diff --git a/hermes_cli/main.py b/hermes_cli/main.py
index 101617de9ad..619311ed18b 100644
--- a/hermes_cli/main.py
+++ b/hermes_cli/main.py
@@ -13365,7 +13365,10 @@ def _render_distribution_plan(plan) -> None:
                             if key == er.name:
                                 already = True
                                 break
-                    except OSError:
+                    except (OSError, UnicodeDecodeError):
+                        # UnicodeDecodeError is a ValueError, not an OSError, so
+                        # the old guard let a mis-encoded .env abort the whole
+                        # install preview. Skip the pre-check instead.
                         pass
             status = "✓ set" if already else ("needs setting" if er.required else "—")
             line = f"    • {er.name} ({tag}, {status})"
diff --git a/tests/hermes_cli/test_profile_install_env_encoding.py b/tests/hermes_cli/test_profile_install_env_encoding.py
new file mode 100644
index 00000000000..f6e746c86f1
--- /dev/null
+++ b/tests/hermes_cli/test_profile_install_env_encoding.py
@@ -0,0 +1,72 @@
+"""Regression: the distribution-install preview must read .env as UTF-8.
+
+`_render_distribution_plan` inspects the target profile's `.env` to decide
+whether a required env var is already set, so it doesn't nag the user. It
+used `Path.read_text()` with no encoding, which:
+
+  1. defaults to the system locale (cp1251/GBK on Windows) and raises
+     `UnicodeDecodeError` on any non-ASCII byte — and the surrounding
+     `except OSError` does NOT catch that (it's a `ValueError`), so a
+     mis-encoded .env aborts the whole install preview; and
+  2. even on a UTF-8 locale, a Notepad-added BOM prefixes the first key,
+     so the very first env var is mis-detected as "needs setting".
+
+The fix reads `utf-8-sig` and also catches `UnicodeDecodeError`.
+"""
+
+from types import SimpleNamespace
+
+import pytest
+
+from hermes_cli.main import _render_distribution_plan
+
+
+def _make_plan(target_dir, env_requires):
+    manifest = SimpleNamespace(
+        name="demo",
+        version="1.0.0",
+        description="",
+        author="",
+        hermes_requires="",
+        env_requires=env_requires,
+    )
+    return SimpleNamespace(
+        manifest=manifest,
+        provenance="local",
+        target_dir=target_dir,
+        existing=False,
+        has_cron=False,
+    )
+
+
+def test_bom_prefixed_env_first_key_is_detected_as_set(tmp_path, monkeypatch, capsys):
+    """A required key on the first line of a BOM-prefixed .env reads as set."""
+    monkeypatch.delenv("FOO_TOKEN", raising=False)
+    profile = tmp_path / "profile"
+    profile.mkdir()
+    # utf-8-sig write == UTF-8 with a leading BOM, exactly what Notepad emits.
+    (profile / ".env").write_text("FOO_TOKEN=abc\nBAR=1\n", encoding="utf-8-sig")
+
+    plan = _make_plan(profile, [SimpleNamespace(name="FOO_TOKEN", required=True, description="")])
+    _render_distribution_plan(plan)
+
+    out = capsys.readouterr().out
+    foo_line = next(ln for ln in out.splitlines() if "FOO_TOKEN" in ln)
+    assert "✓ set" in foo_line, f"BOM must not hide the first key: {foo_line!r}"
+
+
+def test_non_utf8_env_does_not_abort_the_preview(tmp_path, monkeypatch, capsys):
+    """A .env with invalid UTF-8 bytes must not crash the install preview."""
+    monkeypatch.delenv("FOO_TOKEN", raising=False)
+    profile = tmp_path / "profile"
+    profile.mkdir()
+    # \xff is an invalid UTF-8 start byte -> UnicodeDecodeError on read.
+    (profile / ".env").write_bytes(b"FOO_TOKEN=\xff\xfe bad\n")
+
+    plan = _make_plan(profile, [SimpleNamespace(name="FOO_TOKEN", required=True, description="")])
+
+    # Must return normally (old `except OSError` let UnicodeDecodeError escape).
+    _render_distribution_plan(plan)
+
+    out = capsys.readouterr().out
+    assert any("FOO_TOKEN" in ln for ln in out.splitlines())