diff --git a/app/controllers/admin/users_controller.rb b/app/controllers/admin/users_controller.rb
index c8365a6..3ca54c8 100644
--- a/app/controllers/admin/users_controller.rb
+++ b/app/controllers/admin/users_controller.rb
@@ -1,6 +1,6 @@
 module Admin
   class UsersController < BaseController
-    before_action :set_user, only: [:show, :edit, :update, :destroy]
+    before_action :set_user, only: [:show, :edit, :update, :destroy, :resend_invitation]
 
     def index
       @users = User.order(created_at: :desc)
@@ -16,9 +16,11 @@ module Admin
     def create
       @user = User.new(user_params)
       @user.password = SecureRandom.alphanumeric(16) if user_params[:password].blank?
+      @user.status = :pending_invitation
 
       if @user.save
-        redirect_to admin_users_path, notice: "User created successfully."
+        InvitationsMailer.invite_user(@user).deliver_later
+        redirect_to admin_users_path, notice: "User created successfully. Invitation email sent to #{@user.email_address}."
       else
         render :new, status: :unprocessable_entity
       end
@@ -46,6 +48,16 @@ module Admin
       end
     end
 
+    def resend_invitation
+      unless @user.pending_invitation?
+        redirect_to admin_users_path, alert: "Cannot send invitation. User is not pending invitation."
+        return
+      end
+
+      InvitationsMailer.invite_user(@user).deliver_later
+      redirect_to admin_users_path, notice: "Invitation email resent to #{@user.email_address}."
+    end
+
     def destroy
       # Prevent admin from deleting themselves
       if @user == Current.session.user
diff --git a/app/controllers/invitations_controller.rb b/app/controllers/invitations_controller.rb
new file mode 100644
index 0000000..2dae64b
--- /dev/null
+++ b/app/controllers/invitations_controller.rb
@@ -0,0 +1,31 @@
+class InvitationsController < ApplicationController
+  allow_unauthenticated_access
+  before_action :set_user_by_invitation_token, only: %i[ show update ]
+
+  def show
+    # Show the password setup form
+  end
+
+  def update
+    if @user.update(params.permit(:password, :password_confirmation))
+      @user.update!(status: :active)
+      @user.sessions.destroy_all
+      redirect_to new_session_path, notice: "Your account has been set up successfully. Please sign in."
+    else
+      redirect_to invite_path(params[:token]), alert: "Passwords did not match."
+    end
+  end
+
+  private
+
+  def set_user_by_invitation_token
+    @user = User.find_by_invitation_login_token!(params[:token])
+
+    # Check if user is still pending invitation
+    unless @user.pending_invitation?
+      redirect_to new_session_path, alert: "This invitation has already been used or is no longer valid."
+    end
+  rescue ActiveSupport::MessageVerifier::InvalidSignature
+    redirect_to new_session_path, alert: "Invitation link is invalid or has expired."
+  end
+end
\ No newline at end of file
diff --git a/app/controllers/sessions_controller.rb b/app/controllers/sessions_controller.rb
index 26da98a..65915f1 100644
--- a/app/controllers/sessions_controller.rb
+++ b/app/controllers/sessions_controller.rb
@@ -23,7 +23,11 @@ class SessionsController < ApplicationController
 
     # Check if user is active
     unless user.active?
-      redirect_to signin_path, alert: "Your account is not active. Please contact an administrator."
+      if user.pending_invitation?
+        redirect_to signin_path, alert: "Please check your email for an invitation to set up your account."
+      else
+        redirect_to signin_path, alert: "Your account is not active. Please contact an administrator."
+      end
       return
     end
 
diff --git a/app/mailers/invitations_mailer.rb b/app/mailers/invitations_mailer.rb
new file mode 100644
index 0000000..4943ccc
--- /dev/null
+++ b/app/mailers/invitations_mailer.rb
@@ -0,0 +1,6 @@
+class InvitationsMailer < ApplicationMailer
+  def invite_user(user)
+    @user = user
+    mail subject: "You're invited to join Clinch", to: user.email_address
+  end
+end
\ No newline at end of file
diff --git a/app/views/invitations/show.html.erb b/app/views/invitations/show.html.erb
new file mode 100644
index 0000000..70edaf4
--- /dev/null
+++ b/app/views/invitations/show.html.erb
@@ -0,0 +1,22 @@
+<div class="mx-auto md:w-2/3 w-full">
+  <% if alert = flash[:alert] %>
+    <p class="py-2 px-3 bg-red-50 mb-5 text-red-500 font-medium rounded-lg inline-block" id="alert"><%= alert %></p>
+  <% end %>
+
+  <h1 class="font-bold text-4xl">Welcome to Clinch!</h1>
+  <p class="mt-2 text-gray-600">You've been invited to join Clinch. Please create your password to complete your account setup.</p>
+
+  <%= form_with url: invite_path(params[:token]), method: :put, class: "contents" do |form| %>
+    <div class="my-5">
+      <%= form.password_field :password, required: true, autocomplete: "new-password", placeholder: "Enter your password", maxlength: 72, class: "block shadow-sm rounded-md border border-gray-400 focus:outline-solid focus:outline-blue-600 px-3 py-2 mt-2 w-full" %>
+    </div>
+
+    <div class="my-5">
+      <%= form.password_field :password_confirmation, required: true, autocomplete: "new-password", placeholder: "Confirm your password", maxlength: 72, class: "block shadow-sm rounded-md border border-gray-400 focus:outline-solid focus:outline-blue-600 px-3 py-2 mt-2 w-full" %>
+    </div>
+
+    <div class="inline">
+      <%= form.submit "Create Account", class: "w-full sm:w-auto text-center rounded-md px-3.5 py-2.5 bg-blue-600 hover:bg-blue-500 text-white inline-block font-medium cursor-pointer" %>
+    </div>
+  <% end %>
+</div>
\ No newline at end of file