diff --git a/httpie/cli/argparser.py b/httpie/cli/argparser.py
index 9bf09b3b73..56deffee59 100644
--- a/httpie/cli/argparser.py
+++ b/httpie/cli/argparser.py
@@ -5,7 +5,7 @@
 import sys
 from argparse import RawDescriptionHelpFormatter
 from textwrap import dedent
-from urllib.parse import urlsplit
+from urllib.parse import urlsplit, unquote
 
 from requests.utils import get_netrc_auth
 
@@ -289,8 +289,9 @@ def _process_auth(self):
         if self.args.auth is None and not auth_type_set:
             if url.username is not None:
                 # Handle http://username:password@hostname/
-                username = url.username
-                password = url.password or ''
+                # Decode percent-encoded characters in credentials
+                username = unquote(url.username)
+                password = unquote(url.password) if url.password else ''
                 self.args.auth = AuthCredentials(
                     key=username,
                     value=password,
diff --git a/tests/test_auth.py b/tests/test_auth.py
index 83423efec0..795c0e2346 100644
--- a/tests/test_auth.py
+++ b/tests/test_auth.py
@@ -153,3 +153,25 @@ def test_ignore_netrc_null_auth():
         env=MockEnvironment(),
     )
     assert isinstance(args.auth, ExplicitNullAuth)
+
+
+def test_percent_encoded_credentials_in_url(httpbin_both):
+    """
+    Test that percent-encoded characters in URL credentials are decoded.
+
+    https://github.com/httpie/cli/issues/1623
+
+    When credentials contain special characters (like @, =, ?) they need to be
+    percent-encoded in the URL. HTTPie should decode these before using them
+    for authentication.
+    """
+    # The credentials are: username="u@d", password="1=2?"
+    # Percent-encoded: username="u%40d", password="1%3d2%3f"
+    url = httpbin_both.url + '/basic-auth/u%40d/1%3d2%3f'
+    url_with_auth = add_auth(url, auth='u%40d:1%3d2%3f')
+
+    r = http('GET', url_with_auth)
+
+    # This should succeed with 200 OK, not 401
+    assert HTTP_OK in r
+    assert r.json == {'authenticated': True, 'user': 'u@d'}