Despite announcing this new feature in the app's "What's new" section, the option doesn't appear to be showing for some users which suggests that while the app is now capable of uploading custom images, Microsoft may be rolling out the feature gradually. Regardless of the rollout method being used, all public users should be able to upload their own images sometime in the very immediate future.
Once the feature has been activated for a user's app, it can be accessed by going to the user's profile, selecting Customize, Switch to Gamerpic (if currently using an animated Xbox Avatar), and then clicking on Edit. The option to upload should appear about all of the preselected Gamerpics provided by Microsoft.
This latest Windows 10 Xbox app update also adds the ability to pin a post to the top of a user's Activity Feed and to hide posts in the fee they don't want to see.
Have you customized your Gamerpic yet? Let us know if you're using this feature in the comments below.