How to embed image or picture in jupyter notebook, either from a local machine or from a web resource?

You mustn't use quotation marks around the name of the image files in markdown!

If you carefully read your error message, you will see the two %22 parts in the link. That is the html encoded quotation mark.

You have to change the line

![title]("img/picture.png")

to

![title](img/picture.png)

UPDATE

It is assumed, that you have the following file structure and that you run the jupyter notebook command in the directory where the file example.ipynb (<-- contains the markdown for the image) is stored:

/
+-- example.ipynb
+-- img
    +-- picture.png

There are several ways to post an image in Jupyter notebooks:

via HTML:

from IPython.display import Image
from IPython.core.display import HTML 
Image(url= "http://my_site.com/my_picture.jpg")

You retain the ability to use HTML tags to resize, etc...

Image(url= "http://my_site.com/my_picture.jpg", width=100, height=100)

You can also display images stored locally, either via relative or absolute path.

PATH = "/Users/reblochonMasque/Documents/Drawings/"
Image(filename = PATH + "My_picture.jpg", width=100, height=100)

if the image it wider than the display settings: thanks

use unconfined=True to disable max-width confinement of the image

from IPython.core.display import Image, display
display(Image('https://i.ytimg.com/vi/j22DmsZEv30/maxresdefault.jpg', width=1900, unconfined=True))

or via markdown:

• make sure the cell is a markdown cell, and not a code cell, thanks @游凯超 in the comments)
• Please note that on some systems, the markdown does not allow white space in the filenames. Thanks to @CoffeeTableEspresso and @zebralamy in the comments)
  (On macos, as long as you are on a markdown cell you would do like this: ![title](../image 1.png), and not worry about the white space).

for a web image:

![Image of Yaktocat](https://octodex.github.com/images/yaktocat.png)

as shown by @cristianmtr Paying attention not to use either these quotes "" or those '' around the url.

or a local one:

![title](img/picture.png)

demonstrated by @Sebastian

Alternatively, you can use a plain HTML <img src>, which allows you to change height and width and is still read by the markdown interpreter:

<img src="subdirectory/MyImage.png" width=60 height=60 />