Abstract: A gift bag that is convertible to a gift box comprises a decorative bag that is foldable flat and openable to a substantially rectangular parallelepiped shape, and an insert for the bag that also folds flat but opens to a generally open-ended box inserted into to the bag to reinforce and stiffen the bag. The bag has an integral top flap that opens to cooperate with the insert to form a closed box, and has carry handles connected to the interior of the bag that are either removable or can be located within the bag when it is converted into a box.