diff --git a/linkwarden/CHANGELOG.md b/linkwarden/CHANGELOG.md
index de5e146a8b..7bb5346bd4 100644
--- a/linkwarden/CHANGELOG.md
+++ b/linkwarden/CHANGELOG.md
@@ -1,4 +1,7 @@
  
+## 2.16.3.1 (19-09-2026)
+- Fix startup failure (Prisma P3018/P3009, collation "und-x-icu" for encoding "SQL_ASCII" does not exist) after the 2.16.3 update (#3073): a local database created as SQL_ASCII by older versions is converted once to UTF8 at startup, the original is kept as `linkwarden_sql_ascii_backup`. New databases are created as UTF8.
+
 ## 2.16.3 (2026-09-12)
 - Update to latest version from linkwarden/linkwarden (changelog : https://github.com/linkwarden/linkwarden/releases)
 - Migrate legacy add-on configuration map names to current app configuration terminology.
diff --git a/linkwarden/config.yaml b/linkwarden/config.yaml
index 8b8f4ef951..049125ea04 100644
--- a/linkwarden/config.yaml
+++ b/linkwarden/config.yaml
@@ -45,5 +45,5 @@ schema:
   STORAGE_FOLDER: str?
 slug: linkwarden
 url: https://github.com/alexbelgium/hassio-addons/tree/master/linkwarden
-version: "2.16.3"
+version: "2.16.3.1"
 webui: "[PROTO:ssl]://[HOST]:[PORT:3000]"
diff --git a/linkwarden/rootfs/etc/cont-init.d/99-run.sh b/linkwarden/rootfs/etc/cont-init.d/99-run.sh
index ac20ed97ec..531ab6c7a7 100755
--- a/linkwarden/rootfs/etc/cont-init.d/99-run.sh
+++ b/linkwarden/rootfs/etc/cont-init.d/99-run.sh
@@ -75,10 +75,27 @@ if [[ "$DATABASE_URL" == *"localhost"* ]]; then
     # Set password
     sudo -u postgres psql -c "ALTER USER postgres WITH PASSWORD 'homeassistant';"
 
-    # Create database if does not exist
-    echo "CREATE DATABASE linkwarden; GRANT ALL PRIVILEGES ON DATABASE linkwarden to postgres;
+    # Create database if does not exist (UTF8 is required for the ICU collations used by Linkwarden migrations)
+    echo "CREATE DATABASE linkwarden TEMPLATE template0 ENCODING 'UTF8' LC_COLLATE 'C' LC_CTYPE 'C'; GRANT ALL PRIVILEGES ON DATABASE linkwarden to postgres;
     \q" > setup_postgres.sql
     sudo -u postgres bash -c 'cat setup_postgres.sql | psql "postgres://postgres:homeassistant@localhost:5432"' || true
+
+    # Databases created by older versions are SQL_ASCII, where the "und-x-icu" collation fails (Prisma P3018/P3009)
+    # One-time conversion: copy into a new UTF8 database, keep the original as linkwarden_sql_ascii_backup
+    if [ "$(sudo -u postgres psql -tAc "SELECT pg_encoding_to_char(encoding) FROM pg_database WHERE datname='linkwarden'")" = "SQL_ASCII" ]; then
+        bashio::log.warning "Database linkwarden uses SQL_ASCII encoding, converting it to UTF8"
+        sudo -u postgres psql -v ON_ERROR_STOP=1 -c "DROP DATABASE IF EXISTS linkwarden_utf8;" \
+            -c "CREATE DATABASE linkwarden_utf8 TEMPLATE template0 ENCODING 'UTF8' LC_COLLATE 'C' LC_CTYPE 'C';"
+        if sudo -u postgres bash -o pipefail -c 'pg_dump -d linkwarden | iconv -f UTF-8 -t UTF-8 | psql -q -v ON_ERROR_STOP=1 -d linkwarden_utf8 >/dev/null'; then
+            # Let Prisma re-apply the migration that failed on SQL_ASCII
+            sudo -u postgres psql -v ON_ERROR_STOP=1 -d linkwarden_utf8 -c "UPDATE \"_prisma_migrations\" SET rolled_back_at=NOW() WHERE migration_name='20260818000000_case_insensitive_name_sorting' AND finished_at IS NULL AND rolled_back_at IS NULL;"
+            sudo -u postgres psql -v ON_ERROR_STOP=1 -c "ALTER DATABASE linkwarden RENAME TO linkwarden_sql_ascii_backup; ALTER DATABASE linkwarden_utf8 RENAME TO linkwarden;"
+            bashio::log.info "Database converted to UTF8, original kept as linkwarden_sql_ascii_backup (once everything works, free the space with: sudo -u postgres psql -c 'DROP DATABASE linkwarden_sql_ascii_backup;')"
+        else
+            sudo -u postgres psql -c "DROP DATABASE IF EXISTS linkwarden_utf8;"
+            bashio::log.error "Conversion to UTF8 failed, the original database was left untouched"
+        fi
+    fi
 fi
 
 ########################