diff --git a/packages/block-library/src/image/block.json b/packages/block-library/src/image/block.json
index decd621688cea1..798210cbd5c2f8 100644
--- a/packages/block-library/src/image/block.json
+++ b/packages/block-library/src/image/block.json
@@ -60,8 +60,7 @@
 			"type": "string"
 		},
 		"linkDestination": {
-			"type": "string",
-			"default": "none"
+			"type": "string"
 		},
 		"linkTarget": {
 			"type": "string",
diff --git a/packages/block-library/src/image/deprecated.js b/packages/block-library/src/image/deprecated.js
index 08f43101618e2a..0a3c2142636c65 100644
--- a/packages/block-library/src/image/deprecated.js
+++ b/packages/block-library/src/image/deprecated.js
@@ -59,7 +59,6 @@ const blockAttributes = {
 	},
 	linkDestination: {
 		type: 'string',
-		default: 'none',
 	},
 	linkTarget: {
 		type: 'string',
diff --git a/packages/block-library/src/image/edit.js b/packages/block-library/src/image/edit.js
index 50181e67ee83f3..5d5478b4db3394 100644
--- a/packages/block-library/src/image/edit.js
+++ b/packages/block-library/src/image/edit.js
@@ -21,6 +21,8 @@ import { useEffect, useRef } from '@wordpress/element';
 import { __ } from '@wordpress/i18n';
 import { image as icon } from '@wordpress/icons';
 
+/* global wp */
+
 /**
  * Internal dependencies
  */
@@ -30,8 +32,10 @@ import Image from './image';
  * Module constants
  */
 import {
-	LINK_DESTINATION_MEDIA,
 	LINK_DESTINATION_ATTACHMENT,
+	LINK_DESTINATION_CUSTOM,
+	LINK_DESTINATION_MEDIA,
+	LINK_DESTINATION_NONE,
 	ALLOWED_MEDIA_TYPES,
 	DEFAULT_SIZE_SLUG,
 } from './constants';
@@ -83,7 +87,6 @@ export function ImageEdit( {
 		caption,
 		align,
 		id,
-		linkDestination,
 		width,
 		height,
 		sizeSlug,
@@ -152,21 +155,49 @@ export function ImageEdit( {
 			additionalAttributes = { url };
 		}
 
-		// Check if the image is linked to it's media.
-		if ( linkDestination === LINK_DESTINATION_MEDIA ) {
-			// Update the media link.
-			mediaAttributes.href = media.url;
+		// Check if default link setting should be used.
+		let linkDestination = attributes.linkDestination;
+		if ( ! linkDestination ) {
+			// Use the WordPress option to determine the proper default.
+			// The constants used in Gutenberg do not match WP options so a little more complicated than ideal.
+			// TODO: fix this in a follow up PR, requires updating media-text and ui component.
+			switch (
+				wp?.media?.view?.settings?.defaultProps?.link ||
+				LINK_DESTINATION_NONE
+			) {
+				case 'file':
+				case LINK_DESTINATION_MEDIA:
+					linkDestination = LINK_DESTINATION_MEDIA;
+					break;
+				case 'post':
+				case LINK_DESTINATION_ATTACHMENT:
+					linkDestination = LINK_DESTINATION_ATTACHMENT;
+					break;
+				case LINK_DESTINATION_CUSTOM:
+					linkDestination = LINK_DESTINATION_CUSTOM;
+					break;
+				case LINK_DESTINATION_NONE:
+					linkDestination = LINK_DESTINATION_NONE;
+					break;
+			}
 		}
 
-		// Check if the image is linked to the attachment page.
-		if ( linkDestination === LINK_DESTINATION_ATTACHMENT ) {
-			// Update the media link.
-			mediaAttributes.href = media.link;
+		// Check if the image is linked to it's media.
+		let href;
+		switch ( linkDestination ) {
+			case LINK_DESTINATION_MEDIA:
+				href = media.url;
+				break;
+			case LINK_DESTINATION_ATTACHMENT:
+				href = media.link;
+				break;
 		}
+		mediaAttributes.href = href;
 
 		setAttributes( {
 			...mediaAttributes,
 			...additionalAttributes,
+			linkDestination,
 		} );
 	}
 
diff --git a/packages/e2e-tests/fixtures/blocks/core__image.json b/packages/e2e-tests/fixtures/blocks/core__image.json
index 22c56bcf681315..1650156649dadf 100644
--- a/packages/e2e-tests/fixtures/blocks/core__image.json
+++ b/packages/e2e-tests/fixtures/blocks/core__image.json
@@ -6,8 +6,7 @@
         "attributes": {
             "url": "data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAACklEQVR4nGMAAQAABQABDQottAAAAABJRU5ErkJggg==",
             "alt": "",
-            "caption": "",
-            "linkDestination": "none"
+            "caption": ""
         },
         "innerBlocks": [],
         "originalContent": "<figure class=\"wp-block-image\"><img src=\"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAACklEQVR4nGMAAQAABQABDQottAAAAABJRU5ErkJggg==\" alt=\"\" /></figure>"
diff --git a/packages/e2e-tests/fixtures/blocks/core__image__center-caption.json b/packages/e2e-tests/fixtures/blocks/core__image__center-caption.json
index 80aa7f460f2463..174eba0a63e366 100644
--- a/packages/e2e-tests/fixtures/blocks/core__image__center-caption.json
+++ b/packages/e2e-tests/fixtures/blocks/core__image__center-caption.json
@@ -7,8 +7,7 @@
             "align": "center",
             "url": "data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAACklEQVR4nGMAAQAABQABDQottAAAAABJRU5ErkJggg==",
             "alt": "",
-            "caption": "Give it a try. Press the \"really wide\" button on the image toolbar.",
-            "linkDestination": "none"
+            "caption": "Give it a try. Press the \"really wide\" button on the image toolbar."
         },
         "innerBlocks": [],
         "originalContent": "<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img src=\"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAACklEQVR4nGMAAQAABQABDQottAAAAABJRU5ErkJggg==\" alt=\"\" /><figcaption>Give it a try. Press the &quot;really wide&quot; button on the image toolbar.</figcaption></figure></div>"
diff --git a/packages/e2e-tests/fixtures/blocks/core__image__deprecated-1.json b/packages/e2e-tests/fixtures/blocks/core__image__deprecated-1.json
index f02d8ba36cc66c..904153083e94b5 100644
--- a/packages/e2e-tests/fixtures/blocks/core__image__deprecated-1.json
+++ b/packages/e2e-tests/fixtures/blocks/core__image__deprecated-1.json
@@ -7,8 +7,7 @@
             "align": "left",
             "url": "data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAACklEQVR4nGMAAQAABQABDQottAAAAABJRU5ErkJggg==",
             "alt": "",
-            "caption": "",
-            "linkDestination": "none"
+            "caption": ""
         },
         "innerBlocks": [],
         "originalContent": "<figure class=\"wp-block-image alignleft\" style=\"max-width:50%\">\n\t<img src=\"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAACklEQVR4nGMAAQAABQABDQottAAAAABJRU5ErkJggg==\" alt=\"\" />\n</figure>"
diff --git a/packages/e2e-tests/fixtures/blocks/core__image__deprecated-2.json b/packages/e2e-tests/fixtures/blocks/core__image__deprecated-2.json
index a9d3fe689b461a..65106d9000e176 100644
--- a/packages/e2e-tests/fixtures/blocks/core__image__deprecated-2.json
+++ b/packages/e2e-tests/fixtures/blocks/core__image__deprecated-2.json
@@ -9,8 +9,7 @@
             "alt": "",
             "caption": "",
             "width": 100,
-            "height": 100,
-            "linkDestination": "none"
+            "height": 100
         },
         "innerBlocks": [],
         "originalContent": "<figure class=\"wp-block-image alignleft\">\n\t<img src=\"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAACklEQVR4nGMAAQAABQABDQottAAAAABJRU5ErkJggg==\" alt=\"\" width=\"100\" height=\"100\" />\n</figure>"
diff --git a/packages/e2e-tests/fixtures/blocks/core__image__deprecated-3.json b/packages/e2e-tests/fixtures/blocks/core__image__deprecated-3.json
index 68d63a7a1ee0f0..eaf76455e82e9d 100644
--- a/packages/e2e-tests/fixtures/blocks/core__image__deprecated-3.json
+++ b/packages/e2e-tests/fixtures/blocks/core__image__deprecated-3.json
@@ -9,8 +9,7 @@
             "alt": "",
             "caption": "",
             "width": 100,
-            "height": 100,
-            "linkDestination": "none"
+            "height": 100
         },
         "innerBlocks": [],
         "originalContent": "<figure class=\"wp-block-image alignleft is-resized\">\n\t<img src=\"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAACklEQVR4nGMAAQAABQABDQottAAAAABJRU5ErkJggg==\" alt=\"\" width=\"100\" height=\"100\" />\n</figure>"
diff --git a/packages/e2e-tests/specs/editor/blocks/image.test.js b/packages/e2e-tests/specs/editor/blocks/image.test.js
index ad0adcd998825f..5e6cd85099385a 100644
--- a/packages/e2e-tests/specs/editor/blocks/image.test.js
+++ b/packages/e2e-tests/specs/editor/blocks/image.test.js
@@ -48,7 +48,7 @@ describe( 'Image', () => {
 		const filename = await upload( '.wp-block-image input[type="file"]' );
 
 		const regex = new RegExp(
-			`<!-- wp:image {"id":\\d+,"sizeSlug":"large"} -->\\s*<figure class="wp-block-image size-large"><img src="[^"]+\\/${ filename }\\.png" alt="" class="wp-image-\\d+"/></figure>\\s*<!-- \\/wp:image -->`
+			`<!-- wp:image {"id":\\d+,"sizeSlug":"large","linkDestination":"none"} -->\\s*<figure class="wp-block-image size-large"><img src="[^"]+\\/${ filename }\\.png" alt="" class="wp-image-\\d+"/></figure>\\s*<!-- \\/wp:image -->`
 		);
 		expect( await getEditedPostContent() ).toMatch( regex );
 	} );
@@ -58,7 +58,7 @@ describe( 'Image', () => {
 		const filename1 = await upload( '.wp-block-image input[type="file"]' );
 
 		const regex1 = new RegExp(
-			`<!-- wp:image {"id":\\d+,"sizeSlug":"large"} -->\\s*<figure class="wp-block-image size-large"><img src="[^"]+\\/${ filename1 }\\.png" alt="" class="wp-image-\\d+"/></figure>\\s*<!-- \\/wp:image -->`
+			`<!-- wp:image {"id":\\d+,"sizeSlug":"large","linkDestination":"none"} -->\\s*<figure class="wp-block-image size-large"><img src="[^"]+\\/${ filename1 }\\.png" alt="" class="wp-image-\\d+"/></figure>\\s*<!-- \\/wp:image -->`
 		);
 		expect( await getEditedPostContent() ).toMatch( regex1 );
 
@@ -66,7 +66,7 @@ describe( 'Image', () => {
 		await page.click( '[aria-label="Image size presets"] button' );
 
 		const regex2 = new RegExp(
-			`<!-- wp:image {"id":\\d+,"width":3,"height":3,"sizeSlug":"large"} -->\\s*<figure class="wp-block-image size-large is-resized"><img src="[^"]+\\/${ filename1 }\\.png" alt="" class="wp-image-\\d+" width="3" height="3"\\/><\\/figure>\\s*<!-- /wp:image -->`
+			`<!-- wp:image {"id":\\d+,"width":3,"height":3,"sizeSlug":"large","linkDestination":"none"} -->\\s*<figure class="wp-block-image size-large is-resized"><img src="[^"]+\\/${ filename1 }\\.png" alt="" class="wp-image-\\d+" width="3" height="3"\\/><\\/figure>\\s*<!-- /wp:image -->`
 		);
 
 		expect( await getEditedPostContent() ).toMatch( regex2 );
@@ -77,7 +77,7 @@ describe( 'Image', () => {
 		);
 
 		const regex3 = new RegExp(
-			`<!-- wp:image {"id":\\d+,"sizeSlug":"large"} -->\\s*<figure class="wp-block-image size-large"><img src="[^"]+\\/${ filename2 }\\.png" alt="" class="wp-image-\\d+"/></figure>\\s*<!-- \\/wp:image -->`
+			`<!-- wp:image {"id":\\d+,"sizeSlug":"large","linkDestination":"none"} -->\\s*<figure class="wp-block-image size-large"><img src="[^"]+\\/${ filename2 }\\.png" alt="" class="wp-image-\\d+"/></figure>\\s*<!-- \\/wp:image -->`
 		);
 		expect( await getEditedPostContent() ).toMatch( regex3 );