diff --git a/src/prefect/settings.py b/src/prefect/settings.py
index 9f163b9f06ed..62299fc6821c 100644
--- a/src/prefect/settings.py
+++ b/src/prefect/settings.py
@@ -425,13 +425,20 @@ def default_database_connection_url(settings: "Settings", value: Optional[str]):
                 f"Missing required database connection settings: {', '.join(missing)}"
             )
 
-        host = PREFECT_API_DATABASE_HOST.value_from(settings)
-        port = PREFECT_API_DATABASE_PORT.value_from(settings) or 5432
-        user = PREFECT_API_DATABASE_USER.value_from(settings)
-        name = PREFECT_API_DATABASE_NAME.value_from(settings)
-        password = PREFECT_API_DATABASE_PASSWORD.value_from(settings)
-
-        return f"{driver}://{user}:{password}@{host}:{port}/{name}"
+        # We only need SQLAlchemy here if we're parsing a remote database connection
+        # string.  Import it here so that we don't require the prefect-client package
+        # to have SQLAlchemy installed.
+        from sqlalchemy import URL
+
+        return URL(
+            drivername=driver,
+            host=PREFECT_API_DATABASE_HOST.value_from(settings),
+            port=PREFECT_API_DATABASE_PORT.value_from(settings) or 5432,
+            username=PREFECT_API_DATABASE_USER.value_from(settings),
+            password=PREFECT_API_DATABASE_PASSWORD.value_from(settings),
+            database=PREFECT_API_DATABASE_NAME.value_from(settings),
+            query=[],
+        ).render_as_string(hide_password=False)
 
     elif driver == "sqlite+aiosqlite":
         path = PREFECT_API_DATABASE_NAME.value_from(settings)
diff --git a/tests/test_settings.py b/tests/test_settings.py
index ac45a3b2a4d7..45db1005042c 100644
--- a/tests/test_settings.py
+++ b/tests/test_settings.py
@@ -5,6 +5,7 @@
 
 import pydantic
 import pytest
+from sqlalchemy import make_url
 
 import prefect.context
 import prefect.settings
@@ -511,12 +512,33 @@ def test_postgres_database_settings_may_be_set_individually(self):
                 PREFECT_API_DATABASE_PASSWORD: "the-password",
             }
         ):
-            assert PREFECT_API_DATABASE_CONNECTION_URL.value() == (
-                "postgresql+asyncpg://"
-                "the-user:the-password@"
-                "the-database-server.example.com:15432"
-                "/the-database"
-            )
+            url = make_url(PREFECT_API_DATABASE_CONNECTION_URL.value())
+            assert url.drivername == "postgresql+asyncpg"
+            assert url.host == "the-database-server.example.com"
+            assert url.port == 15432
+            assert url.username == "the-user"
+            assert url.database == "the-database"
+            assert url.password == "the-password"
+
+    def test_postgres_password_is_quoted(self):
+        with temporary_settings(
+            {
+                PREFECT_API_DATABASE_CONNECTION_URL: None,
+                PREFECT_API_DATABASE_DRIVER: "postgresql+asyncpg",
+                PREFECT_API_DATABASE_HOST: "the-database-server.example.com",
+                PREFECT_API_DATABASE_PORT: 15432,
+                PREFECT_API_DATABASE_USER: "the-user",
+                PREFECT_API_DATABASE_NAME: "the-database",
+                PREFECT_API_DATABASE_PASSWORD: "the-password:has:funky!@stuff",
+            }
+        ):
+            url = make_url(PREFECT_API_DATABASE_CONNECTION_URL.value())
+            assert url.drivername == "postgresql+asyncpg"
+            assert url.host == "the-database-server.example.com"
+            assert url.port == 15432
+            assert url.username == "the-user"
+            assert url.database == "the-database"
+            assert url.password == "the-password:has:funky!@stuff"
 
     def test_postgres_database_settings_defaults_port(self):
         with temporary_settings(
@@ -529,12 +551,13 @@ def test_postgres_database_settings_defaults_port(self):
                 PREFECT_API_DATABASE_PASSWORD: "the-password",
             }
         ):
-            assert PREFECT_API_DATABASE_CONNECTION_URL.value() == (
-                "postgresql+asyncpg://"
-                "the-user:the-password@"
-                "the-database-server.example.com:5432"
-                "/the-database"
-            )
+            url = make_url(PREFECT_API_DATABASE_CONNECTION_URL.value())
+            assert url.drivername == "postgresql+asyncpg"
+            assert url.host == "the-database-server.example.com"
+            assert url.port == 5432
+            assert url.username == "the-user"
+            assert url.database == "the-database"
+            assert url.password == "the-password"
 
     def test_sqlite_database_settings_may_be_set_individually(self):
         with temporary_settings(
@@ -544,9 +567,9 @@ def test_sqlite_database_settings_may_be_set_individually(self):
                 PREFECT_API_DATABASE_NAME: "/the/database/file/path.db",
             }
         ):
-            assert PREFECT_API_DATABASE_CONNECTION_URL.value() == (
-                "sqlite+aiosqlite:////the/database/file/path.db"
-            )
+            url = make_url(PREFECT_API_DATABASE_CONNECTION_URL.value())
+            assert url.drivername == "sqlite+aiosqlite"
+            assert url.database == "/the/database/file/path.db"
 
     def test_sqlite_database_driver_uses_default_path(self):
         with temporary_settings(
@@ -555,9 +578,9 @@ def test_sqlite_database_driver_uses_default_path(self):
                 PREFECT_API_DATABASE_DRIVER: "sqlite+aiosqlite",
             }
         ):
-            assert PREFECT_API_DATABASE_CONNECTION_URL.value() == (
-                f"sqlite+aiosqlite:///{PREFECT_HOME.value()}/prefect.db"
-            )
+            url = make_url(PREFECT_API_DATABASE_CONNECTION_URL.value())
+            assert url.drivername == "sqlite+aiosqlite"
+            assert url.database == f"{PREFECT_HOME.value()}/prefect.db"
 
     def test_unknown_driver_raises(self):
         with pytest.raises(pydantic.ValidationError, match="literal_error"):
@@ -587,12 +610,13 @@ def test_connection_string_with_dollar_sign(self):
                 PREFECT_API_DATABASE_USER: "the-user",
             }
         ):
-            assert PREFECT_API_DATABASE_CONNECTION_URL.value() == (
-                "postgresql+asyncpg://"
-                "the-user:the-$password@"
-                "the-database-server.example.com:5432"
-                "/the-database"
-            )
+            url = make_url(PREFECT_API_DATABASE_CONNECTION_URL.value())
+            assert url.drivername == "postgresql+asyncpg"
+            assert url.host == "the-database-server.example.com"
+            assert url.port == 5432
+            assert url.username == "the-user"
+            assert url.database == "the-database"
+            assert url.password == "the-$password"
 
 
 class TestTemporarySettings: