diff --git a/conda_libmamba_solver/solver.py b/conda_libmamba_solver/solver.py
index 48ee4ae7..b39b7e07 100644
--- a/conda_libmamba_solver/solver.py
+++ b/conda_libmamba_solver/solver.py
@@ -32,6 +32,7 @@
 from conda.common.constants import NULL
 from conda.common.io import Spinner, time_recorder
 from conda.common.path import paths_equal
+from conda.common.url import percent_decode
 from conda.core.solve import Solver
 from conda.exceptions import (
     CondaValueError,
@@ -634,6 +635,7 @@ def _package_info_to_package_record(
                 break
         else:
             url = pkg.package_url
+        url = percent_decode(url)
         return PackageRecord(
             name=pkg.name,
             version=pkg.version,
diff --git a/dev/requirements.txt b/dev/requirements.txt
index 56dba1a9..761ee516 100644
--- a/dev/requirements.txt
+++ b/dev/requirements.txt
@@ -5,6 +5,3 @@ boltons>=23.0.0
 conda>=23.7.3
 conda-forge::libmamba>=2.0.0
 conda-forge::libmambapy>=2.0.0
-# NOTE: jaimergp/label/conda-libmamba-solver-for-libmamba-v2 is a temporary hack
-# to allow upgrades to libmamba v2. Remove once CLS with v2 compat is released.
-jaimergp/label/conda-libmamba-solver-for-libmamba-v2::conda-libmamba-solver
diff --git a/tests/test_solver.py b/tests/test_solver.py
index 2e90494a..906d8613 100644
--- a/tests/test_solver.py
+++ b/tests/test_solver.py
@@ -24,6 +24,7 @@
 )
 
 from conda_libmamba_solver.exceptions import LibMambaUnsatisfiableError
+from conda_libmamba_solver.solver import LibMambaSolver as Solver
 
 from .utils import conda_subprocess
 
@@ -500,3 +501,18 @@ def test_install_virtual_packages(conda_cli, spec):
     else:
         raises = (UnsatisfiableError, PackagesNotFoundError)
     conda_cli("create", "--dry-run", "--offline", spec, raises=raises)
+
+
+def test_urls_are_percent_decoded(tmp_path):
+    solver = Solver(
+        prefix=tmp_path, channels=["conda-forge"], specs_to_add=["x264"], command="create"
+    )
+    records = solver.solve_final_state()
+    for record in records:
+        if record.name == "x264":
+            print(record.url)
+            assert "!" in record.url
+            assert "%" not in record.url
+            break
+    else:
+        pytest.fail("Solution didn't include x264")