diff --git a/packages/account-sdk/src/sign/base-account/utils/createSmartAccount.test.ts b/packages/account-sdk/src/sign/base-account/utils/createSmartAccount.test.ts
index e84bef01..41e47884 100644
--- a/packages/account-sdk/src/sign/base-account/utils/createSmartAccount.test.ts
+++ b/packages/account-sdk/src/sign/base-account/utils/createSmartAccount.test.ts
@@ -6,7 +6,7 @@ import { baseSepolia } from 'viem/chains';
 import { encodeFunctionData, keccak256 } from 'viem/utils';
 import { beforeEach, describe, expect, vi } from 'vitest';
 
-import { createSmartAccount, sign, wrapSignature } from './createSmartAccount.js';
+import { createFactoryData, createSmartAccount, sign, wrapSignature } from './createSmartAccount.js';
 
 const privateKey = '0x8d0ec8aa1f67f8c11db3c191d3d66408e148759acd617fa22ab5d5d677a234e9';
 const signer = privateKeyToAccount(privateKey);
@@ -505,3 +505,88 @@ describe('wrapSignature', () => {
     );
   });
 });
+
+describe('createFactoryData', () => {
+  it('should create factory data for local account', () => {
+    const factoryData = createFactoryData(signer);
+    
+    // Verify that the factory data is properly encoded
+    expect(factoryData).toMatch(/^0x/);
+    expect(factoryData.length).toBeGreaterThan(10); // Should be a reasonable length
+    
+    // The factory data should start with the function selector for createAccount
+    // which is 0x3ffba36f (first 4 bytes of keccak256("createAccount(bytes[],uint256)"))
+    expect(factoryData.startsWith('0x3ffba36f')).toBe(true);
+  });
+
+  it('should create factory data for WebAuthn account', () => {
+    const webauthnOwner = toWebAuthnAccount({
+      credential: { 
+        id: 'test-id', 
+        publicKey: '0x1234567890abcdef1234567890abcdef1234567890abcdef1234567890abcdef1234567890abcdef1234567890abcdef1234567890abcdef1234567890abcdef' 
+      },
+    });
+    
+    const factoryData = createFactoryData(webauthnOwner);
+    
+    // Verify that the factory data is properly encoded
+    expect(factoryData).toMatch(/^0x/);
+    expect(factoryData.length).toBeGreaterThan(10);
+    expect(factoryData.startsWith('0x3ffba36f')).toBe(true);
+  });
+
+  it('should throw error for WebAuthn account with invalid public key', () => {
+    const webauthnOwner = toWebAuthnAccount({
+      credential: { 
+        id: 'test-id', 
+        publicKey: '0xinvalid' // Too short
+      },
+    });
+    
+    expect(() => createFactoryData(webauthnOwner)).toThrow('WebAuthn owner must have a valid 64-byte public key');
+  });
+
+  it('should throw error for unsupported owner type', () => {
+    const unsupportedOwner = {
+      type: 'unsupported',
+      address: '0x1234567890123456789012345678901234567890',
+    } as any;
+    
+    expect(() => createFactoryData(unsupportedOwner)).toThrow('Unsupported owner type: unsupported');
+  });
+});
+
+describe('getFactoryArgs with generated factory data', () => {
+  it('should generate factory data when none is provided', async () => {
+    const account = await createSmartAccount({
+      client,
+      owner: signer,
+      ownerIndex: 0,
+      address: '0xBb0c1d5E7f530e8e648150fc7Cf30912575523E8',
+      factoryData: undefined, // No factory data provided
+    });
+
+    const factoryArgs = await account.getFactoryArgsWithGeneration();
+    expect(factoryArgs.factory).toBe('0xba5ed110efdba3d005bfc882d75358acbbb85842');
+    expect(factoryArgs.factoryData).toBeDefined();
+    expect(factoryArgs.factoryData).toMatch(/^0x/);
+    expect(factoryArgs.factoryData!.startsWith('0x3ffba36f')).toBe(true);
+  });
+
+  it('should use provided factory data when available', async () => {
+    const providedFactoryData = '0x3ffba36f00000000000000000000000000000000000000000000000000000000000000400000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000100000000000000000000000000000000000000000000000000000000000000200000000000000000000000000000000000000000000000000000000000000020000000000000000000000000f39Fd6e51aad88F6F4ce6aB8827279cffFb92266';
+    
+    const account = await createSmartAccount({
+      client,
+      owner: signer,
+      ownerIndex: 0,
+      address: '0xBb0c1d5E7f530e8e648150fc7Cf30912575523E8',
+      factoryData: providedFactoryData,
+    });
+
+    const factoryArgs = await account.getFactoryArgsWithGeneration();
+    
+    expect(factoryArgs.factory).toBe('0xba5ed110efdba3d005bfc882d75358acbbb85842');
+    expect(factoryArgs.factoryData).toBe(providedFactoryData);
+  });
+});
diff --git a/packages/account-sdk/src/sign/base-account/utils/createSmartAccount.ts b/packages/account-sdk/src/sign/base-account/utils/createSmartAccount.ts
index 5e24c1bb..58fef8b4 100644
--- a/packages/account-sdk/src/sign/base-account/utils/createSmartAccount.ts
+++ b/packages/account-sdk/src/sign/base-account/utils/createSmartAccount.ts
@@ -19,6 +19,7 @@ import {
   encodePacked,
   hashMessage,
   hashTypedData,
+  pad,
   parseSignature,
   size,
   stringToHex,
@@ -57,6 +58,7 @@ export type CoinbaseSmartAccountImplementation = Assign<
   {
     decodeCalls: NonNullable<SmartAccountImplementation['decodeCalls']>;
     sign: NonNullable<SmartAccountImplementation['sign']>;
+    getFactoryArgsWithGeneration: () => Promise<{ factory: Address; factoryData: Hex }>;
   }
 >;
 
@@ -73,7 +75,7 @@ export type CoinbaseSmartAccountImplementation = Assign<
  *   owner: privateKeyToAccount('0x...'),
  *   ownerIndex: 0,
  *   address: '0x...',
- *   factoryData: '0x...',
+ *   factoryData: '0x...', // Optional: if not provided, will be generated automatically
  * })
  */
 export async function createSmartAccount(
@@ -135,10 +137,12 @@ export async function createSmartAccount(
       return address;
     },
 
-    async getFactoryArgs() {
-      if (factoryData) return { factory: factory.address, factoryData };
-      // TODO: support creating factory data
-      return { factory: factory.address, factoryData };
+    async getFactoryArgsWithGeneration() {
+      if (factoryData) return { factory: factoryAddress, factoryData };
+
+      // Generate factory data for owner initialization
+      const generatedFactoryData = createFactoryData(owner);
+      return { factory: factoryAddress, factoryData: generatedFactoryData };
     },
 
     async getStubSignature() {
@@ -386,3 +390,49 @@ export function wrapSignature(parameters: { ownerIndex?: number | undefined; sig
     ]
   );
 }
+
+/**
+ * @description Creates factory data for smart account initialization.
+ *
+ * This function generates the encoded data needed to initialize a smart account
+ * through the factory contract. It supports both local (private key) and WebAuthn
+ * account types.
+ *
+ * @param owner - The owner account to initialize the smart account with
+ * @returns Encoded factory data for the createAccount function call
+ * @throws {BaseError} If the owner type is unsupported or has invalid data
+ *
+ * @example
+ *
+ * const factoryData = createFactoryData(privateKeyToAccount('0x...'));
+ * // Returns: '0x3ffba36f...' (encoded createAccount call)
+ */
+export function createFactoryData(owner: OwnerAccount): Hex {
+  // Convert owner to the format expected by the factory
+  let ownerBytes: Hex;
+
+  if (owner.type === 'webAuthn') {
+    // For WebAuthn accounts, we need to encode the public key
+    // The public key should be 64 bytes (32 bytes x + 32 bytes y)
+    if (!owner.publicKey || owner.publicKey.length !== 130) {
+      // 0x + 64 hex chars = 130
+      throw new BaseError('WebAuthn owner must have a valid 64-byte public key');
+    }
+    ownerBytes = owner.publicKey as Hex;
+  } else if (owner.type === 'local') {
+    // For local accounts (private key accounts), we need the address padded to 32 bytes
+    if (!owner.address) {
+      throw new BaseError('Local owner must have an address');
+    }
+    ownerBytes = pad(owner.address);
+  } else {
+    throw new BaseError(`Unsupported owner type: ${owner.type}`);
+  }
+
+  // Encode the createAccount function call with the owner and nonce 0
+  return encodeFunctionData({
+    abi: factoryAbi,
+    functionName: 'createAccount',
+    args: [[ownerBytes], BigInt(0)],
+  });
+}