diff --git a/Cargo.lock b/Cargo.lock
index a247391..acc3ff6 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -3193,6 +3193,7 @@ dependencies = [
  "linkme",
  "matchit 0.7.3",
  "multer",
+ "percent-encoding",
  "pin-project-lite",
  "prometheus",
  "proptest",
diff --git a/crates/rustapi-core/Cargo.toml b/crates/rustapi-core/Cargo.toml
index 9fc67f0..9810276 100644
--- a/crates/rustapi-core/Cargo.toml
+++ b/crates/rustapi-core/Cargo.toml
@@ -10,6 +10,7 @@ repository.workspace = true
 homepage.workspace = true
 
 [dependencies]
+percent-encoding = "2.3"
 # Async
 tokio = { workspace = true, features = ["rt", "net", "time", "fs", "macros", "io-util"] }
 futures-util = { workspace = true }
diff --git a/crates/rustapi-core/src/static_files.rs b/crates/rustapi-core/src/static_files.rs
index 2f3e046..1ea50a4 100644
--- a/crates/rustapi-core/src/static_files.rs
+++ b/crates/rustapi-core/src/static_files.rs
@@ -253,8 +253,13 @@ impl StaticFile {
         relative_path: &str,
         config: &StaticFileConfig,
     ) -> Result<Response, ApiError> {
-        // Sanitize path to prevent directory traversal
-        let clean_path = sanitize_path(relative_path);
+        // Percent-decode the path first
+        let decoded_path = percent_encoding::percent_decode_str(relative_path)
+            .decode_utf8()
+            .unwrap_or(std::borrow::Cow::Borrowed(relative_path));
+
+        // Sanitize path to prevent basic directory traversal
+        let clean_path = sanitize_path(&decoded_path);
         let file_path = config.root.join(&clean_path);
 
         // Check if it's a directory
@@ -282,6 +287,21 @@ impl StaticFile {
 
     /// Serve a specific file
     async fn serve_file(path: &Path, config: &StaticFileConfig) -> Result<Response, ApiError> {
+        // Security check: ensure the resolved path is within the root directory
+        let canonical_root = match tokio::fs::canonicalize(&config.root).await {
+            Ok(root) => root,
+            Err(_) => return Err(ApiError::internal("Static file root directory not found")),
+        };
+
+        let canonical_file = match tokio::fs::canonicalize(path).await {
+            Ok(file) => file,
+            Err(_) => return Err(ApiError::not_found("File not found")),
+        };
+
+        if !canonical_file.starts_with(&canonical_root) {
+            return Err(ApiError::not_found("File not found"));
+        }
+
         // Check if file exists
         let metadata = fs::metadata(path)
             .await
diff --git a/crates/rustapi-core/tests/static_files_security_test.rs b/crates/rustapi-core/tests/static_files_security_test.rs
new file mode 100644
index 0000000..1774325
--- /dev/null
+++ b/crates/rustapi-core/tests/static_files_security_test.rs
@@ -0,0 +1,53 @@
+use rustapi_core::static_files::serve_dir;
+use rustapi_core::static_files::StaticFile;
+use std::fs::File;
+
+#[tokio::test]
+async fn test_directory_traversal_blocked() {
+    let config = serve_dir("/static", "./"); // root is crates/rustapi-core
+
+    // We try to access something outside the root
+    let relative_path = "../../etc/passwd";
+    let res = StaticFile::serve(relative_path, &config).await;
+    assert!(res.is_err(), "Standard traversal should be blocked");
+
+    // Percent encoded payload
+    let relative_path_encoded = "..%2F..%2Fetc%2Fpasswd";
+    let res_encoded = StaticFile::serve(relative_path_encoded, &config).await;
+    assert!(res_encoded.is_err(), "Encoded traversal should be blocked");
+
+    // Double encoded
+    let relative_path_double = "%2e%2e%2f%2e%2e%2fetc%2fpasswd";
+    let res_double = StaticFile::serve(relative_path_double, &config).await;
+    assert!(
+        res_double.is_err(),
+        "Double encoded traversal should be blocked"
+    );
+}
+
+#[tokio::test]
+async fn test_valid_file_served() {
+    let config = serve_dir("/static", "./");
+
+    // Valid file
+    let relative_path = "src/lib.rs";
+    let res = StaticFile::serve(relative_path, &config).await;
+    assert!(res.is_ok(), "Valid file should be served");
+}
+
+#[tokio::test]
+async fn test_valid_file_with_spaces_served() {
+    let _ = std::fs::create_dir_all("./test_dir");
+    let _ = File::create("./test_dir/file with spaces.txt");
+
+    let config = serve_dir("/static", "./test_dir");
+
+    let relative_path = "file%20with%20spaces.txt";
+    let res = StaticFile::serve(relative_path, &config).await;
+    assert!(
+        res.is_ok(),
+        "File with percent-encoded spaces should be served"
+    );
+
+    let _ = std::fs::remove_dir_all("./test_dir");
+}