diff --git a/src/components/settings/SecurityTab.tsx b/src/components/settings/SecurityTab.tsx
index a6ed47a4..2e98fa63 100644
--- a/src/components/settings/SecurityTab.tsx
+++ b/src/components/settings/SecurityTab.tsx
@@ -168,7 +168,7 @@ export function SecurityTab() {
       });
     } else {
       sonnerToast.success("Password Reset Email Sent!", {
-        description: "Check your email for a password reset link from Supabase. Click the link to set your password. You'll also receive a notification email from ThrillWiki.",
+        description: "Check your email for a password reset link. Click it to set your password on ThrillWiki.",
         duration: 15000,
       });
     }
diff --git a/src/pages/AuthCallback.tsx b/src/pages/AuthCallback.tsx
index 74da9855..d85332c5 100644
--- a/src/pages/AuthCallback.tsx
+++ b/src/pages/AuthCallback.tsx
@@ -2,19 +2,36 @@ import { useEffect, useState } from 'react';
 import { useNavigate } from 'react-router-dom';
 import { supabase } from '@/integrations/supabase/client';
 import { useToast } from '@/hooks/use-toast';
-import { Loader2 } from 'lucide-react';
+import { Loader2, CheckCircle2 } from 'lucide-react';
 import { Header } from '@/components/layout/Header';
 import { handlePostAuthFlow } from '@/lib/authService';
 import type { AuthMethod } from '@/types/auth';
+import { Card, CardHeader, CardTitle, CardDescription, CardContent } from '@/components/ui/card';
+import { Label } from '@/components/ui/label';
+import { Input } from '@/components/ui/input';
+import { Button } from '@/components/ui/button';
 
 export default function AuthCallback() {
   const navigate = useNavigate();
   const { toast } = useToast();
   const [status, setStatus] = useState<'processing' | 'success' | 'error'>('processing');
+  const [isRecoveryMode, setIsRecoveryMode] = useState(false);
+  const [newPassword, setNewPassword] = useState('');
+  const [confirmPassword, setConfirmPassword] = useState('');
+  const [settingPassword, setSettingPassword] = useState(false);
 
   useEffect(() => {
     const processOAuthCallback = async () => {
       try {
+        // Check if this is a password recovery flow first
+        const hash = window.location.hash;
+        if (hash.includes('type=recovery')) {
+          console.log('[AuthCallback] Password recovery detected');
+          setIsRecoveryMode(true);
+          setStatus('success'); // Stop the loading spinner
+          return; // Don't process further
+        }
+
         // Get the current session
         const { data: { session }, error: sessionError } = await supabase.auth.getSession();
         
@@ -237,14 +254,111 @@ export default function AuthCallback() {
     processOAuthCallback();
   }, [navigate, toast]);
 
+  const handlePasswordReset = async (e: React.FormEvent) => {
+    e.preventDefault();
+    
+    if (newPassword !== confirmPassword) {
+      toast({
+        variant: 'destructive',
+        title: 'Passwords do not match',
+        description: 'Please make sure both passwords are identical.',
+      });
+      return;
+    }
+    
+    if (newPassword.length < 8) {
+      toast({
+        variant: 'destructive',
+        title: 'Password too short',
+        description: 'Password must be at least 8 characters long.',
+      });
+      return;
+    }
+    
+    setSettingPassword(true);
+    
+    try {
+      const { error } = await supabase.auth.updateUser({
+        password: newPassword
+      });
+      
+      if (error) throw error;
+      
+      toast({
+        title: 'Password Set Successfully!',
+        description: 'You can now sign in with your email and password.',
+      });
+      
+      setTimeout(() => {
+        navigate('/auth');
+      }, 1500);
+      
+    } catch (error: any) {
+      console.error('[AuthCallback] Password reset error:', error);
+      toast({
+        variant: 'destructive',
+        title: 'Failed to set password',
+        description: error.message || 'Please try again.',
+      });
+      setSettingPassword(false);
+    }
+  };
+
   return (
     <div className="min-h-screen bg-background">
       <Header />
       
       <main className="container mx-auto px-4 py-16">
         <div className="max-w-md mx-auto text-center">
-          <div className="flex flex-col items-center gap-4">
-            {status === 'processing' && (
+          {isRecoveryMode ? (
+            <Card className="w-full">
+              <CardHeader>
+                <CardTitle>Set Your New Password</CardTitle>
+                <CardDescription>
+                  Enter a new password for your account
+                </CardDescription>
+              </CardHeader>
+              <CardContent>
+                <form onSubmit={handlePasswordReset} className="space-y-4">
+                  <div className="text-left">
+                    <Label htmlFor="new-password">New Password</Label>
+                    <Input
+                      id="new-password"
+                      type="password"
+                      value={newPassword}
+                      onChange={(e) => setNewPassword(e.target.value)}
+                      placeholder="At least 8 characters"
+                      required
+                      minLength={8}
+                    />
+                  </div>
+                  <div className="text-left">
+                    <Label htmlFor="confirm-password">Confirm Password</Label>
+                    <Input
+                      id="confirm-password"
+                      type="password"
+                      value={confirmPassword}
+                      onChange={(e) => setConfirmPassword(e.target.value)}
+                      placeholder="Re-enter password"
+                      required
+                    />
+                  </div>
+                  <Button type="submit" className="w-full" disabled={settingPassword}>
+                    {settingPassword ? (
+                      <>
+                        <Loader2 className="w-4 h-4 mr-2 animate-spin" />
+                        Setting Password...
+                      </>
+                    ) : (
+                      'Set Password'
+                    )}
+                  </Button>
+                </form>
+              </CardContent>
+            </Card>
+          ) : (
+            <div className="flex flex-col items-center gap-4">
+              {status === 'processing' && (
               <>
                 <Loader2 className="h-8 w-8 animate-spin text-primary" />
                 <h2 className="text-2xl font-bold">Setting up your profile...</h2>
@@ -277,7 +391,8 @@ export default function AuthCallback() {
                 </p>
               </>
             )}
-          </div>
+            </div>
+          )}
         </div>
       </main>
     </div>