diff --git a/packages/coding-agent/CHANGELOG.md b/packages/coding-agent/CHANGELOG.md
index fd7e6c948..4cab06ab4 100644
--- a/packages/coding-agent/CHANGELOG.md
+++ b/packages/coding-agent/CHANGELOG.md
@@ -14,6 +14,7 @@
 
 - Fixed compaction and branch summaries failing with "generation hit the token cap" when reasoning used most of the fixed summary output limit. Summaries now use the model's output limit, and `compaction.reserveTokens` only controls when compaction starts ([#9512](https://github.com/earendil-works/pi/issues/9512), [#9075](https://github.com/earendil-works/pi/issues/9075)).
 - Fixed `models.schema.json` missing descriptions for provider and model fields, so editors showed no hints for them ([#10790](https://github.com/earendil-works/pi/issues/10790))
+- Fixed `pi update` failing with "Managed install marker is missing or invalid" when `managed-install.json` starts with a UTF-8 BOM, which Windows PowerShell 5.1 adds when it rewrites the file.
 
 ## [1.3.0] - 2026-10-15
 
diff --git a/packages/coding-agent/src/package-manager-cli.ts b/packages/coding-agent/src/package-manager-cli.ts
index 45a6db707..48d605620 100644
--- a/packages/coding-agent/src/package-manager-cli.ts
+++ b/packages/coding-agent/src/package-manager-cli.ts
@@ -37,6 +37,7 @@ import { hasTrustRequiringProjectResources, ProjectTrustStore } from "./core/tru
 import { spawnProcess, spawnProcessSync, waitForChildProcess } from "./utils/child-process.ts";
 import { canonicalizePath, getCwdRelativePath } from "./utils/paths.ts";
 import { getPiUserAgent } from "./utils/pi-user-agent.ts";
+import { stripBom } from "./utils/text.ts";
 import { formatVersionCheckError, getLatestPiRelease, isNewerPackageVersion } from "./utils/version-check.ts";
 import {
 	cleanupWindowsSelfUpdateQuarantine,
@@ -63,7 +64,7 @@ function getActiveManagedInstallRoot(): string | undefined {
 
 	const markerPath = join(managedRoot, MANAGED_INSTALL_MARKER);
 	try {
-		const marker = JSON.parse(readFileSync(markerPath, "utf8")) as {
+		const marker = JSON.parse(stripBom(readFileSync(markerPath, "utf8"))) as {
 			kind?: unknown;
 			layout?: unknown;
 			schemaVersion?: unknown;
diff --git a/packages/coding-agent/test/package-command-paths.test.ts b/packages/coding-agent/test/package-command-paths.test.ts
index c97fbe9bf..68949f9a3 100644
--- a/packages/coding-agent/test/package-command-paths.test.ts
+++ b/packages/coding-agent/test/package-command-paths.test.ts
@@ -697,6 +697,24 @@ if (process.platform !== "win32") fs.chmodSync(piPath, 0o755);
 		expect(process.exitCode).toBeUndefined();
 	});
 
+	it("accepts a managed install marker with a UTF-8 BOM", async () => {
+		const targetVersion = getNewerPatchVersion();
+		const { managedRoot } = prepareManagedInstall(targetVersion);
+		writeFileSync(
+			join(managedRoot, "managed-install.json"),
+			`\uFEFF${JSON.stringify({ kind: "pi-managed-install", schemaVersion: 1, layout: "releases-v1" })}\r\n`,
+		);
+		mockManagedUpdate(targetVersion);
+		vi.spyOn(console, "log").mockImplementation(() => {});
+		const errorSpy = vi.spyOn(console, "error").mockImplementation(() => {});
+
+		await expect(runPackageCommandDirectly(["update", "--self"])).resolves.toBeUndefined();
+
+		expect(readFileSync(join(managedRoot, "current-version"), "utf8")).toBe(`${targetVersion}\n`);
+		expect(errorSpy).not.toHaveBeenCalled();
+		expect(process.exitCode).toBeUndefined();
+	});
+
 	it("removes older managed releases after an update", async () => {
 		// https://github.com/earendil-works/pi/issues/10392
 		const targetVersion = getNewerPatchVersion();