In my readme on GitHub I have several images that are present there in my project\'s source tree which I reference successfully with directives like
.. image
PyPI will not read your package distributions for the image. You have to use the image's external link, for example:
.. image:: https://raw.githubusercontent.com/greyli/flask-share/master/images/demo.png
Here I use the image hosted by GitHub, the real demo is on PyPI.
P.S. To get the image's raw link on GitHub, right-click the image and choose Open image in new tab.
If you have your images on Github, navigate to the image then right click on download button and copy link address:
Then you can add it in your README.md file:

It should be rendered properly both on Github and PyPi.