diff --git a/VERSION b/VERSION
index 7eb3095a..423d6603 100644
--- a/VERSION
+++ b/VERSION
@@ -1 +1 @@
-0.16.3
+0.16.4-rc1
diff --git a/release-notes.md b/release-notes.md
index 2747e7b8..3d672c46 100644
--- a/release-notes.md
+++ b/release-notes.md
@@ -1,5 +1,16 @@
 # Notes / Changes in various releases
 
+## Zephyr SDK 0.16.4-rc1
+
+- general:
+
+  * Added NXP ADSP 8ULP toolchain (`xtensa-nxp_imx8ulp_adsp_zephyr-elf`).
+
+- picolibc:
+
+  * Updated to Picolibc 1.8.5 release.
+  * Disabled `assert_verbose` option to reduce binary size.
+
 ## Zephyr SDK 0.16.3
 
 - general: