diff --git a/lib/simplecov/source_file.rb b/lib/simplecov/source_file.rb
index 428f0972..6fa8d74d 100644
--- a/lib/simplecov/source_file.rb
+++ b/lib/simplecov/source_file.rb
@@ -77,7 +77,8 @@ def status
     alias_method :source, :src
 
     def initialize(filename, coverage)
-      @filename, @coverage, @src = filename, coverage, File.readlines(filename)
+      @filename, @coverage = filename, coverage
+      File.open(filename, "r:UTF-8") {|f| @src = f.readlines }
     end
 
     # Returns all source lines for this file as instances of SimpleCov::SourceFile::Line,
diff --git a/test/fixtures/utf-8.rb b/test/fixtures/utf-8.rb
new file mode 100644
index 00000000..7afa3501
--- /dev/null
+++ b/test/fixtures/utf-8.rb
@@ -0,0 +1,3 @@
+# encoding: utf-8
+
+puts '135°C'
diff --git a/test/test_source_file.rb b/test/test_source_file.rb
index d66eea55..0689d33a 100644
--- a/test/test_source_file.rb
+++ b/test/test_source_file.rb
@@ -71,5 +71,16 @@ class TestSourceFile < Test::Unit::TestCase
         assert_match /^Warning: coverage data provided/, captured_output
       end
     end
+
+    context "Encoding" do
+      should "handle utf-8 encoded source files" do
+        source_file = SimpleCov::SourceFile.new(source_fixture('utf-8.rb'), [nil, nil, 1])
+
+        assert_nothing_raised do
+          source_file.process_skipped_lines!
+        end
+      end
+    end
+
   end
 end