diff --git a/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/CompAPIDriver.java b/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/CompAPIDriver.java
index 49a467b5cffc..39d8996e296a 100644
--- a/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/CompAPIDriver.java
+++ b/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/CompAPIDriver.java
@@ -16,9 +16,12 @@
 package com.intellij.compiler.impl.javaCompiler.api;
 
 import com.intellij.compiler.OutputParser;
-import com.sun.source.util.*;
+import com.sun.source.util.JavacTask;
+import com.sun.source.util.TaskEvent;
+import com.sun.source.util.TaskListener;
 import com.sun.tools.javac.api.JavacTool;
 import org.jetbrains.annotations.NotNull;
+import org.jetbrains.annotations.Nullable;
 
 import javax.tools.*;
 import java.io.File;
@@ -49,8 +52,11 @@ class CompAPIDriver {
 
   private volatile boolean compiling;
   private static final PrintWriter COMPILER_ERRORS = new PrintWriter(System.err);
+  @Nullable
+  private final String mySourcesEncoding;
 
-  CompAPIDriver() {
+  CompAPIDriver(@Nullable String sourcesEncoding) {
+    mySourcesEncoding = sourcesEncoding;
   }
 
   public void compile(List<String> commandLine, List<File> paths, final String outputDir) {
@@ -60,7 +66,7 @@ class CompAPIDriver {
     assert myCompilationResults.isEmpty();
     JavaCompiler compiler = JavacTool.create(); //use current classloader
     StandardJavaFileManager standardFileManager = compiler.getStandardFileManager(null, null, null);
-    MyFileManager manager = new MyFileManager(this, outputDir, standardFileManager);
+    MyFileManager manager = new MyFileManager(this, outputDir, standardFileManager, mySourcesEncoding);
 
     Iterable<? extends JavaFileObject> input = manager.getJavaFileObjectsFromFiles(paths);
 
diff --git a/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/CompilerAPICompiler.java b/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/CompilerAPICompiler.java
index 63c3186a5db1..e26b8de22f37 100644
--- a/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/CompilerAPICompiler.java
+++ b/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/CompilerAPICompiler.java
@@ -141,13 +141,27 @@ public class CompilerAPICompiler implements BackendCompiler {
     private final ModuleChunk myChunk;
     private final String myOutputDir;
     private final CompileContext myCompileContext;
-    private final CompAPIDriver myCompAPIDriver = new CompAPIDriver();
+    private final CompAPIDriver myCompAPIDriver;
 
     private MyProcess(List<String> commandLine, ModuleChunk chunk, String outputDir, CompileContext compileContext) {
       myCommandLine = commandLine;
       myChunk = chunk;
       myOutputDir = outputDir;
       myCompileContext = compileContext;
+      myCompAPIDriver = new CompAPIDriver(findEncodingValue(commandLine));
+    }
+
+    private static String findEncodingValue(List<String> commandLine) {
+      boolean found = false;
+      for (String param : commandLine) {
+        if (found) {
+          return param;
+        }
+        if ("-encoding".equalsIgnoreCase(param)) {
+          found = true;
+        }
+      }
+      return null;
     }
 
     public OutputStream getOutputStream() {
diff --git a/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/JavaIoFile.java b/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/JavaIoFile.java
index a937d9ce5322..c0e03bf8af7a 100644
--- a/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/JavaIoFile.java
+++ b/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/JavaIoFile.java
@@ -16,8 +16,10 @@
 package com.intellij.compiler.impl.javaCompiler.api;
 
 import com.intellij.openapi.util.io.FileUtil;
+import org.jetbrains.annotations.Nullable;
 
-import javax.tools.*;
+import javax.tools.JavaFileObject;
+import javax.tools.SimpleJavaFileObject;
 import java.io.*;
 
 /**
@@ -26,15 +28,18 @@ import java.io.*;
 @SuppressWarnings({"Since15"})
 class JavaIoFile extends SimpleJavaFileObject {
   private final File myFile;
+  @Nullable
+  private final String myEncoding;
 
-  JavaIoFile(File file, Kind kind) {
+  JavaIoFile(File file, Kind kind, @Nullable String encoding) {
     super(file.toURI(), kind);
     myFile = file;
+    myEncoding = encoding;
   }
 
   @Override
   public CharSequence getCharContent(boolean ignoreEncodingErrors) throws IOException {
-    return FileUtil.loadFile(myFile);
+    return FileUtil.loadFile(myFile, myEncoding);
   }
 
   @Override
diff --git a/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/MyFileManager.java b/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/MyFileManager.java
index 2fd54d176620..8da3c0d46fe3 100644
--- a/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/MyFileManager.java
+++ b/java/compiler/impl/src/com/intellij/compiler/impl/javaCompiler/api/MyFileManager.java
@@ -26,7 +26,9 @@ import com.sun.tools.javac.util.ListBuffer;
 import gnu.trove.THashSet;
 import gnu.trove.TObjectHashingStrategy;
 
-import javax.tools.*;
+import javax.tools.FileObject;
+import javax.tools.JavaFileObject;
+import javax.tools.StandardJavaFileManager;
 import java.io.File;
 import java.io.IOException;
 import java.net.URI;
@@ -40,12 +42,14 @@ class MyFileManager implements StandardJavaFileManager {
 
   private final String myOutputDir;
   private final StandardJavaFileManager myStandardFileManager;
+  private final String myEncoding;
   private final CompAPIDriver myCompAPIDriver;
 
-  MyFileManager(CompAPIDriver compAPIDriver, String outputDir, StandardJavaFileManager standardFileManager) {
+  MyFileManager(CompAPIDriver compAPIDriver, String outputDir, StandardJavaFileManager standardFileManager, String encoding) {
     myCompAPIDriver = compAPIDriver;
     myOutputDir = outputDir;
     myStandardFileManager = standardFileManager;
+    myEncoding = encoding;
   }
 
   @Override
@@ -54,7 +58,7 @@ class MyFileManager implements StandardJavaFileManager {
     List<JavaFileObject> result = new ArrayList<JavaFileObject>(size);
 
     for (File file : files) {
-      JavaFileObject fileObject = new JavaIoFile(file, JavaFileObject.Kind.SOURCE);
+      JavaFileObject fileObject = new JavaIoFile(file, JavaFileObject.Kind.SOURCE, myEncoding);
       result.add(fileObject);
     }
 
@@ -119,7 +123,7 @@ class MyFileManager implements StandardJavaFileManager {
           if (kind == JavaFileObject.Kind.SOURCE && child.getFileSystem() instanceof JarFileSystem) continue;  //for some reasdon javac looks for java files inside jar
 
           // use VFS to read content inside .jar
-          JavaFileObject fileObject = !child.getPath().contains("!/") ? new JavaIoFile(new File(child.getPath()), kind) : new JavaVirtualFile(child, kind);
+          JavaFileObject fileObject = !child.getPath().contains("!/") ? new JavaIoFile(new File(child.getPath()), kind, myEncoding) : new JavaVirtualFile(child, kind);
           results.add(fileObject);
         }
       }