diff --git a/src-tauri/src/asset_server.rs b/src-tauri/src/asset_server.rs
new file mode 100644
index 0000000..b0388ca
--- /dev/null
+++ b/src-tauri/src/asset_server.rs
@@ -0,0 +1,199 @@
+use std::{
+    io::Read,
+    path::{Component, Path, PathBuf},
+};
+
+use log::*;
+use tokio::{
+    io::{AsyncReadExt, AsyncWriteExt},
+    net::{TcpListener, TcpStream},
+};
+
+const MAX_HEADER_SIZE: usize = 16 * 1024;
+const FILE_READ_BUF_SIZE: usize = 64 * 1024;
+
+/// Serves files from `root` over HTTP so Proton/Wine can fetch local
+/// `file://` assets through the same loopback URL used for proxied CDN downloads.
+pub async fn run(listener: TcpListener, root: PathBuf) {
+    info!(
+        "Local asset server listening on {} ({})",
+        listener.local_addr().unwrap(),
+        root.display()
+    );
+
+    loop {
+        match listener.accept().await {
+            Ok((stream, addr)) => {
+                let root = root.clone();
+                tokio::spawn(async move {
+                    if let Err(e) = handle_client(stream, &root).await {
+                        debug!("Local asset server error from {}: {}", addr, e);
+                    }
+                });
+            }
+            Err(e) => {
+                error!("Local asset server accept error: {}", e);
+            }
+        }
+    }
+}
+
+async fn handle_client(mut stream: TcpStream, root: &Path) -> std::io::Result<()> {
+    let header_bytes = read_headers(&mut stream).await?;
+    let header_text = String::from_utf8_lossy(&header_bytes);
+    let request_line = header_text.lines().next().unwrap_or("");
+    let mut parts = request_line.split_whitespace();
+    let method = parts.next().unwrap_or("");
+    let raw_path = parts.next().unwrap_or("/");
+
+    if method != "GET" && method != "HEAD" {
+        write_empty_response(&mut stream, "405 Method Not Allowed").await?;
+        return Ok(());
+    }
+
+    let path_only = raw_path.split(['?', '#']).next().unwrap_or("/");
+    let Some(file_path) = resolve_asset_path(root, path_only) else {
+        write_empty_response(&mut stream, "400 Bad Request").await?;
+        return Ok(());
+    };
+
+    let mut file = match std::fs::File::open(&file_path) {
+        Ok(file) => file,
+        Err(e) if e.kind() == std::io::ErrorKind::NotFound => {
+            debug!("Local asset not found: {}", file_path.display());
+            write_empty_response(&mut stream, "404 Not Found").await?;
+            return Ok(());
+        }
+        Err(e) => {
+            warn!("Failed to open {}: {}", file_path.display(), e);
+            write_empty_response(&mut stream, "500 Internal Server Error").await?;
+            return Ok(());
+        }
+    };
+
+    let metadata = file.metadata()?;
+    if metadata.is_dir() {
+        write_empty_response(&mut stream, "404 Not Found").await?;
+        return Ok(());
+    }
+
+    let headers = format!(
+        "HTTP/1.1 200 OK\r\nContent-Length: {}\r\nContent-Type: application/octet-stream\r\nConnection: close\r\n\r\n",
+        metadata.len()
+    );
+    stream.write_all(headers.as_bytes()).await?;
+
+    if method == "GET" {
+        let mut buf = vec![0u8; FILE_READ_BUF_SIZE];
+        loop {
+            let n = file.read(&mut buf)?;
+            if n == 0 {
+                break;
+            }
+            stream.write_all(&buf[..n]).await?;
+        }
+    }
+
+    stream.shutdown().await.ok();
+    Ok(())
+}
+
+async fn read_headers(stream: &mut TcpStream) -> std::io::Result<Vec<u8>> {
+    let mut buf = Vec::new();
+    let mut byte = [0u8; 1];
+    while buf.len() < MAX_HEADER_SIZE {
+        let n = stream.read(&mut byte).await?;
+        if n == 0 {
+            break;
+        }
+        buf.push(byte[0]);
+        if buf.windows(4).any(|w| w == b"\r\n\r\n") || buf.windows(2).any(|w| w == b"\n\n") {
+            return Ok(buf);
+        }
+    }
+    if buf.is_empty() {
+        Err(std::io::Error::new(
+            std::io::ErrorKind::UnexpectedEof,
+            "No data received",
+        ))
+    } else {
+        Ok(buf)
+    }
+}
+
+async fn write_empty_response(stream: &mut TcpStream, status: &str) -> std::io::Result<()> {
+    let response = format!("HTTP/1.1 {status}\r\nContent-Length: 0\r\nConnection: close\r\n\r\n");
+    stream.write_all(response.as_bytes()).await?;
+    stream.shutdown().await.ok();
+    Ok(())
+}
+
+pub(crate) fn resolve_asset_path(root: &Path, request_path: &str) -> Option<PathBuf> {
+    let trimmed = request_path.trim_start_matches('/');
+    if trimmed.is_empty() {
+        return None;
+    }
+
+    let decoded = percent_decode(trimmed);
+    let relative = Path::new(&decoded);
+    if relative.is_absolute()
+        || relative
+            .components()
+            .any(|c| matches!(c, Component::ParentDir | Component::Prefix(_)))
+    {
+        return None;
+    }
+
+    Some(root.join(relative))
+}
+
+fn percent_decode(input: &str) -> String {
+    let bytes = input.as_bytes();
+    let mut out = Vec::with_capacity(bytes.len());
+    let mut i = 0;
+    while i < bytes.len() {
+        if bytes[i] == b'%'
+            && i + 2 < bytes.len()
+            && let Ok(value) =
+                u8::from_str_radix(std::str::from_utf8(&bytes[i + 1..i + 3]).unwrap_or(""), 16)
+        {
+            out.push(value);
+            i += 3;
+            continue;
+        }
+        if bytes[i] == b'+' {
+            out.push(b' ');
+            i += 1;
+            continue;
+        }
+        out.push(bytes[i]);
+        i += 1;
+    }
+    String::from_utf8_lossy(&out).into_owned()
+}
+
+#[cfg(test)]
+mod tests {
+    use super::*;
+
+    #[test]
+    fn resolve_rejects_parent_dir() {
+        let root = Path::new("/tmp/assets");
+        assert!(resolve_asset_path(root, "/../secret").is_none());
+        assert!(resolve_asset_path(root, "/foo/../../secret").is_none());
+    }
+
+    #[test]
+    fn resolve_joins_relative_name() {
+        let root = PathBuf::from("assets");
+        let path = resolve_asset_path(&root, "/Map_01_01.unity3d").unwrap();
+        assert_eq!(path, root.join("Map_01_01.unity3d"));
+    }
+
+    #[test]
+    fn resolve_decodes_percent_encoding() {
+        let root = PathBuf::from("assets");
+        let path = resolve_asset_path(&root, "/foo%20bar.unity3d").unwrap();
+        assert_eq!(path, root.join("foo bar.unity3d"));
+    }
+}
diff --git a/src-tauri/src/lib.rs b/src-tauri/src/lib.rs
index bdb5c32..a516ba0 100644
--- a/src-tauri/src/lib.rs
+++ b/src-tauri/src/lib.rs
@@ -1,3 +1,4 @@
+mod asset_server;
 mod config;
 mod endpoint;
 mod state;
@@ -549,17 +550,32 @@ async fn prep_launch(
                 main_url = offline_main_url;
             }
         } else if state.config.launcher.proxy_asset_downloads {
-            let mut proxy = TcpProxy::default();
-            proxy.set_base_path(asset_url.clone());
             let listener = TcpListener::bind("127.0.0.1:0").await?;
             let proxy_addr = listener.local_addr()?;
             let new_asset_url = format!("http://{}", proxy_addr);
-            asset_url = new_asset_url;
 
-            let handle = tokio::spawn(async move {
-                proxy.run(&listener).await;
-            });
-            state.proxy = Some(handle);
+            if util::is_file_uri(&asset_url) {
+                let local_dir = util::file_uri_to_path(&asset_url)?;
+                if !local_dir.is_dir() {
+                    return Err(
+                        format!("Asset directory not found: {}", local_dir.display()).into(),
+                    );
+                }
+                debug!("Proxying local file assets from {}", local_dir.display());
+                let handle = tokio::spawn(async move {
+                    asset_server::run(listener, local_dir).await;
+                });
+                state.proxy = Some(handle);
+            } else {
+                let mut proxy = TcpProxy::default();
+                proxy.set_base_path(asset_url.clone());
+                let handle = tokio::spawn(async move {
+                    proxy.run(&listener).await;
+                });
+                state.proxy = Some(handle);
+            }
+
+            asset_url = new_asset_url;
         }
 
         // Upgrade the main URL to HTTPS, if it's available, since ffrunner supports it
diff --git a/src-tauri/src/util.rs b/src-tauri/src/util.rs
index 70f2a87..1ba5e1c 100644
--- a/src-tauri/src/util.rs
+++ b/src-tauri/src/util.rs
@@ -295,6 +295,119 @@ pub(crate) fn get_path_as_file_uri(path: &Path) -> String {
     uri.replace("\\", "/")
 }
 
+pub(crate) fn is_file_uri(uri: &str) -> bool {
+    uri.len() >= 5 && uri[..5].eq_ignore_ascii_case("file:")
+}
+
+/// Converts a `file:` URI into a filesystem path.
+pub(crate) fn file_uri_to_path(uri: &str) -> Result<PathBuf> {
+    if !is_file_uri(uri) {
+        return Err(format!("Not a file URI: {}", uri).into());
+    }
+
+    let normalized = uri.replace('\\', "/");
+    let after_scheme = normalized
+        .split_once(':')
+        .map(|(_, rest)| rest)
+        .unwrap_or("");
+
+    let path_part = if let Some(rest) = after_scheme.strip_prefix("//") {
+        if rest.starts_with('/') {
+            rest
+        } else {
+            // file://localhost/path or file://host/path - skip the host
+            rest.find('/').map(|i| &rest[i..]).unwrap_or("")
+        }
+    } else {
+        after_scheme
+    };
+
+    if path_part.is_empty() {
+        return Err(format!("Invalid file URI: {}", uri).into());
+    }
+
+    let decoded = percent_decode_uri_path(path_part);
+
+    #[cfg(windows)]
+    {
+        // file:///C:/foo -> /C:/foo -> C:/foo
+        let windows_path = decoded
+            .strip_prefix('/')
+            .filter(|s| s.chars().nth(1) == Some(':'))
+            .unwrap_or(&decoded);
+        Ok(PathBuf::from(windows_path))
+    }
+
+    #[cfg(not(windows))]
+    {
+        Ok(PathBuf::from(decoded))
+    }
+}
+
+fn percent_decode_uri_path(input: &str) -> String {
+    let bytes = input.as_bytes();
+    let mut out = Vec::with_capacity(bytes.len());
+    let mut i = 0;
+    while i < bytes.len() {
+        if bytes[i] == b'%'
+            && i + 2 < bytes.len()
+            && let Ok(value) =
+                u8::from_str_radix(std::str::from_utf8(&bytes[i + 1..i + 3]).unwrap_or(""), 16)
+        {
+            out.push(value);
+            i += 3;
+            continue;
+        }
+        out.push(bytes[i]);
+        i += 1;
+    }
+    String::from_utf8_lossy(&out).into_owned()
+}
+
+#[cfg(test)]
+mod file_uri_tests {
+    use super::*;
+    use std::path::PathBuf;
+
+    #[test]
+    fn detects_file_uri() {
+        assert!(is_file_uri("file:///tmp/assets"));
+        assert!(is_file_uri("FILE:///C:/builds"));
+        assert!(!is_file_uri("http://cdn.example.com/build"));
+    }
+
+    #[test]
+    fn parses_unix_file_uri() {
+        let path = file_uri_to_path("file:///tmp/assets").unwrap();
+        if cfg!(windows) {
+            assert!(path.ends_with("tmp\\assets") || path.ends_with("tmp/assets"));
+        } else {
+            assert_eq!(path, PathBuf::from("/tmp/assets"));
+        }
+    }
+
+    #[test]
+    fn parses_windows_file_uri() {
+        let path = file_uri_to_path("file:///C:/builds/assets").unwrap();
+        if cfg!(windows) {
+            assert_eq!(path, PathBuf::from("C:/builds/assets"));
+        } else {
+            assert_eq!(path, PathBuf::from("/C:/builds/assets"));
+        }
+    }
+
+    #[test]
+    fn roundtrips_local_path() {
+        let original = std::env::temp_dir();
+        let uri = get_path_as_file_uri(&original);
+        let parsed = file_uri_to_path(&uri).unwrap();
+        assert_eq!(
+            parsed.components().collect::<Vec<_>>(),
+            original.components().collect::<Vec<_>>()
+        );
+    }
+}
+
 pub(crate) fn get_version_name(version: &Version) -> String {
     if let Some(name) = version.get_name() {
         name.to_string()