diff --git a/docs/changelog.md b/docs/changelog.md
index 5bcdd147..93eb1904 100644
--- a/docs/changelog.md
+++ b/docs/changelog.md
@@ -2,6 +2,12 @@
 
 ### v0.12 - "*look*"
 
+#### v0.12.2 - TBD
+
+* Ensure 16-bit input images work with embed option.
+  [#325](https://github.com/lovell/sharp/issues/325)
+  [@janaz](https://github.com/janaz)
+
 #### v0.12.1 - 12<sup>th</sup> December 2015
 
 * Allow use of SIMD vector instructions (via liborc) to be toggled on/off.
diff --git a/package.json b/package.json
index dab15784..a26863d5 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "sharp",
-  "version": "0.12.1",
+  "version": "0.12.2",
   "author": "Lovell Fuller <npm@lovell.info>",
   "contributors": [
     "Pierre Inglebert <pierre.inglebert@gmail.com>",
diff --git a/src/pipeline.cc b/src/pipeline.cc
index 1558b425..91a62662 100644
--- a/src/pipeline.cc
+++ b/src/pipeline.cc
@@ -627,16 +627,6 @@ class PipelineWorker : public AsyncWorker {
     // Crop/embed
     if (image->Xsize != baton->width || image->Ysize != baton->height) {
       if (baton->canvas == Canvas::EMBED) {
-        // Match background colour space, namely sRGB
-        if (image->Type != VIPS_INTERPRETATION_sRGB) {
-          // Convert to sRGB colour space
-          VipsImage *colourspaced;
-          if (vips_colourspace(image, &colourspaced, VIPS_INTERPRETATION_sRGB, nullptr)) {
-            return Error();
-          }
-          vips_object_local(hook, colourspaced);
-          image = colourspaced;
-        }
         // Add non-transparent alpha channel, if required
         if (baton->background[3] < 255.0 && !HasAlpha(image)) {
           // Create single-channel transparency
@@ -661,13 +651,22 @@ class PipelineWorker : public AsyncWorker {
         }
         // Create background
         VipsArrayDouble *background;
+        // Scale up 8-bit values to match 16-bit input image
+        double multiplier = (image->Type == VIPS_INTERPRETATION_RGB16) ? 256.0 : 1.0;
         if (baton->background[3] < 255.0 || HasAlpha(image)) {
-          background = vips_array_double_newv(
-            4, baton->background[0], baton->background[1], baton->background[2], baton->background[3]
+          // RGBA
+          background = vips_array_double_newv(4,
+            baton->background[0] * multiplier,
+            baton->background[1] * multiplier,
+            baton->background[2] * multiplier,
+            baton->background[3] * multiplier
           );
         } else {
-          background = vips_array_double_newv(
-            3, baton->background[0], baton->background[1], baton->background[2]
+          // RGB
+          background = vips_array_double_newv(3,
+            baton->background[0] * multiplier,
+            baton->background[1] * multiplier,
+            baton->background[2] * multiplier
           );
         }
         // Embed
diff --git a/test/fixtures/expected/embed-16bit.png b/test/fixtures/expected/embed-16bit.png
new file mode 100644
index 00000000..9b49e8cb
Binary files /dev/null and b/test/fixtures/expected/embed-16bit.png differ
diff --git a/test/unit/embed.js b/test/unit/embed.js
index e92b121e..3dd29d9f 100644
--- a/test/unit/embed.js
+++ b/test/unit/embed.js
@@ -68,6 +68,20 @@ describe('Embed', function() {
       });
   });
 
+  it('16-bit PNG with alpha channel', function(done) {
+    sharp(fixtures.inputPngWithTransparency16bit)
+      .resize(32, 16)
+      .embed()
+      .toBuffer(function(err, data, info) {
+        if (err) throw err;
+        assert.strictEqual(true, data.length > 0);
+        assert.strictEqual('png', info.format);
+        assert.strictEqual(32, info.width);
+        assert.strictEqual(16, info.height);
+        fixtures.assertSimilar(fixtures.expected('embed-16bit.png'), data, done);
+      });
+  });
+
   it('Enlarge and embed', function(done) {
     sharp(fixtures.inputPngWithOneColor)
       .embed()