diff --git a/web/pgadmin/browser/server_groups/servers/__init__.py b/web/pgadmin/browser/server_groups/servers/__init__.py
index cfcb324c4d8..93bcc38a147 100644
--- a/web/pgadmin/browser/server_groups/servers/__init__.py
+++ b/web/pgadmin/browser/server_groups/servers/__init__.py
@@ -1685,8 +1685,16 @@ def connect(self, gid, sid, is_qt=False, server=None):
                 password = conn_passwd or server.password
         else:
             password = data['password'] if 'password' in data else None
-            save_password = data['save_password']\
-                if 'save_password' in data else False
+            # The password-prompt dialog doesn't resend the server's
+            # existing save_password setting, only its own checkbox
+            # state. If the server is already configured to save its
+            # password, a freshly entered replacement should still be
+            # persisted, or the stale saved password is never
+            # replaced. See issue #10128.
+            save_password = (
+                data['save_password'] if 'save_password' in data
+                else False
+            ) or bool(server.save_password)
 
             try:
                 # Encrypt the password before saving with user's login
@@ -1756,6 +1764,16 @@ def connect(self, gid, sid, is_qt=False, server=None):
 
                     return internal_server_error(errormsg=str(e))
 
+            # Persist the manager's corrected in-memory password (set by
+            # the driver on a successful connect) into the Flask session.
+            # Without this, a fresh worker process handling the next
+            # request (e.g. opening the Query Tool, in a multi-worker
+            # deployment) restores the stale pre-fix manager state from
+            # the session and the new password is lost, re-triggering the
+            # password prompt indefinitely. See issue #10128.
+            if password:
+                manager.update_session()
+
             if save_tunnel_password and config.ALLOW_SAVE_TUNNEL_PASSWORD:
                 try:
                     # Save the encrypted tunnel password.
diff --git a/web/pgadmin/tools/sqleditor/__init__.py b/web/pgadmin/tools/sqleditor/__init__.py
index 3c61c1edb0c..ec131621ff6 100644
--- a/web/pgadmin/tools/sqleditor/__init__.py
+++ b/web/pgadmin/tools/sqleditor/__init__.py
@@ -2712,7 +2712,7 @@ def connect_server(sid):
         # password the user just entered at that prompt is cached here so the
         # tool's connection can use it, instead of being discarded and
         # re-prompted in a loop.
-        _cache_manager_password_from_request(manager)
+        _cache_manager_password_from_request(manager, server)
         return make_json_response(
             success=1,
             info=gettext("Server connected."),
@@ -2725,7 +2725,7 @@ def connect_server(sid):
     )
 
 
-def _cache_manager_password_from_request(manager):
+def _cache_manager_password_from_request(manager, server=None):
     """
     Cache the password supplied with the current request (from a tool's
     password prompt) onto the server manager, so that connections opened by
@@ -2736,6 +2736,13 @@ def _cache_manager_password_from_request(manager):
     password, so a freshly entered credential (e.g. a regenerated, short-lived
     cloud auth token) takes effect immediately.
 
+    When "Save Password" is requested and allowed, the freshly entered
+    password is also persisted to the server record (overwriting any stale
+    stored ciphertext).  Without this, a rotated/regenerated password entered
+    at the prompt would work for the current session only and the tool would
+    keep re-using the stale saved password and re-prompt on the next
+    connection.
+
     This is best-effort: any failure (including malformed request data) is
     logged and swallowed so it never turns the caller's "Server connected"
     response into a 500 error.
@@ -2756,12 +2763,40 @@ def _cache_manager_password_from_request(manager):
         if not crypt_key_present:
             return
 
-        manager._update_password(encrypt(password, crypt_key))
+        enc_password = encrypt(password, crypt_key)
+        manager._update_password(enc_password)
         manager.update_session()
+
+        # Persist the freshly entered password if the user asked to save it,
+        # so the stale stored ciphertext is replaced.
+        save_password = data.get('save_password', False)
+        if save_password in ('true', 'True', '1', 1, True) and \
+                ALLOW_SAVE_PASSWORD and server is not None:
+            _persist_saved_password(server, enc_password)
     except Exception as e:
         current_app.logger.exception(e)
 
 
+def _persist_saved_password(server, enc_password):
+    """
+    Persist the encrypted password to the server record (owned or shared),
+    replacing any stale stored ciphertext.
+    """
+    from pgadmin.model import db
+    from pgadmin.browser.server_groups.servers import ServerModule
+
+    target = server
+    if server.shared and server.user_id != current_user.id:
+        shared_server = ServerModule.get_shared_server(
+            server, server.servergroup_id)
+        if shared_server is not None:
+            target = shared_server
+
+    setattr(target, 'save_password', 1)
+    setattr(target, 'password', enc_password)
+    db.session.commit()
+
+
 @blueprint.route(
     '/filter_dialog/<int:trans_id>',
     methods=["PUT"], endpoint='set_filter_data'