Change Unreal engines working color space
In previous versions of the Unreal Engine the working color space was implicit and was Linear Rec.709, also called Linear sRGB (the encoding is linear, and the color space is Rec.709 for primaries and white point).
In Unreal Engine 5, the concept of an explicit Working Color Space is introduced and has now been exposed as a project setting. This allows you to change it for the entire project. Changing it is completely optional and should only be done, if your team chooses to use a different working color space for a project. We recommend you consult your color scientist to determine if another working color space is needed.
Default Working Color Space (sRGB/Rec709 Linear)
This is the older/traditional approach for dealing with the color pipeline that was introduced in UE 4.26 before the working color space was a project option. With this approach everything stays in sRGB Linear within Unreal even up to the rendering phase - which means your textures can be painted and imported into UE as sRGB which is usually the default output color space of most paint packages or DCCs.
Other Working Color Spaces (usually ACEScg)
The Working Color Space option was introduced in 5.1.
If you want to use a non-default Working Color Space in Unreal such as ACEScg - it requires that the textures also live in that color space.
Continue to Color manage your textures