diff --git a/apps/web/app/api/auth/signup/handlers/calcomSignupHandler.ts b/apps/web/app/api/auth/signup/handlers/calcomSignupHandler.ts
index a31bbfaee0a6c1..c5e8a0efa7da75 100644
--- a/apps/web/app/api/auth/signup/handlers/calcomSignupHandler.ts
+++ b/apps/web/app/api/auth/signup/handlers/calcomSignupHandler.ts
@@ -102,15 +102,22 @@ const handler: CustomNextApiHandler = async (body, usernameStatus, query) => {
       isSignup: true,
     });
 
-    if (foundToken?.teamId) {
-      const existingUser = await prisma.user.findUnique({
-        where: { email },
-        select: { invitedTo: true },
-      });
-      if (existingUser && existingUser.invitedTo !== foundToken.teamId) {
-        return NextResponse.json({ message: SIGNUP_ERROR_CODES.USER_ALREADY_EXISTS }, { status: 409 });
+      if (foundToken?.teamId) {
+        const existingUser = await prisma.user.findUnique({
+          where: { email },
+          select: { invitedTo: true, emailVerified: true, password: { select: { hash: true } } },
+        });
+        if (existingUser) {
+          const isInvitedPlaceholderAccount =
+            existingUser.invitedTo === foundToken.teamId &&
+            !existingUser.password?.hash &&
+            !existingUser.emailVerified;
+
+          if (!isInvitedPlaceholderAccount) {
+            return NextResponse.json({ message: SIGNUP_ERROR_CODES.USER_ALREADY_EXISTS }, { status: 409 });
+          }
+        }
       }
-    }
   } else {
     const usernameAndEmailValidation = await validateAndGetCorrectedUsernameAndEmail({
       username,
diff --git a/apps/web/app/api/auth/signup/handlers/selfHostedHandler.ts b/apps/web/app/api/auth/signup/handlers/selfHostedHandler.ts
index 9bea17ef643d93..ad9d9ad4bb7266 100644
--- a/apps/web/app/api/auth/signup/handlers/selfHostedHandler.ts
+++ b/apps/web/app/api/auth/signup/handlers/selfHostedHandler.ts
@@ -46,10 +46,17 @@ export default async function handler(body: Record<string, string>) {
     if (foundToken?.teamId) {
       const existingUser = await prisma.user.findUnique({
         where: { email: userEmail },
-        select: { invitedTo: true },
+        select: { invitedTo: true, emailVerified: true, password: { select: { hash: true } } },
       });
-      if (existingUser && existingUser.invitedTo !== foundToken.teamId) {
-        return NextResponse.json({ message: SIGNUP_ERROR_CODES.USER_ALREADY_EXISTS }, { status: 409 });
+      if (existingUser) {
+        const isInvitedPlaceholderAccount =
+          existingUser.invitedTo === foundToken.teamId &&
+          !existingUser.password?.hash &&
+          !existingUser.emailVerified;
+
+        if (!isInvitedPlaceholderAccount) {
+          return NextResponse.json({ message: SIGNUP_ERROR_CODES.USER_ALREADY_EXISTS }, { status: 409 });
+        }
       }
     }
   } else {
diff --git a/packages/features/auth/lib/next-auth-options.ts b/packages/features/auth/lib/next-auth-options.ts
index 296e64559fdd36..ee102db8656ba7 100644
--- a/packages/features/auth/lib/next-auth-options.ts
+++ b/packages/features/auth/lib/next-auth-options.ts
@@ -998,10 +998,10 @@ export const getOptions = ({
           }
 
           // check if user was invited
+          // Invited placeholder users may already have a generated username; password/email verification
+          // are the reliable signals that account setup is incomplete and should be completed here.
           if (
-            !existingUserWithEmail.password?.hash &&
-            !existingUserWithEmail.emailVerified &&
-            !existingUserWithEmail.username
+            !existingUserWithEmail.password?.hash && !existingUserWithEmail.emailVerified
           ) {
             await prisma.user.update({
               where: {