diff --git a/enterprise/external-postgres.mdx b/enterprise/external-postgres.mdx
index 76126aac..d2d7a57f 100644
--- a/enterprise/external-postgres.mdx
+++ b/enterprise/external-postgres.mdx
@@ -12,6 +12,27 @@ need specific backup/recovery procedures, or require high availability configura
 
 OpenHands Enterprise requires **PostgreSQL 16.4.0 or above**. PostgreSQL 17 is also supported.
 
+## Database Encoding Requirement
+
+<Warning>
+  All databases used by OpenHands Enterprise **must use UTF8 encoding**. Using other encodings
+  (such as LATIN1) will cause database migrations to fail during installation or upgrades.
+</Warning>
+
+When creating databases manually or configuring your PostgreSQL instance, ensure UTF8 encoding
+is set:
+
+```sql
+-- Check current database encoding
+SELECT datname, pg_encoding_to_char(encoding) AS encoding FROM pg_database;
+
+-- Create databases with explicit UTF8 encoding
+CREATE DATABASE openhands WITH ENCODING 'UTF8';
+```
+
+If your PostgreSQL server's default encoding is not UTF8, you may need to specify the encoding
+explicitly when creating each database, or configure the server's default encoding.
+
 ## Required Databases
 
 OpenHands Enterprise uses the following databases:
@@ -48,12 +69,12 @@ If your security policies prevent granting `CREATEDB`, you must manually create
 databases before installation:
 
 ```sql
--- Create the databases
-CREATE DATABASE openhands;
-CREATE DATABASE bitnami_keycloak;
-CREATE DATABASE litellm;
-CREATE DATABASE runtime_api_db;
-CREATE DATABASE automations;
+-- Create the databases with UTF8 encoding
+CREATE DATABASE openhands WITH ENCODING 'UTF8';
+CREATE DATABASE bitnami_keycloak WITH ENCODING 'UTF8';
+CREATE DATABASE litellm WITH ENCODING 'UTF8';
+CREATE DATABASE runtime_api_db WITH ENCODING 'UTF8';
+CREATE DATABASE automations WITH ENCODING 'UTF8';
 
 -- Create user without CREATEDB
 CREATE USER openhands_user WITH PASSWORD 'your-secure-password';