diff --git a/Tests/images/palette.dds b/Tests/images/palette.dds
new file mode 100644
index 00000000000..7171cb1f242
Binary files /dev/null and b/Tests/images/palette.dds differ
diff --git a/Tests/test_file_dds.py b/Tests/test_file_dds.py
index ae4831d4848..bb9af7967b7 100644
--- a/Tests/test_file_dds.py
+++ b/Tests/test_file_dds.py
@@ -298,6 +298,11 @@ def test_dxt5_colorblock_alpha_issue_4142():
         assert px[2] != 0
 
 
+def test_palette():
+    with Image.open("Tests/images/palette.dds") as im:
+        assert_image_equal_tofile(im, "Tests/images/transparent.gif")
+
+
 def test_unimplemented_pixel_format():
     with pytest.raises(NotImplementedError):
         with Image.open("Tests/images/unimplemented_pixel_format.dds"):
diff --git a/docs/handbook/image-file-formats.rst b/docs/handbook/image-file-formats.rst
index 2a42bdacba7..1f785bc21a3 100644
--- a/docs/handbook/image-file-formats.rst
+++ b/docs/handbook/image-file-formats.rst
@@ -63,8 +63,35 @@ DDS
 ^^^
 
 DDS is a popular container texture format used in video games and natively supported
-by DirectX. Uncompressed RGB and RGBA can be read, and (since 8.3.0) written. DXT1,
-DXT3 (since 3.4.0) and DXT5 pixel formats can be read, only in ``RGBA`` mode.
+by DirectX.
+
+DXT1 and DXT5 pixel formats can be read, only in ``RGBA`` mode.
+
+.. versionadded:: 3.4.0
+   DXT3 images can be read in ``RGB`` mode and DX10 images can be read in
+   ``RGB`` and ``RGBA`` mode.
+
+.. versionadded:: 6.0.0
+   Uncompressed ``RGBA`` images can be read.
+
+
+.. versionadded:: 8.3.0
+   BC5S images can be opened in ``RGB`` mode, and uncompressed ``RGB`` images
+   can be read. Uncompressed data can also be saved to image files.
+
+
+.. versionadded:: 9.3.0
+   ATI1 images can be opened in ``L`` mode and ATI2 images can be opened in
+   ``RGB`` mode.
+
+.. versionadded:: 9.4.0
+   Uncompressed ``L`` ("luminance") and ``LA`` images can be opened and saved.
+
+
+.. versionadded:: 10.1.0
+   BC5U can be read in ``RGB`` mode, and 8-bit color indexed images can be read
+   in ``P`` mode.
+
 
 DIB
 ^^^
diff --git a/docs/releasenotes/10.1.0.rst b/docs/releasenotes/10.1.0.rst
index da5153cceef..087062dfd38 100644
--- a/docs/releasenotes/10.1.0.rst
+++ b/docs/releasenotes/10.1.0.rst
@@ -48,7 +48,7 @@ TODO
 Other Changes
 =============
 
-TODO
-^^^^
+Added support for DDS 8-bit color indexed images
+^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 
-TODO
+Support has been added to read PALETTEINDEXED8 DDS files as P mode images.
diff --git a/src/PIL/DdsImagePlugin.py b/src/PIL/DdsImagePlugin.py
index 4da33332edf..54f358c7f9a 100644
--- a/src/PIL/DdsImagePlugin.py
+++ b/src/PIL/DdsImagePlugin.py
@@ -13,7 +13,7 @@
 import struct
 from io import BytesIO
 
-from . import Image, ImageFile
+from . import Image, ImageFile, ImagePalette
 from ._binary import o32le as o32
 
 # Magic ("DDS ")
@@ -157,6 +157,10 @@ def _open(self):
             rawmode += masks[0xFF0000] + masks[0xFF00] + masks[0xFF]
 
             self.tile = [("raw", (0, 0) + self.size, 0, (rawmode[::-1], 0, 1))]
+        elif pfflags & DDPF_PALETTEINDEXED8:
+            self._mode = "P"
+            self.palette = ImagePalette.raw("RGBA", self.fp.read(1024))
+            self.tile = [("raw", (0, 0) + self.size, 0, "L")]
         else:
             data_start = header_size + 4
             n = 0