diff --git a/CHANGELOG.md b/CHANGELOG.md
index e5f95ecac..0a518f3dd 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -8,6 +8,10 @@ This changelog also contains important changes in dependencies.
 
 ## [Unreleased]
 
+### Fixed
+
+- Local `<image>` hrefs are now percent-decoded when the raw href doesn't point to an existing file. (#1073)
+
 ## [0.48.1] 2026-08-02
 
 This release has an MSRV of 1.85.0 for `usvg` and `resvg` and the C API.
diff --git a/crates/usvg/src/parser/image.rs b/crates/usvg/src/parser/image.rs
index 35a908b9b..82aa41076 100644
--- a/crates/usvg/src/parser/image.rs
+++ b/crates/usvg/src/parser/image.rs
@@ -84,7 +84,17 @@ impl ImageHrefResolver<'_> {
     /// [Options::resources_dir](crate::Options::resources_dir).
     pub fn default_string_resolver() -> ImageHrefStringResolverFn<'static> {
         Box::new(move |href: &str, opts: &Options| {
-            let path = opts.get_abs_path(std::path::Path::new(href));
+            let mut path = opts.get_abs_path(std::path::Path::new(href));
+
+            // `href` is an IRI and therefore can be percent-encoded.
+            // Editors like Inkscape store non-ASCII file names this way.
+            // A file name can contain a literal `%` as well,
+            // so the raw path is checked first.
+            if !path.exists() {
+                if let Some(decoded) = percent_decode(href) {
+                    path = opts.get_abs_path(std::path::Path::new(&decoded));
+                }
+            }
 
             if path.exists() {
                 let data = match std::fs::read(&path) {
@@ -120,6 +130,39 @@ impl std::fmt::Debug for ImageHrefResolver<'_> {
     }
 }
 
+/// Decodes percent-encoded characters in an IRI.
+///
+/// Returns `None` when there is nothing to decode
+/// or when the decoded data is not a valid UTF-8 string.
+/// Invalid escape sequences are preserved as is.
+fn percent_decode(href: &str) -> Option<String> {
+    if !href.contains('%') {
+        return None;
+    }
+
+    fn hex_digit(c: u8) -> Option<u8> {
+        (c as char).to_digit(16).map(|d| d as u8)
+    }
+
+    let src = href.as_bytes();
+    let mut dst = Vec::with_capacity(src.len());
+    let mut i = 0;
+    while i < src.len() {
+        if src[i] == b'%' && i + 2 < src.len() {
+            if let (Some(h), Some(l)) = (hex_digit(src[i + 1]), hex_digit(src[i + 2])) {
+                dst.push(h * 16 + l);
+                i += 3;
+                continue;
+            }
+        }
+
+        dst.push(src[i]);
+        i += 1;
+    }
+
+    String::from_utf8(dst).ok()
+}
+
 #[derive(Clone, Copy, PartialEq, Debug)]
 enum ImageFormat {
     PNG,
diff --git a/crates/usvg/tests/parser.rs b/crates/usvg/tests/parser.rs
index f517fd998..2b9b1af41 100644
--- a/crates/usvg/tests/parser.rs
+++ b/crates/usvg/tests/parser.rs
@@ -572,6 +572,63 @@ fn image_bbox_with_parent_transform() {
     );
 }
 
+// An external image used by the tests below.
+const EXTERNAL_IMAGE: &str = "<svg xmlns='http://www.w3.org/2000/svg' width='10' height='10'>\
+    <rect width='10' height='10'/>\
+</svg>";
+
+// Creates an empty directory for external image tests.
+fn resources_dir(name: &str) -> std::path::PathBuf {
+    let dir = std::path::Path::new(env!("CARGO_TARGET_TMPDIR")).join(name);
+    let _ = std::fs::remove_dir_all(&dir);
+    std::fs::create_dir_all(&dir).unwrap();
+    dir
+}
+
+// Checks that an `<image>` with the provided `href` was resolved
+// relative to `resources_dir`.
+fn is_image_resolved(dir: &std::path::Path, href: &str) -> bool {
+    let svg = format!(
+        "<svg xmlns='http://www.w3.org/2000/svg' width='100' height='100'>\
+            <image href='{}' width='100' height='100'/>\
+        </svg>",
+        href
+    );
+
+    let opt = usvg::Options {
+        resources_dir: Some(dir.to_path_buf()),
+        ..usvg::Options::default()
+    };
+
+    let tree = usvg::Tree::from_str(&svg, &opt).unwrap();
+    let Some(usvg::Node::Group(group)) = tree.root().children().first() else {
+        return false;
+    };
+    matches!(group.children().first(), Some(usvg::Node::Image(_)))
+}
+
+#[test]
+fn percent_encoded_image_href() {
+    let dir = resources_dir("percent-encoded-image-href");
+    std::fs::create_dir(dir.join("images")).unwrap();
+    std::fs::write(dir.join("images").join("细节3-mine.svg"), EXTERNAL_IMAGE).unwrap();
+
+    // Editors like Inkscape store non-ASCII file names percent-encoded.
+    assert!(is_image_resolved(
+        &dir,
+        "images/%E7%BB%86%E8%8A%823-mine.svg"
+    ));
+}
+
+#[test]
+fn image_href_with_literal_percent() {
+    let dir = resources_dir("image-href-with-literal-percent");
+    // `%41` is a valid escape sequence for `A`, but here it's just a file name.
+    std::fs::write(dir.join("%41.svg"), EXTERNAL_IMAGE).unwrap();
+
+    assert!(is_image_resolved(&dir, "%41.svg"));
+}
+
 #[test]
 fn no_text_nodes() {
     let svg = "