diff --git a/CHANGELOG.md b/CHANGELOG.md
index aeea8dd51..0507a8208 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -9,6 +9,7 @@ The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/),
 
 ### Fixed
 
+- Fixed percentage scaling in `TEXT`: `TEXT(0.0123,"0.00%")` now returns `1.23%` instead of `0.01%`. Quoted or escaped percent signs remain literal. Remove manual multiplication by 100 used to work around the previous behavior. [#1776](https://github.com/handsontable/hyperformula/pull/1776)
 - Fixed the `AVERAGEIF` function returning a division-by-zero error when the calculated average was `0`. [#1733](https://github.com/handsontable/hyperformula/pull/1733)
 - Fixed the localized names of `VSTACK` and `HSTACK` in 14 language packs to match Microsoft Excel. [#1748](https://github.com/handsontable/hyperformula/pull/1748)
 - Fixed the MAXPOOL and MEDIANPOOL functions throwing an uncaught `TypeError` instead of returning the `#VALUE!` error when the range dimensions are not a whole multiple of the window size and the stride. [#1718](https://github.com/handsontable/hyperformula/pull/1718)
diff --git a/docs/guide/compatibility-with-microsoft-excel.md b/docs/guide/compatibility-with-microsoft-excel.md
index c0e86520b..0ccc6cad9 100644
--- a/docs/guide/compatibility-with-microsoft-excel.md
+++ b/docs/guide/compatibility-with-microsoft-excel.md
@@ -170,6 +170,8 @@ Options related to date and time formats:
 
 ### `TEXT` function formats
 
+HyperFormula's built-in number formatter supports percentage formats such as `0%` and `0.00%`. Each unquoted, unescaped `%` multiplies the value by 100 before rounding. For example, `=TEXT(0.0123,"0.00%")` returns `1.23%`. A quoted or backslash-escaped percent sign in a numeric format is displayed literally without scaling the value.
+
 Excel's `TEXT` function supports a wide range of date, time, and currency formats. To cover the full range in HyperFormula, supply both [`stringifyDateTime()`](../api/interfaces/configparams.md#stringifydatetime) (for dates and durations) and [`stringifyCurrency()`](../api/interfaces/configparams.md#stringifycurrency) (for currency formats — locale-aware grouping, non-`$` symbols, accounting two-section patterns). See [Currency handling](currency-handling.md) for an `Intl.NumberFormat`-based example.
 
 ## Full configuration
diff --git a/src/format/format.ts b/src/format/format.ts
index 52e119254..bd614007f 100644
--- a/src/format/format.ts
+++ b/src/format/format.ts
@@ -3,9 +3,11 @@
  * Copyright (c) 2025 Handsoncode. All rights reserved.
  */
 
+import {CellError, ErrorType} from '../Cell'
 import {Config} from '../Config'
 import {TIME_FORMAT_SECONDS_ITEM_REGEXP} from '../DateTimeDefault'
 import {DateTimeHelper, numberToSimpleTime, SimpleDateTime, SimpleTime} from '../DateTimeHelper'
+import {ErrorMessage} from '../error-message'
 import {RawScalarValue} from '../interpreter/InterpreterValue'
 import {Maybe} from '../Maybe'
 import {FormatToken, parseForDateTimeFormat, parseForNumberFormat, TokenType} from './parser'
@@ -75,12 +77,24 @@ function countChars(text: string, char: string) {
   return text.split(char).length - 1
 }
 
+/**
+ * Renders a numeric mask after scaling once for each active percent operator.
+ * Scaling precedes rounding and leaves custom formatter callbacks unaffected.
+ */
 function numberFormat(tokens: FormatToken[], value: number): RawScalarValue {
+  for (const token of tokens) {
+    if (token.type === TokenType.PERCENT) {
+      value *= 100
+      if (!Number.isFinite(value)) {
+        return new CellError(ErrorType.VALUE, ErrorMessage.ValueLarge)
+      }
+    }
+  }
   let result = ''
 
   for (let i = 0; i < tokens.length; ++i) {
     const token = tokens[i]
-    if (token.type === TokenType.FREE_TEXT) {
+    if (token.type === TokenType.FREE_TEXT || token.type === TokenType.PERCENT) {
       result += token.value
       continue
     }
diff --git a/src/format/parser.ts b/src/format/parser.ts
index 3583b205c..d584e519c 100644
--- a/src/format/parser.ts
+++ b/src/format/parser.ts
@@ -6,11 +6,12 @@
 import {Maybe} from '../Maybe'
 
 const dateFormatRegex = /(\\.|dd|DD|d|D|mm|MM|m|M|YYYY|YY|yyyy|yy|HH|hh|H|h|ss(\.(0+|s+))?|s|AM\/PM|am\/pm|A\/P|a\/p|\[mm]|\[MM]|\[hh]|\[HH])/g
-const numberFormatRegex = /(\\.|[#0]+(\.[#0]*)?)/g
+const numberFormatRegex = /(\\.|"[^"]*"|[#0]+(\.[#0]*)?|%)/g
 
 export enum TokenType {
   FORMAT = 'FORMAT',
   FREE_TEXT = 'FREE_TEXT',
+  PERCENT = 'PERCENT',
 }
 
 export interface FormatToken {
@@ -52,15 +53,26 @@ function matchDateFormat(str: string): RegExpExecArray[] {
   return tokens
 }
 
+/**
+ * Finds one numeric mask and its surrounding literals and percent operators.
+ * Keeping quotes and escapes intact prevents literal percent signs from scaling
+ * the value. Later numeric masks remain free text, as in the existing formatter.
+ */
 function matchNumberFormat(str: string): RegExpExecArray[] {
   numberFormatRegex.lastIndex = 0
-  const numberFormatToken = numberFormatRegex.exec(str)
+  const tokens: RegExpExecArray[] = []
+  let foundNumber = false
+  let token
 
-  if (numberFormatToken !== null) {
-    return [numberFormatToken]
-  } else {
-    return []
+  while ((token = numberFormatRegex.exec(str)) !== null) {
+    const isNumber = token[0].startsWith('#') || token[0].startsWith('0')
+    if (!isNumber || !foundNumber) {
+      tokens.push(token)
+    }
+    foundNumber = foundNumber || isNumber
   }
+
+  return foundNumber ? tokens : []
 }
 
 function createTokens(regexTokens: RegExpExecArray[], str: string) {
@@ -106,6 +118,11 @@ export function parseForDateTimeFormat(str: string): Maybe<FormatExpression> {
   }
 }
 
+/**
+ * Tokenizes a numeric format, distinguishing percent operators from literals.
+ * Percent escapes and quoted literals are decoded only on the number path;
+ * date tokens and unrelated backslash escapes retain their representation.
+ */
 export function parseForNumberFormat(str: string): Maybe<FormatExpression> {
   const numberFormatTokens = matchNumberFormat(str)
   if (numberFormatTokens.every((elem) => isEscapeToken(elem))) {
@@ -113,7 +130,18 @@ export function parseForNumberFormat(str: string): Maybe<FormatExpression> {
   } else {
     return {
       type: FormatExpressionType.NUMBER,
-      tokens: createTokens(numberFormatTokens, str),
+      tokens: createTokens(numberFormatTokens, str).map((token) => {
+        if (token.value === '\\%' || token.value === '\\\\') {
+          return formatToken(TokenType.FREE_TEXT, token.value.substring(1))
+        }
+        if (token.type === TokenType.FORMAT && token.value.startsWith('"')) {
+          return formatToken(TokenType.FREE_TEXT, token.value.slice(1, -1))
+        }
+        if (token.type === TokenType.FORMAT && token.value === '%') {
+          return formatToken(TokenType.PERCENT, token.value)
+        }
+        return token
+      }),
     }
   }
 }