diff --git a/backend/app/urls.py b/backend/app/urls.py
index d4ffe8c3..78eadae5 100644
--- a/backend/app/urls.py
+++ b/backend/app/urls.py
@@ -4,4 +4,6 @@
 urlpatterns = [
     path('build', views.build, name='build'),
     path('download', views.download, name='download'),
+    path('install_block', views.install_block, name='install_block'),
+    path('installed_blocks', views.installed_blocks, name='installed_blocks'),
 ]
diff --git a/backend/app/views.py b/backend/app/views.py
index d6cf79ec..9e6ac6d7 100644
--- a/backend/app/views.py
+++ b/backend/app/views.py
@@ -6,6 +6,8 @@
 from django.views.decorators.csrf import csrf_exempt
 
 import json
+import os
+from django.conf import settings
 
 @csrf_exempt
 def build(request):
@@ -20,3 +22,45 @@ def build(request):
 
 def download(request):
     return JsonResponse({'status': 'request received'})
+
+
+@csrf_exempt
+def install_block(request):
+    try:
+        data = json.loads(request.body)
+        block_name = data.get('package', {}).get('name') or data.get('name', 'Untitled')
+        
+        custom_blocks_dir = os.path.join(settings.BASE_DIR, 'custom_blocks')
+        if not os.path.exists(custom_blocks_dir):
+            os.makedirs(custom_blocks_dir)
+            
+        safe_filename = "".join([c for c in block_name if c.isalpha() or c.isdigit() or c in (' ')]).rstrip()
+        filepath = os.path.join(custom_blocks_dir, f"{safe_filename}.vc3")
+        
+        with open(filepath, 'w') as f:
+            json.dump(data, f, indent=4)
+            
+        return JsonResponse({'status': 'success', 'saved_as': os.path.basename(filepath)})
+    except Exception as e:
+        return HttpResponseBadRequest(str(e))
+
+def installed_blocks(request):
+    try:
+        custom_blocks_dir = os.path.join(settings.BASE_DIR, 'custom_blocks')
+        if not os.path.exists(custom_blocks_dir):
+            return JsonResponse({'blocks': []})
+            
+        blocks = []
+        for filename in os.listdir(custom_blocks_dir):
+            if filename.endswith('.vc3'):
+                filepath = os.path.join(custom_blocks_dir, filename)
+                try:
+                    with open(filepath, 'r') as f:
+                        block_data = json.load(f)
+                        blocks.append(block_data)
+                except Exception as e:
+                    print(f"Failed to load block {filename}: {e}")
+                    
+        return JsonResponse({'blocks': blocks})
+    except Exception as e:
+        return HttpResponseBadRequest(str(e))
diff --git a/frontend/src/components/marketplace/MarketplacePanel.tsx b/frontend/src/components/marketplace/MarketplacePanel.tsx
index 4dbd5969..93d2c3d9 100644
--- a/frontend/src/components/marketplace/MarketplacePanel.tsx
+++ b/frontend/src/components/marketplace/MarketplacePanel.tsx
@@ -96,29 +96,27 @@ const MarketplacePanel: React.FC<MarketplacePanelProps> = ({ open, onClose, edit
       const isValid = validateMarketplaceBlock(blockData);
       
       if (isValid) {
-        // Save to Local Storage
-        let installedBlocks = [];
         try {
-            const stored = localStorage.getItem('vc_marketplace_blocks');
-            if (stored) {
-                installedBlocks = JSON.parse(stored);
-            }
-        } catch (e) {
-            console.warn("Could not read local storage", e);
-        }
-        
-        // Avoid duplicates by checking package name
-        const exists = installedBlocks.find((b: any) => b.package && b.package.name === blockData.package.name);
-        if (!exists) {
-            installedBlocks.push(blockData);
-            localStorage.setItem('vc_marketplace_blocks', JSON.stringify(installedBlocks));
+            const backendHost = process.env.REACT_APP_BACKEND_HOST || 'http://localhost:8000/api/';
+            const endpoint = backendHost.endsWith('/') ? `${backendHost}install_block` : `${backendHost}/install_block`;
             
-            // Dispatch event so the MenuBar updates
+            const installResponse = await fetch(endpoint, {
+                method: 'POST',
+                headers: {
+                    'Content-Type': 'application/json',
+                },
+                body: JSON.stringify(blockData),
+            });
+            
+            if (!installResponse.ok) {
+                throw new Error(`Backend error: ${installResponse.status}`);
+            }
             window.dispatchEvent(new Event('vc_marketplace_updated'));
 
-            alert(`Successfully added ${block.name} to your Downloads Menu!`);
-        } else {
-            alert(`${block.name} is already in your Downloads!`);
+            alert(`Successfully added ${block.name} to your Custom Blocks!`);
+        } catch (e) {
+            console.error("Failed to save to backend", e);
+            alert(`Failed to save ${block.name} to the backend.`);
         }
       } else {
         alert(`Failed to validate block ${block.name}.`);
diff --git a/frontend/src/components/menu/index.tsx b/frontend/src/components/menu/index.tsx
index 9a0e55d5..a932edfc 100644
--- a/frontend/src/components/menu/index.tsx
+++ b/frontend/src/components/menu/index.tsx
@@ -38,14 +38,18 @@ function MenuBar(props: MenuBarProps) {
     const [marketplaceOpen, setMarketplaceOpen] = useState(false);
     const [downloads, setDownloads] = useState<any[]>([]);
 
-    const loadDownloads = () => {
+    const loadDownloads = async () => {
         try {
-            const stored = localStorage.getItem('vc_marketplace_blocks');
-            if (stored) {
-                setDownloads(JSON.parse(stored));
+            const backendHost = process.env.REACT_APP_BACKEND_HOST || 'http://localhost:8000/api/';
+            const endpoint = backendHost.endsWith('/') ? `${backendHost}installed_blocks` : `${backendHost}/installed_blocks`;
+            
+            const response = await fetch(endpoint);
+            if (response.ok) {
+                const data = await response.json();
+                setDownloads(data.blocks || []);
             }
         } catch (e) {
-            console.error("Failed to load downloads", e);
+            console.error("Failed to load downloads from backend", e);
         }
     };