+            result = _do_convert(docx, "auto")
+
+        mock_md.assert_called_once_with(docx)
+        assert result == "# Markdown from MarkItDown"
+
+    def test_pdf_auto_uses_pymupdf4llm_when_dense(self, tmp_path):
+        """auto mode: use pymupdf4llm output when it's dense enough."""
+        pdf = tmp_path / "report.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+
+        dense_text = "# Heading\n" + "word " * 2000  # clearly dense
+
+        with (
+            patch(
+                "deerflow.utils.file_conversion._convert_pdf_with_pymupdf4llm",
+                return_value=dense_text,
+            ),
+            patch(
+                "deerflow.utils.file_conversion._pymupdf_output_too_sparse",
+                return_value=False,
+            ),
+            patch("deerflow.utils.file_conversion._convert_with_markitdown") as mock_md,
+        ):
+            result = _do_convert(pdf, "auto")
+
+        mock_md.assert_not_called()
+        assert result == dense_text
+
+    def test_pdf_auto_falls_back_when_sparse(self, tmp_path):
+        """auto mode: fall back to MarkItDown when pymupdf4llm output is sparse."""
+        pdf = tmp_path / "scanned.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+
+        with (
+            patch(
+                "deerflow.utils.file_conversion._convert_pdf_with_pymupdf4llm",
+                return_value="x" * 612,  # 19.7 chars/page for 31-page doc
+            ),
+            patch(
+                "deerflow.utils.file_conversion._pymupdf_output_too_sparse",
+                return_value=True,
+            ),
+            patch(
+                "deerflow.utils.file_conversion._convert_with_markitdown",
+                return_value="OCR result via MarkItDown",
+            ) as mock_md,
+        ):
+            result = _do_convert(pdf, "auto")
+
+        mock_md.assert_called_once_with(pdf)
+        assert result == "OCR result via MarkItDown"
+
+    def test_pdf_explicit_pymupdf4llm_skips_sparsity_check(self, tmp_path):
+        """'pymupdf4llm' mode: use output as-is even if sparse."""
+        pdf = tmp_path / "explicit.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+
+        sparse_text = "x" * 10  # very short
+
+        with (
+            patch(
+                "deerflow.utils.file_conversion._convert_pdf_with_pymupdf4llm",
+                return_value=sparse_text,
+            ),
+            patch("deerflow.utils.file_conversion._convert_with_markitdown") as mock_md,
+        ):
+            result = _do_convert(pdf, "pymupdf4llm")
+
+        mock_md.assert_not_called()
+        assert result == sparse_text
+
+    def test_pdf_explicit_markitdown_skips_pymupdf4llm(self, tmp_path):
+        """'markitdown' mode: never attempt pymupdf4llm."""
+        pdf = tmp_path / "force_md.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+
+        with (
+            patch("deerflow.utils.file_conversion._convert_pdf_with_pymupdf4llm") as mock_pymu,
+            patch(
+                "deerflow.utils.file_conversion._convert_with_markitdown",
+                return_value="MarkItDown result",
+            ),
+        ):
+            result = _do_convert(pdf, "markitdown")
+
+        mock_pymu.assert_not_called()
+        assert result == "MarkItDown result"
+
+    def test_pdf_auto_falls_back_when_pymupdf4llm_not_installed(self, tmp_path):
+        """auto mode: if pymupdf4llm is not installed, use MarkItDown directly."""
+        pdf = tmp_path / "no_pymupdf.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+
+        with (
+            patch(
+                "deerflow.utils.file_conversion._convert_pdf_with_pymupdf4llm",
+                return_value=None,  # None signals not installed
+            ),
+            patch(
+                "deerflow.utils.file_conversion._convert_with_markitdown",
+                return_value="MarkItDown fallback",
+            ) as mock_md,
+        ):
+            result = _do_convert(pdf, "auto")
+
+        mock_md.assert_called_once_with(pdf)
+        assert result == "MarkItDown fallback"
+
+
+# ---------------------------------------------------------------------------
+# convert_file_to_markdown — async + file writing
+# ---------------------------------------------------------------------------
+
+
+class TestConvertFileToMarkdown:
+    def test_small_file_runs_synchronously(self, tmp_path):
+        """Small files (< 1 MB) are converted in the event loop thread."""
+        pdf = tmp_path / "small.pdf"
+        pdf.write_bytes(b"%PDF-1.4 " + b"x" * 100)  # well under 1 MB
+
+        with (
+            patch("deerflow.utils.file_conversion._get_pdf_converter", return_value="auto"),
+            patch(
+                "deerflow.utils.file_conversion._do_convert",
+                return_value="# Small PDF",
+            ) as mock_convert,
+            patch("asyncio.to_thread") as mock_thread,
+        ):
+            md_path = _run(convert_file_to_markdown(pdf))
+
+        # asyncio.to_thread must NOT have been called
+        mock_thread.assert_not_called()
+        mock_convert.assert_called_once()
+        assert md_path == pdf.with_suffix(".md")
+        assert md_path.read_text() == "# Small PDF"
+
+    def test_large_file_offloaded_to_thread(self, tmp_path):
+        """Large files (> 1 MB) are offloaded via asyncio.to_thread."""
+        pdf = tmp_path / "large.pdf"
+        # Write slightly more than the threshold
+        pdf.write_bytes(b"%PDF-1.4 " + b"x" * (_ASYNC_THRESHOLD_BYTES + 1))
+
+        async def fake_to_thread(fn, *args, **kwargs):
+            return fn(*args, **kwargs)
+
+        with (
+            patch("deerflow.utils.file_conversion._get_pdf_converter", return_value="auto"),
+            patch(
+                "deerflow.utils.file_conversion._do_convert",
+                return_value="# Large PDF",
+            ),
+            patch("asyncio.to_thread", side_effect=fake_to_thread) as mock_thread,
+        ):
+            md_path = _run(convert_file_to_markdown(pdf))
+
+        mock_thread.assert_called_once()
+        assert md_path == pdf.with_suffix(".md")
+        assert md_path.read_text() == "# Large PDF"
+
+    def test_returns_none_on_conversion_error(self, tmp_path):
+        """If conversion raises, return None without propagating the exception."""
+        pdf = tmp_path / "broken.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+
+        with (
+            patch("deerflow.utils.file_conversion._get_pdf_converter", return_value="auto"),
+            patch(
+                "deerflow.utils.file_conversion._do_convert",
+                side_effect=RuntimeError("conversion failed"),
+            ),
+        ):
+            result = _run(convert_file_to_markdown(pdf))
+
+        assert result is None
+
+    def test_writes_utf8_markdown_file(self, tmp_path):
+        """Generated .md file is written with UTF-8 encoding."""
+        pdf = tmp_path / "report.pdf"
+        pdf.write_bytes(b"%PDF-1.4 fake")
+        chinese_content = "# 中文报告\n\n这是测试内容。"
+
+        with (
+            patch("deerflow.utils.file_conversion._get_pdf_converter", return_value="auto"),
+            patch(
+                "deerflow.utils.file_conversion._do_convert",
+                return_value=chinese_content,
+            ),
+        ):
+            md_path = _run(convert_file_to_markdown(pdf))
+
+        assert md_path is not None
+        assert md_path.read_text(encoding="utf-8") == chinese_content
+
+
 # ---------------------------------------------------------------------------
 # extract_outline
 # ---------------------------------------------------------------------------
diff --git a/config.example.yaml b/config.example.yaml
index 3eb0b9e9e..0ca11f418 100644
--- a/config.example.yaml
+++ b/config.example.yaml
@@ -369,6 +369,15 @@ tool_search:
 
 # Option 1: Local Sandbox (Default)
 # Executes commands directly on the host machine
+uploads:
+  # PDF-to-Markdown converter used when a PDF is uploaded.
+  # auto        — prefer pymupdf4llm when installed; fall back to MarkItDown for
+  #               image-based or encrypted PDFs (recommended default).
+  # pymupdf4llm — always use pymupdf4llm (must be installed: uv add pymupdf4llm).
+  #               Better heading/table extraction; faster on most files.
+  # markitdown  — always use MarkItDown (original behaviour, no extra dependency).
+  pdf_converter: auto
+
 sandbox:
   use: deerflow.sandbox.local:LocalSandboxProvider
   # Host bash execution is disabled by default because LocalSandboxProvider is