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"Inserting images" New Lab Feature from Gmail,which enables user to insert images into the email. To get the job done first of all user need to enable this feature from Lab tab. After that go to compose email. Make sure you're in rich formatting mode, or it won't show up. Click the little image icon, now you can able to insert images in two ways:

By uploading image files from your computer or Insert the Link of the Image.

Note also that many email programs (including Gmail) block external images by default making all that hard work in vain. It's a default to protect you from spammers so user need to change the setting according to the email programs. In case of Gmail, User need to click "Display images below" or "Always display images from ..." to see images you embed.