UPDATE and REPLACE part of a string

You don’t need wildcards in the REPLACE – it just finds the string you enter for the second argument, so the following should work:

UPDATE dbo.xxx
SET Value = REPLACE(Value, '123', '')
WHERE ID <=4

If the column to replace is type text or ntext you need to cast it to nvarchar

UPDATE dbo.xxx
SET Value = REPLACE(CAST(Value as nVarchar(4000)), '123', '')
WHERE ID <=4

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