diff --git a/Makefile b/Makefile
index cb1ce743de2..06187ef4819 100644
--- a/Makefile
+++ b/Makefile
@@ -109,6 +109,22 @@ generate-charts: build ## Re-generate the helm chart testdata and docs samples
 	(cd docs/book/src/cronjob-tutorial/testdata/project && make build-installer && ../../../../../../bin/kubebuilder edit --plugins=helm/v2-alpha)
 	(cd docs/book/src/multiversion-tutorial/testdata/project && make build-installer && ../../../../../../bin/kubebuilder edit --plugins=helm/v2-alpha)
 
+.PHONY: update-demo
+update-demo: ## Record and update the Kubebuilder demo using Asciinema
+	@./scripts/demo/generate-demo.sh
+
+.PHONY: setup-demo-cluster
+setup-demo-cluster: ## Set up Kind cluster for Kubebuilder demo
+	@./scripts/demo/setup-demo-cluster.sh
+
+.PHONY: clean-demo
+clean-demo: ## Clean up the demo Kind cluster and temporary directories
+	@echo "Cleaning up demo cluster..."
+	@kind delete cluster --name kubebuilder-demo || echo "Demo cluster was not found or already deleted"
+	@echo "Cleaning up temporary demo directories..."
+	@rm -rf /tmp/kubebuilder-demo-project /tmp/kb-demo-recording
+	@echo "Demo cleanup completed"
+
 .PHONY: check-docs
 check-docs: ## Run the script to ensure that the docs are updated
 	./hack/docs/check.sh
diff --git a/scripts/demo/README.md b/scripts/demo/README.md
index 96f6fe6e4a1..35ab10b6893 100644
--- a/scripts/demo/README.md
+++ b/scripts/demo/README.md
@@ -1,33 +1,78 @@
-This directory contains scripts to run a quick demo of Kubebuilder.
+# Kubebuilder Demo
 
-Steps to run demo:
+This directory contains scripts to run a comprehensive demo of Kubebuilder features with a local Kind cluster.
+
+## Quick Demo (Manual)
+
+To run the demo manually:
 
 ```sh
 mkdir /tmp/kb-demo
 cd /tmp/kb-demo
-DEMO_AUTO_RUN=1 ./run.sh
+DEMO_AUTO_RUN=1 /path/to/kubebuilder/scripts/demo/run.sh
+```
+
+**Keyboard shortcuts during manual run:**
+- `<CTRL-C>` to terminate the script
+- `<CTRL-D>` to terminate the asciinema recording
+- `<CTRL-C>` to save the recording locally
+
+## Automated Demo Recording
+
+To automatically record and update the demo using Asciinema:
 
+```sh
+# From the root of the Kubebuilder repository
+make update-demo
 ```
 
-Instructions for producing the demo movie:
+This will:
+1. Check for required dependencies (asciinema, svg-term, kind, kubectl)
+2. Set up a Kind cluster for the demo
+3. Record the demo session automatically
+4. Convert the recording to SVG format
+5. Update the demo file in `docs/gif/kb-demo.${VERSION}.svg`
+6. Clean up temporary files
+
+## Using the Script Utilities
+
+The demo generation script (`generate-demo.sh`) supports flexible usage:
 
 ```sh
+# Generate the default kb-demo
+./scripts/demo/generate-demo.sh
 
-# Create temporary directory
-mkdir /tmp/kb-demo
-cd /tmp/kb-demo
+# Generate a custom demo with a different name
+./scripts/demo/generate-demo.sh my-custom-demo
 
-asciinema rec
-<path-to-KB-repo>/scripts/demo/run.sh
+# Generate a custom demo using a different script
+./scripts/demo/generate-demo.sh advanced-demo ./path/to/custom-script.sh
 
-# After each step, press <Enter> to proceed to the next step
+# Show help
+./scripts/demo/generate-demo.sh --help
+```
+
+**Note**: Custom demos (non-default names) won't automatically update the README. You'll need to reference them manually in documentation.
+
+## Setup Demo Cluster Only
+
+If you just want to set up the Kind cluster for testing:
+
+```sh
+make setup-demo-cluster
+```
 
-<CTRL-C> to terminate the script
-<CTRL-D> to terminate the asciinema recording
-<CTRL-C> to save the recording locally
+## Clean Up Demo Cluster
 
-# Edit the recorded file by editing the controller-gen path
-# Once you are happy with the recording, use svg-term program to generate the svg
+To remove the demo Kind cluster when done:
 
-svg-term --in=<cast-file-path> --out demo.svg --window
+```sh
+make clean-demo
 ```
+
+## Prerequisites
+
+- `kind`: For creating local Kubernetes clusters
+- `kubectl`: For interacting with Kubernetes
+- `asciinema`: For recording terminal sessions (recording only)
+- `svg-term`: For converting recordings to SVG (recording only, requires Node.js/npm)
diff --git a/scripts/demo/generate-demo.sh b/scripts/demo/generate-demo.sh
new file mode 100755
index 00000000000..03131645800
--- /dev/null
+++ b/scripts/demo/generate-demo.sh
@@ -0,0 +1,217 @@
+#!/usr/bin/env bash
+
+# Copyright 2025 The Kubernetes Authors.
+#
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+#
+#     http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+
+set -e
+
+SCRIPT_ROOT="$(cd "$(dirname "${BASH_SOURCE[0]}")" && pwd)"
+PROJECT_ROOT="$(cd "${SCRIPT_ROOT}/../.." && pwd)"
+
+# Source the e2e test infrastructure for kind cluster management
+source "${PROJECT_ROOT}/test/common.sh"
+source "${PROJECT_ROOT}/test/e2e/setup.sh"
+
+# Default demo name
+DEMO_NAME="${1:-kb-demo}"
+DEMO_SCRIPT="${2:-${SCRIPT_ROOT}/run.sh}"
+
+# Use color output from common.sh or define our own
+RED='\033[0;31m'
+GREEN='\033[0;32m'
+YELLOW='\033[1;33m'
+NC='\033[0m' # No Color
+
+log() {
+    echo -e "${GREEN}[INFO]${NC} $1"
+}
+
+warn() {
+    echo -e "${YELLOW}[WARN]${NC} $1"
+}
+
+error() {
+    echo -e "${RED}[ERROR]${NC} $1"
+    exit 1
+}
+
+usage() {
+    cat << EOF
+Usage: $0 [DEMO_NAME] [DEMO_SCRIPT]
+
+Generate an asciinema demo recording and convert it to SVG.
+
+Arguments:
+    DEMO_NAME     Name of the demo (default: kb-demo)
+    DEMO_SCRIPT   Path to the demo script to run (default: ${SCRIPT_ROOT}/run.sh)
+
+Examples:
+    $0                              # Generate default kb-demo
+    $0 my-custom-demo               # Generate custom demo with default script
+    $0 advanced-demo ./my-demo.sh   # Generate custom demo with custom script
+
+EOF
+    exit 0
+}
+
+check_prerequisites() {
+    log "Checking prerequisites..."
+    
+    # Check for help flag
+    if [[ "$1" == "-h" || "$1" == "--help" ]]; then
+        usage
+    fi
+    
+    # Validate demo script exists
+    if [[ ! -f "$DEMO_SCRIPT" ]]; then
+        error "Demo script not found: $DEMO_SCRIPT"
+    fi
+    
+    local missing_tools=()
+    
+    if ! command -v asciinema &> /dev/null; then
+        missing_tools+=("asciinema")
+    fi
+    
+    if ! command -v svg-term &> /dev/null; then
+        missing_tools+=("svg-term")
+    fi
+    
+    if ! command -v kind &> /dev/null; then
+        missing_tools+=("kind")
+    fi
+    
+    if ! command -v kubectl &> /dev/null; then
+        missing_tools+=("kubectl")
+    fi
+    
+    if [ ${#missing_tools[@]} -ne 0 ]; then
+        error "Missing required tools:\n$(printf '  - %s\n' "${missing_tools[@]}")"
+    fi
+    
+    log "All prerequisites are installed ✓"
+}
+
+setup_cluster() {
+    log "Setting up Kind cluster for demo..."
+    
+    # Use the e2e infrastructure to set up the cluster
+    export KIND_CLUSTER="kubebuilder-demo"
+    
+    # Build kubebuilder, fetch tools, and install kind if needed
+    build_kb
+    fetch_tools
+    install_kind
+    
+    # Create the cluster using the e2e setup function
+    create_cluster ${KIND_K8S_VERSION}
+    
+    log "Cluster connection verified ✓"
+}
+
+record_demo() {
+    local recording_dir="/tmp/kb-demo-recording"
+    
+    log "Cleaning up any previous recording files..."
+    rm -rf "$recording_dir"
+    mkdir -p "$recording_dir"
+    
+    log "Starting demo recording for '${DEMO_NAME}' in 3 seconds..."
+    sleep 3
+    
+    cd "$recording_dir"
+    asciinema rec \
+        --command "$DEMO_SCRIPT" \
+        --env "DEMO_AUTO_RUN=1" \
+        --title "Kubebuilder Demo: ${DEMO_NAME}" \
+        --idle-time-limit 2 \
+        "${DEMO_NAME}.cast"
+}
+
+convert_to_svg() {
+    local recording_dir="/tmp/kb-demo-recording"
+    local version="$1"
+    local svg_file="${PROJECT_ROOT}/docs/gif/${DEMO_NAME}.${version}.svg"
+    
+    log "Converting recording to SVG..."
+    svg-term \
+        --in="${recording_dir}/${DEMO_NAME}.cast" \
+        --out="$svg_file" \
+        --window \
+        --width=120 \
+        --height=30
+    
+    log "Demo updated! New file: docs/gif/${DEMO_NAME}.${version}.svg"
+    return 0
+}
+
+update_readme() {
+    local version="$1"
+    
+    # Only update README for the default kb-demo
+    if [[ "$DEMO_NAME" != "kb-demo" ]]; then
+        log "Skipping README update for custom demo '${DEMO_NAME}'"
+        return 0
+    fi
+    
+    log "Updating README.md with new demo..."
+    if [[ "$OSTYPE" == "darwin"* ]]; then
+        # macOS
+        sed -i '' "s|docs/gif/kb-demo\.v[^)]*\.svg|docs/gif/kb-demo.${version}.svg|g" "${PROJECT_ROOT}/README.md"
+    else
+        # Linux
+        sed -i "s|docs/gif/kb-demo\.v[^)]*\.svg|docs/gif/kb-demo.${version}.svg|g" "${PROJECT_ROOT}/README.md"
+    fi
+    
+    log "README.md updated with new demo file ✓"
+}
+
+cleanup() {
+    log "Cleaning up temporary files..."
+    rm -rf /tmp/kb-demo-recording
+    log "To clean up the demo cluster, run: make clean-demo"
+}
+
+cleanup_cluster() {
+    log "Cleaning up demo cluster..."
+    export KIND_CLUSTER="kubebuilder-demo"
+    delete_cluster
+    log "Demo cluster removed ✓"
+}
+
+main() {
+    # Check for help flag first
+    if [[ "$1" == "-h" || "$1" == "--help" ]]; then
+        usage
+    fi
+    
+    log "Starting Kubebuilder demo generation for '${DEMO_NAME}'..."
+    log "Using demo script: ${DEMO_SCRIPT}"
+    
+    # Extract version once to avoid duplication
+    local version
+    version=$(git -C "$PROJECT_ROOT" describe --tags --abbrev=0 2>/dev/null || echo "v4.0.0")
+    
+    check_prerequisites
+    setup_cluster
+    record_demo
+    convert_to_svg "$version"
+    update_readme "$version"
+    cleanup
+    
+    log "Demo generation completed successfully! 🎉"
+    log "Generated: docs/gif/${DEMO_NAME}.${version}.svg"
+}
+
+main "$@"
diff --git a/scripts/demo/run.sh b/scripts/demo/run.sh
index bbd8980d647..b6a89bd1c21 100755
--- a/scripts/demo/run.sh
+++ b/scripts/demo/run.sh
@@ -13,6 +13,12 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
+# Set up working directory in /tmp for clean demo
+cd /tmp
+rm -rf kubebuilder-demo-project
+mkdir kubebuilder-demo-project
+cd kubebuilder-demo-project
+
 clear
 . $(dirname ${BASH_SOURCE})/util.sh
 
diff --git a/scripts/demo/setup-demo-cluster.sh b/scripts/demo/setup-demo-cluster.sh
new file mode 100755
index 00000000000..4d029502a06
--- /dev/null
+++ b/scripts/demo/setup-demo-cluster.sh
@@ -0,0 +1,48 @@
+#!/usr/bin/env bash
+
+#  Copyright 2025 The Kubernetes Authors.
+#
+#  Licensed under the Apache License, Version 2.0 (the "License");
+#  you may not use this file except in compliance with the License.
+#  You may obtain a copy of the License at
+#
+#      http://www.apache.org/licenses/LICENSE-2.0
+#
+#  Unless required by applicable law or agreed to in writing, software
+#  distributed under the License is distributed on an "AS IS" BASIS,
+#  WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+#  See the License for the specific language governing permissions and
+#  limitations under the License.
+
+# This script sets up a Kind cluster for the Kubebuilder demo
+# It reuses the e2e test infrastructure for consistency
+
+set -e
+
+SCRIPT_ROOT="$(cd "$(dirname "${BASH_SOURCE[0]}")" && pwd)"
+PROJECT_ROOT="$(cd "${SCRIPT_ROOT}/../.." && pwd)"
+
+# Source the e2e test infrastructure
+source "${PROJECT_ROOT}/test/common.sh"
+source "${PROJECT_ROOT}/test/e2e/setup.sh"
+
+echo "Setting up Kind cluster for Kubebuilder demo..."
+
+# Set the cluster name for the demo
+export KIND_CLUSTER="kubebuilder-demo"
+
+# Build kubebuilder, fetch tools, and install kind if needed
+build_kb
+fetch_tools
+install_kind
+
+# Create the cluster using the e2e setup function
+create_cluster ${KIND_K8S_VERSION}
+
+echo ""
+echo "Kind cluster is ready for the Kubebuilder demo!"
+echo "Cluster name: ${KIND_CLUSTER}"
+echo "Context: kind-${KIND_CLUSTER}"
+echo ""
+echo "To delete the cluster when done:"
+echo "   make clean-demo"