diff --git a/backend/Dockerfile b/backend/Dockerfile
index 113c77f..b6a05de 100644
--- a/backend/Dockerfile
+++ b/backend/Dockerfile
@@ -7,6 +7,7 @@ WORKDIR /app
 RUN apt-get update && apt-get install -y --no-install-recommends \
     gcc \
     libpq-dev \
+    git \
     && rm -rf /var/lib/apt/lists/*
 
 # Install Python dependencies
diff --git a/backend/app/api/dither.py b/backend/app/api/dither.py
new file mode 100644
index 0000000..94bcdf8
--- /dev/null
+++ b/backend/app/api/dither.py
@@ -0,0 +1,153 @@
+"""Dithering API endpoints for on-demand dithering and screen-print separations."""
+
+import io
+import logging
+from pathlib import Path
+
+from fastapi import APIRouter, HTTPException, Query
+from fastapi.responses import StreamingResponse
+
+from app.schemas.dither import (
+    DitherAlgorithm,
+    DitherResponse,
+    PaletteMode,
+    ScreenPrintExport,
+    ScreenPrintRequest,
+)
+from app.services.design_service import DesignService
+from app.services.dither_service import dither_design, generate_color_separations
+
+logger = logging.getLogger(__name__)
+router = APIRouter()
+design_service = DesignService()
+
+
+@router.get("/{slug}/dither")
+async def get_dithered_design(
+    slug: str,
+    algorithm: DitherAlgorithm = DitherAlgorithm.FLOYD_STEINBERG,
+    palette: PaletteMode = PaletteMode.AUTO,
+    num_colors: int = Query(default=8, ge=2, le=32),
+    colors: str | None = Query(default=None, description="Comma-separated hex colors for custom palette"),
+    threshold: int = Query(default=64, ge=1, le=256),
+    order: int = Query(default=8, ge=2, le=16),
+    fresh: bool = False,
+    format: str = Query(default="image", description="'image' for PNG, 'json' for metadata"),
+):
+    """Apply dithering to a design image.
+
+    Returns a PNG image (default) or JSON metadata with image URL.
+    """
+    image_path = await design_service.get_design_image_path(slug)
+    if not image_path or not Path(image_path).exists():
+        raise HTTPException(status_code=404, detail="Design not found")
+
+    custom_colors = [c.strip() for c in colors.split(",")] if colors else None
+
+    try:
+        png_bytes, meta = dither_design(
+            image_path=image_path,
+            slug=slug,
+            algorithm=algorithm,
+            palette_mode=palette,
+            num_colors=num_colors,
+            custom_colors=custom_colors,
+            threshold=threshold,
+            order=order,
+            fresh=fresh,
+        )
+    except Exception as e:
+        logger.error(f"Dithering failed for {slug}: {e}")
+        raise HTTPException(status_code=500, detail=f"Dithering failed: {e}")
+
+    if format == "json":
+        return DitherResponse(
+            slug=slug,
+            algorithm=algorithm,
+            palette_mode=palette,
+            num_colors=meta["num_colors"],
+            colors_used=meta["colors_used"],
+            cached=meta["cached"],
+            image_url=f"/api/designs/{slug}/dither?algorithm={algorithm.value}&palette={palette.value}&num_colors={num_colors}",
+        )
+
+    return StreamingResponse(
+        io.BytesIO(png_bytes),
+        media_type="image/png",
+        headers={"Cache-Control": "public, max-age=86400"},
+    )
+
+
+@router.post("/{slug}/screen-print", response_model=ScreenPrintExport)
+async def create_screen_print(slug: str, body: ScreenPrintRequest):
+    """Generate color separations for screen printing."""
+    image_path = await design_service.get_design_image_path(slug)
+    if not image_path or not Path(image_path).exists():
+        raise HTTPException(status_code=404, detail="Design not found")
+
+    try:
+        composite_bytes, separations, colors = generate_color_separations(
+            image_path=image_path,
+            slug=slug,
+            num_colors=body.num_colors,
+            algorithm=body.algorithm,
+            spot_colors=body.spot_colors,
+        )
+    except Exception as e:
+        logger.error(f"Screen print generation failed for {slug}: {e}")
+        raise HTTPException(status_code=500, detail=f"Screen print generation failed: {e}")
+
+    base_url = f"/api/designs/{slug}/screen-print"
+    separation_urls = {color: f"{base_url}/{color}" for color in colors}
+
+    return ScreenPrintExport(
+        slug=slug,
+        num_colors=len(colors),
+        algorithm=body.algorithm,
+        colors=colors,
+        composite_url=f"{base_url}/composite",
+        separation_urls=separation_urls,
+    )
+
+
+@router.get("/{slug}/screen-print/{channel}")
+async def get_screen_print_channel(slug: str, channel: str):
+    """Serve a screen-print separation channel image.
+
+    channel: "composite" or a hex color code (e.g. "FF0000")
+    """
+    image_path = await design_service.get_design_image_path(slug)
+    if not image_path or not Path(image_path).exists():
+        raise HTTPException(status_code=404, detail="Design not found")
+
+    # Try to find cached separations — generate with defaults if not cached
+    try:
+        composite_bytes, separations, colors = generate_color_separations(
+            image_path=image_path,
+            slug=slug,
+        )
+    except Exception as e:
+        logger.error(f"Screen print channel failed for {slug}/{channel}: {e}")
+        raise HTTPException(status_code=500, detail=f"Failed to generate separation: {e}")
+
+    if channel == "composite":
+        png_bytes = composite_bytes
+        filename = f"{slug}-composite.png"
+    else:
+        hex_upper = channel.upper().lstrip("#")
+        if hex_upper not in separations:
+            raise HTTPException(
+                status_code=404,
+                detail=f"Color channel '{channel}' not found. Available: {', '.join(separations.keys())}",
+            )
+        png_bytes = separations[hex_upper]
+        filename = f"{slug}-{hex_upper}.png"
+
+    return StreamingResponse(
+        io.BytesIO(png_bytes),
+        media_type="image/png",
+        headers={
+            "Cache-Control": "public, max-age=86400",
+            "Content-Disposition": f"attachment; filename={filename}",
+        },
+    )
diff --git a/backend/app/main.py b/backend/app/main.py
index 96bb77e..3ebb4d2 100644
--- a/backend/app/main.py
+++ b/backend/app/main.py
@@ -6,7 +6,7 @@ from fastapi import FastAPI
 from fastapi.middleware.cors import CORSMiddleware
 
 from app.config import get_settings
-from app.api import designs, products, cart, checkout, orders, webhooks, health, design_generator, upload, spaces
+from app.api import designs, products, cart, checkout, orders, webhooks, health, design_generator, upload, spaces, dither
 from app.api.admin import router as admin_router
 
 settings = get_settings()
@@ -52,6 +52,7 @@ app.include_router(webhooks.router, prefix="/api/webhooks", tags=["webhooks"])
 app.include_router(design_generator.router, prefix="/api/design", tags=["design-generator"])
 app.include_router(upload.router, prefix="/api/design", tags=["upload"])
 app.include_router(spaces.router, prefix="/api/spaces", tags=["spaces"])
+app.include_router(dither.router, prefix="/api/designs", tags=["dithering"])
 app.include_router(admin_router, prefix="/api/admin", tags=["admin"])
 
 
diff --git a/backend/app/schemas/__init__.py b/backend/app/schemas/__init__.py
index 8e92624..37f0496 100644
--- a/backend/app/schemas/__init__.py
+++ b/backend/app/schemas/__init__.py
@@ -10,6 +10,7 @@ from app.schemas.cart import (
     CartItemResponse,
 )
 from app.schemas.order import OrderResponse, OrderItemResponse, OrderStatus
+from app.schemas.dither import DitherAlgorithm, DitherResponse, PaletteMode, ScreenPrintExport
 
 __all__ = [
     "Design",
@@ -25,4 +26,8 @@ __all__ = [
     "OrderResponse",
     "OrderItemResponse",
     "OrderStatus",
+    "DitherAlgorithm",
+    "DitherResponse",
+    "PaletteMode",
+    "ScreenPrintExport",
 ]
diff --git a/backend/app/schemas/dither.py b/backend/app/schemas/dither.py
new file mode 100644
index 0000000..55a55bd
--- /dev/null
+++ b/backend/app/schemas/dither.py
@@ -0,0 +1,67 @@
+"""Pydantic schemas for dithering API."""
+
+from enum import Enum
+
+from pydantic import BaseModel, Field
+
+
+class DitherAlgorithm(str, Enum):
+    """Supported dithering algorithms."""
+
+    FLOYD_STEINBERG = "floyd-steinberg"
+    ATKINSON = "atkinson"
+    STUCKI = "stucki"
+    BURKES = "burkes"
+    SIERRA = "sierra"
+    SIERRA_TWO_ROW = "sierra-two-row"
+    SIERRA_LITE = "sierra-lite"
+    JARVIS_JUDICE_NINKE = "jarvis-judice-ninke"
+    BAYER = "bayer"
+    YLILUOMA = "yliluoma"
+    ORDERED = "ordered"
+    CLUSTER_DOT = "cluster-dot"
+
+
+class PaletteMode(str, Enum):
+    """Palette generation modes."""
+
+    AUTO = "auto"
+    GRAYSCALE = "grayscale"
+    SPOT = "spot"
+    CUSTOM = "custom"
+
+
+class DitherResponse(BaseModel):
+    """Metadata response for dithered image."""
+
+    slug: str
+    algorithm: DitherAlgorithm
+    palette_mode: PaletteMode
+    num_colors: int
+    colors_used: list[str] = Field(description="Hex color codes used in the palette")
+    cached: bool
+    image_url: str
+
+
+class ScreenPrintRequest(BaseModel):
+    """Request body for screen print color separation."""
+
+    num_colors: int = Field(default=4, ge=2, le=12)
+    algorithm: DitherAlgorithm = DitherAlgorithm.FLOYD_STEINBERG
+    spot_colors: list[str] | None = Field(
+        default=None,
+        description="Optional list of hex colors to use as spot colors (e.g. ['FF0000', '00FF00'])",
+    )
+
+
+class ScreenPrintExport(BaseModel):
+    """Response for screen print color separation."""
+
+    slug: str
+    num_colors: int
+    algorithm: DitherAlgorithm
+    colors: list[str] = Field(description="Hex color codes for each separation channel")
+    composite_url: str
+    separation_urls: dict[str, str] = Field(
+        description="Map of hex color to separation image URL",
+    )
diff --git a/backend/app/services/dither_service.py b/backend/app/services/dither_service.py
new file mode 100644
index 0000000..99826be
--- /dev/null
+++ b/backend/app/services/dither_service.py
@@ -0,0 +1,247 @@
+"""Dithering service — palette building, dithering, and color separations."""
+
+import hashlib
+import io
+import logging
+from collections import OrderedDict
+
+import numpy as np
+from PIL import Image
+
+import hitherdither
+
+from app.schemas.dither import DitherAlgorithm, PaletteMode
+
+logger = logging.getLogger(__name__)
+
+# In-memory cache: sha256(slug+params) → (png_bytes, metadata)
+_MAX_CACHE = 200
+_dither_cache: OrderedDict[str, tuple[bytes, dict]] = OrderedDict()
+
+# Screen-print separation cache: sha256(slug+params) → {color_hex: png_bytes, "composite": png_bytes}
+_separation_cache: OrderedDict[str, tuple[bytes, dict[str, bytes], list[str]]] = OrderedDict()
+
+
+def _cache_key(*parts) -> str:
+    raw = "|".join(str(p) for p in parts)
+    return hashlib.sha256(raw.encode()).hexdigest()
+
+
+def _evict(cache: OrderedDict, max_size: int = _MAX_CACHE):
+    while len(cache) > max_size:
+        cache.popitem(last=False)
+
+
+def _hex_to_rgb(hex_str: str) -> tuple[int, int, int]:
+    h = hex_str.lstrip("#")
+    return (int(h[0:2], 16), int(h[2:4], 16), int(h[4:6], 16))
+
+
+def _rgb_to_hex(r: int, g: int, b: int) -> str:
+    return f"{r:02X}{g:02X}{b:02X}"
+
+
+def build_palette(
+    image: Image.Image,
+    mode: PaletteMode,
+    num_colors: int = 8,
+    custom_colors: list[str] | None = None,
+) -> hitherdither.palette.Palette:
+    """Build a hitherdither Palette from an image and mode."""
+    if mode == PaletteMode.CUSTOM and custom_colors:
+        rgb_colors = [_hex_to_rgb(c) for c in custom_colors]
+        return hitherdither.palette.Palette(rgb_colors)
+
+    if mode == PaletteMode.GRAYSCALE:
+        step = 255 // max(num_colors - 1, 1)
+        grays = [(i * step, i * step, i * step) for i in range(num_colors)]
+        return hitherdither.palette.Palette(grays)
+
+    if mode == PaletteMode.SPOT and custom_colors:
+        rgb_colors = [_hex_to_rgb(c) for c in custom_colors[:num_colors]]
+        return hitherdither.palette.Palette(rgb_colors)
+
+    # Auto mode: median-cut quantization
+    quantized = image.convert("RGB").quantize(colors=num_colors, method=Image.Quantize.MEDIANCUT)
+    palette_data = quantized.getpalette()
+    colors = []
+    for i in range(num_colors):
+        idx = i * 3
+        if idx + 2 < len(palette_data):
+            colors.append((palette_data[idx], palette_data[idx + 1], palette_data[idx + 2]))
+    if not colors:
+        colors = [(0, 0, 0), (255, 255, 255)]
+    return hitherdither.palette.Palette(colors)
+
+
+def _get_palette_hex(palette: hitherdither.palette.Palette) -> list[str]:
+    """Extract hex color strings from a palette."""
+    colors = []
+    for color in palette.colours:
+        r, g, b = int(color[0]), int(color[1]), int(color[2])
+        colors.append(_rgb_to_hex(r, g, b))
+    return colors
+
+
+# Map algorithm enum to hitherdither function calls
+_ERROR_DIFFUSION_ALGOS = {
+    DitherAlgorithm.FLOYD_STEINBERG: "floyd-steinberg",
+    DitherAlgorithm.ATKINSON: "atkinson",
+    DitherAlgorithm.STUCKI: "stucki",
+    DitherAlgorithm.BURKES: "burkes",
+    DitherAlgorithm.SIERRA: "sierra3",
+    DitherAlgorithm.SIERRA_TWO_ROW: "sierra2",
+    DitherAlgorithm.SIERRA_LITE: "sierra-2-4a",
+    DitherAlgorithm.JARVIS_JUDICE_NINKE: "jarvis-judice-ninke",
+}
+
+
+def apply_dither(
+    image: Image.Image,
+    palette: hitherdither.palette.Palette,
+    algorithm: DitherAlgorithm,
+    threshold: int = 64,
+    order: int = 8,
+) -> Image.Image:
+    """Apply a dithering algorithm to an image with the given palette."""
+    img_rgb = image.convert("RGB")
+
+    if algorithm in _ERROR_DIFFUSION_ALGOS:
+        method = _ERROR_DIFFUSION_ALGOS[algorithm]
+        result = hitherdither.diffusion.error_diffusion_dithering(
+            img_rgb, palette, method=method, order=2,
+        )
+    elif algorithm == DitherAlgorithm.ORDERED:
+        result = hitherdither.ordered.bayer.bayer_dithering(
+            img_rgb, palette, [threshold, threshold, threshold], order=order,
+        )
+    elif algorithm == DitherAlgorithm.BAYER:
+        result = hitherdither.ordered.bayer.bayer_dithering(
+            img_rgb, palette, [threshold, threshold, threshold], order=order,
+        )
+    elif algorithm == DitherAlgorithm.YLILUOMA:
+        result = hitherdither.ordered.yliluoma.yliluomas_1_ordered_dithering(
+            img_rgb, palette, order=order,
+        )
+    elif algorithm == DitherAlgorithm.CLUSTER_DOT:
+        result = hitherdither.ordered.cluster.cluster_dot_dithering(
+            img_rgb, palette, [threshold, threshold, threshold], order=order,
+        )
+    else:
+        # Fallback to Floyd-Steinberg
+        result = hitherdither.diffusion.error_diffusion_dithering(
+            img_rgb, palette, method="floyd-steinberg", order=2,
+        )
+
+    # hitherdither returns a PIL Image (indexed); convert to RGB
+    if hasattr(result, "convert"):
+        return result.convert("RGB")
+    return result
+
+
+def dither_design(
+    image_path: str,
+    slug: str,
+    algorithm: DitherAlgorithm = DitherAlgorithm.FLOYD_STEINBERG,
+    palette_mode: PaletteMode = PaletteMode.AUTO,
+    num_colors: int = 8,
+    custom_colors: list[str] | None = None,
+    threshold: int = 64,
+    order: int = 8,
+    fresh: bool = False,
+) -> tuple[bytes, dict]:
+    """Dither a design image and return (png_bytes, metadata).
+
+    Results are cached by slug+params combination.
+    """
+    key = _cache_key(slug, algorithm.value, palette_mode.value, num_colors,
+                     ",".join(custom_colors or []), threshold, order)
+
+    if not fresh and key in _dither_cache:
+        _dither_cache.move_to_end(key)
+        png_bytes, meta = _dither_cache[key]
+        meta["cached"] = True
+        return png_bytes, meta
+
+    image = Image.open(image_path)
+    palette = build_palette(image, palette_mode, num_colors, custom_colors)
+    dithered = apply_dither(image, palette, algorithm, threshold, order)
+
+    buf = io.BytesIO()
+    dithered.save(buf, format="PNG", optimize=True)
+    png_bytes = buf.getvalue()
+
+    colors_used = _get_palette_hex(palette)
+
+    meta = {
+        "slug": slug,
+        "algorithm": algorithm.value,
+        "palette_mode": palette_mode.value,
+        "num_colors": len(colors_used),
+        "colors_used": colors_used,
+        "cached": False,
+    }
+
+    _dither_cache[key] = (png_bytes, meta)
+    _evict(_dither_cache)
+
+    return png_bytes, meta
+
+
+def generate_color_separations(
+    image_path: str,
+    slug: str,
+    num_colors: int = 4,
+    algorithm: DitherAlgorithm = DitherAlgorithm.FLOYD_STEINBERG,
+    spot_colors: list[str] | None = None,
+) -> tuple[bytes, dict[str, bytes], list[str]]:
+    """Generate color separations for screen printing.
+
+    Returns (composite_png_bytes, {hex_color: separation_png_bytes}, colors_list).
+    """
+    palette_mode = PaletteMode.SPOT if spot_colors else PaletteMode.AUTO
+    key = _cache_key("sep", slug, num_colors, algorithm.value,
+                     ",".join(spot_colors or []))
+
+    if key in _separation_cache:
+        _separation_cache.move_to_end(key)
+        return _separation_cache[key]
+
+    image = Image.open(image_path)
+    palette = build_palette(image, palette_mode, num_colors, spot_colors)
+    dithered = apply_dither(image, palette, algorithm)
+
+    # Save composite
+    buf = io.BytesIO()
+    dithered.save(buf, format="PNG", optimize=True)
+    composite_bytes = buf.getvalue()
+
+    # Generate per-color separations
+    dithered_rgb = dithered.convert("RGB")
+    arr = np.array(dithered_rgb)
+    colors = _get_palette_hex(palette)
+    separations: dict[str, bytes] = {}
+
+    for hex_color in colors:
+        r, g, b = _hex_to_rgb(hex_color)
+        # Create mask where pixels match this color (with small tolerance)
+        mask = (
+            (np.abs(arr[:, :, 0].astype(int) - r) < 16) &
+            (np.abs(arr[:, :, 1].astype(int) - g) < 16) &
+            (np.abs(arr[:, :, 2].astype(int) - b) < 16)
+        )
+
+        # White background, color pixels where mask is true
+        sep_img = np.full_like(arr, 255)
+        sep_img[mask] = [r, g, b]
+
+        sep_pil = Image.fromarray(sep_img.astype(np.uint8))
+        buf = io.BytesIO()
+        sep_pil.save(buf, format="PNG", optimize=True)
+        separations[hex_color] = buf.getvalue()
+
+    result = (composite_bytes, separations, colors)
+    _separation_cache[key] = result
+    _evict(_separation_cache)
+
+    return result
diff --git a/backend/requirements.txt b/backend/requirements.txt
index 2dd93db..0ed93e1 100644
--- a/backend/requirements.txt
+++ b/backend/requirements.txt
@@ -27,6 +27,8 @@ pyyaml>=6.0.0
 pillow>=10.0.0
 python-multipart>=0.0.6
 aiofiles>=23.0.0
+hitherdither @ git+https://github.com/hbldh/hitherdither@master
+numpy>=1.24.0
 
 # Email
 aiosmtplib>=3.0.0