diff --git a/packages/start/src/runtime/server-handler.ts b/packages/start/src/runtime/server-handler.ts
index 74ded0de7..062487adc 100644
--- a/packages/start/src/runtime/server-handler.ts
+++ b/packages/start/src/runtime/server-handler.ts
@@ -90,7 +90,7 @@ async function handleServerFunction(h3Event: HTTPEvent) {
   let functionId: string | undefined | null, name: string | undefined | null;
   if (serverReference) {
     invariant(typeof serverReference === "string", "Invalid server function");
-    [functionId, name] = serverReference.split("#");
+    [functionId, name] = decodeURIComponent(serverReference).split("#");
   } else {
     functionId = url.searchParams.get("id");
     name = url.searchParams.get("name");
diff --git a/packages/start/src/runtime/server-runtime.ts b/packages/start/src/runtime/server-runtime.ts
index 2900539a9..18075d763 100644
--- a/packages/start/src/runtime/server-runtime.ts
+++ b/packages/start/src/runtime/server-runtime.ts
@@ -125,7 +125,7 @@ function createRequest(base: string, id: string, instance: string, options: Requ
     ...options,
     headers: {
       ...options.headers,
-      "X-Server-Id": id,
+      "X-Server-Id": encodeURIComponent(id),
       "X-Server-Instance": instance
     }
   });