diff --git a/lib/fs.js b/lib/fs.js
index 286dea2654..0bbb14b6d4 100644
--- a/lib/fs.js
+++ b/lib/fs.js
@@ -635,6 +635,8 @@ var ReadStream = fs.ReadStream = function(path, options) {
     this[key] = options[key];
   }
 
+  if(this.encoding) this.setEncoding(this.encoding);
+
   if (this.start !== undefined || this.end !== undefined) {
     if (this.start === undefined || this.end === undefined) {
       this.emit('error',
diff --git a/test/simple/test-fs-read-stream.js b/test/simple/test-fs-read-stream.js
index ab8cbc5a4e..cc1b6cd66a 100644
--- a/test/simple/test-fs-read-stream.js
+++ b/test/simple/test-fs-read-stream.js
@@ -60,9 +60,8 @@ file2.destroy(function(err) {
   callbacks.destroy++;
 });
 
-var file3 = fs.createReadStream(fn);
+var file3 = fs.createReadStream(fn, {encoding: 'utf8'});
 file3.length = 0;
-file3.setEncoding('utf8');
 file3.addListener('data', function(data) {
   assert.equal("string", typeof(data));
   file3.length += data.length;