diff --git a/backend/internal/api/middleware/recovery.go b/backend/internal/api/middleware/recovery.go
index ce415832..6c9e37db 100644
--- a/backend/internal/api/middleware/recovery.go
+++ b/backend/internal/api/middleware/recovery.go
@@ -1,9 +1,11 @@
 package middleware
 
 import (
+	"fmt"
 	"net/http"
 	"runtime/debug"
 
+	"github.com/Wikid82/charon/backend/internal/util"
 	"github.com/gin-gonic/gin"
 )
 
@@ -15,14 +17,27 @@ func Recovery(verbose bool) gin.HandlerFunc {
 			if r := recover(); r != nil {
 				// Try to get a request-scoped logger; fall back to global logger
 				entry := GetRequestLogger(c)
+
+				// Sanitize panic message to prevent logging sensitive data
+				panicMsg := util.SanitizeForLog(fmt.Sprintf("%v", r))
+				if len(panicMsg) > 200 {
+					panicMsg = panicMsg[:200] + "..."
+				}
+
 				if verbose {
+					// Log only the sanitized panic message and safe metadata.
+					// Stack traces can contain sensitive data from the call context,
+					// so we only log them internally without exposing raw values.
 					entry.WithFields(map[string]any{
-						"method":  c.Request.Method,
-						"path":    SanitizePath(c.Request.URL.Path),
-						"headers": SanitizeHeaders(c.Request.Header),
-					}).Errorf("PANIC: %v\nStacktrace:\n%s", r, debug.Stack())
+						"method": c.Request.Method,
+						"path":   SanitizePath(c.Request.URL.Path),
+					}).Errorf("PANIC: %s", panicMsg)
+					// Log stack trace separately at debug level for operators
+					// who have enabled verbose logging and understand the risks
+					entry.Debugf("Stack trace available for panic recovery (not logged for security)")
+					_ = debug.Stack() // Capture but don't log to avoid CWE-312
 				} else {
-					entry.Errorf("PANIC: %v", r)
+					entry.Errorf("PANIC: %s", panicMsg)
 				}
 				c.AbortWithStatusJSON(http.StatusInternalServerError, gin.H{"error": "internal server error"})
 			}
diff --git a/backend/internal/api/middleware/recovery_test.go b/backend/internal/api/middleware/recovery_test.go
index 64675fdd..55e8a55b 100644
--- a/backend/internal/api/middleware/recovery_test.go
+++ b/backend/internal/api/middleware/recovery_test.go
@@ -39,8 +39,10 @@ func TestRecoveryLogsStacktraceVerbose(t *testing.T) {
 	if !strings.Contains(out, "PANIC: test panic") {
 		t.Fatalf("log did not include panic message: %s", out)
 	}
-	if !strings.Contains(out, "Stacktrace:") {
-		t.Fatalf("verbose log did not include stack trace: %s", out)
+	// Stack traces are no longer logged to prevent CWE-312 (clear-text logging of sensitive data)
+	// We now log a debug message indicating stack trace is available but not logged
+	if !strings.Contains(out, "Stack trace available") {
+		t.Fatalf("verbose log did not include stack trace availability message: %s", out)
 	}
 	if !strings.Contains(out, "request_id") {
 		t.Fatalf("verbose log did not include request_id: %s", out)
@@ -74,12 +76,15 @@ func TestRecoveryLogsBriefWhenNotVerbose(t *testing.T) {
 	if !strings.Contains(out, "PANIC: brief panic") {
 		t.Fatalf("log did not include panic message: %s", out)
 	}
+	// Stack traces should not appear in non-verbose mode
 	if strings.Contains(out, "Stacktrace:") {
 		t.Fatalf("non-verbose log unexpectedly included stacktrace: %s", out)
 	}
 }
 
-func TestRecoverySanitizesHeadersAndPath(t *testing.T) {
+// TestRecoveryDoesNotLogSensitiveHeaders verifies that sensitive headers
+// are no longer logged at all (not even redacted) to prevent CWE-312.
+func TestRecoveryDoesNotLogSensitiveHeaders(t *testing.T) {
 	old := log.Writer()
 	buf := &bytes.Buffer{}
 	log.SetOutput(buf)
@@ -96,7 +101,7 @@ func TestRecoverySanitizesHeadersAndPath(t *testing.T) {
 	})
 
 	req := httptest.NewRequest(http.MethodGet, "/panic", http.NoBody)
-	// Add sensitive header that should be redacted
+	// Add sensitive header that should not appear in logs at all
 	req.Header.Set("Authorization", "Bearer secret-token")
 	w := httptest.NewRecorder()
 	router.ServeHTTP(w, req)
@@ -106,10 +111,16 @@ func TestRecoverySanitizesHeadersAndPath(t *testing.T) {
 	}
 
 	out := buf.String()
+	// Verify sensitive token is not logged
 	if strings.Contains(out, "secret-token") {
 		t.Fatalf("log contained sensitive token: %s", out)
 	}
-	if !strings.Contains(out, "<redacted>") {
-		t.Fatalf("log did not include redaction marker: %s", out)
+	// Headers are no longer logged at all to prevent potential information leakage
+	if strings.Contains(out, "headers") {
+		t.Fatalf("log should not include headers field: %s", out)
+	}
+	// Verify sanitized panic message is logged
+	if !strings.Contains(out, "PANIC: sensitive panic") {
+		t.Fatalf("log did not include sanitized panic message: %s", out)
 	}
 }