diff --git a/cabal-testsuite/src/Test/Cabal/Monad.hs b/cabal-testsuite/src/Test/Cabal/Monad.hs
index 38534402d26..04771018cbf 100644
--- a/cabal-testsuite/src/Test/Cabal/Monad.hs
+++ b/cabal-testsuite/src/Test/Cabal/Monad.hs
@@ -402,8 +402,8 @@ runTestM mode m =
                     testSkipSetupTests =  argSkipSetupTests (testCommonArgs args),
                     testHaveCabalShared = runnerWithSharedLib senv,
                     testEnvironment =
-                        -- Try to avoid Unicode output
-                        [ ("LC_ALL", Just "C")
+                        -- Use UTF-8 output on all platforms.
+                        [ ("LC_ALL", Just "en_US.UTF-8")
                         -- Hermetic builds (knot-tied)
                         , ("HOME", Just (testHomeDir env))
                         -- Set CABAL_DIR in addition to HOME, since HOME has no
diff --git a/cabal-testsuite/src/Test/Cabal/Run.hs b/cabal-testsuite/src/Test/Cabal/Run.hs
index 37b27e9edf3..498c14ded23 100644
--- a/cabal-testsuite/src/Test/Cabal/Run.hs
+++ b/cabal-testsuite/src/Test/Cabal/Run.hs
@@ -54,6 +54,29 @@ runAction _verbosity mb_cwd env_overrides path0 args input action = do
     mb_env <- getEffectiveEnvironment env_overrides
     putStrLn $ "+ " ++ showCommandForUser path args
     (readh, writeh) <- createPipe
+
+    -- `System.Process.createPipe` calls (through many intermediaries)
+    -- `GHC.IO.Handle.FD.fdToHandle`, whose documentation says:
+    --
+    -- > Makes a binary Handle. This is for historical reasons; it should
+    -- > probably be a text Handle with the default encoding and newline
+    -- > translation instead.
+    --
+    -- The documentation for `System.IO.hSetBinaryMode` says:
+    --
+    -- > This has the same effect as calling `hSetEncoding` with `char8`, together
+    -- > with `hSetNewlineMode` with `noNewlineTranslation`.
+    --
+    -- But this is a lie, and Unicode written to or read from binary handles is
+    -- always encoded or decoded as Latin-1, which is always the wrong choice.
+    --
+    -- Therefore, we explicitly set the output to UTF-8 to keep it consistent
+    -- between platforms and correct on all modern computers.
+    --
+    -- See: https://gitlab.haskell.org/ghc/ghc/-/issues/25307
+    hSetEncoding readh utf8
+    hSetEncoding writeh utf8
+
     hSetBuffering readh LineBuffering
     hSetBuffering writeh LineBuffering
     let drain = do