diff --git a/CHANGELOG.md b/CHANGELOG.md
index d6b3325a..6b8a1198 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -19,6 +19,7 @@ https://github.com/capistrano/capistrano/compare/v3.7.2...HEAD
 * [#1846](https://github.com/capistrano/capistrano/pull/1846): add_host will add a new host in a case where it used to incorrectly update an existing one (potentially breaking) [(@dbenamy)](https://github.com/dbenamy)
 * [capistrano-harrow#4](https://github.com/harrowio/capistrano-harrow/issues/4): Drop dependency on `capistrano-harrow` gem. Gem can still be installed separately [(@leehambley)](https://github.com/leehambley)
 * Run `svn switch` to work with svn branches if repo_url is changed
+* [#1856](https://github.com/capistrano/capistrano/pull/1856): Fix hg repo_tree implementation - [@mattbrictson](https://github.com/mattbrictson)
 * Your contribution here!
 
 ## `3.7.2` (2017-01-27)
diff --git a/lib/capistrano/scm/hg.rb b/lib/capistrano/scm/hg.rb
index 3754e427..24709cd8 100644
--- a/lib/capistrano/scm/hg.rb
+++ b/lib/capistrano/scm/hg.rb
@@ -1,4 +1,5 @@
 require "capistrano/scm/plugin"
+require "securerandom"
 
 class Capistrano::SCM::Hg < Capistrano::SCM::Plugin
   def register_hooks
@@ -36,7 +37,13 @@ class Capistrano::SCM::Hg < Capistrano::SCM::Plugin
     if (tree = fetch(:repo_tree))
       tree = tree.slice %r#^/?(.*?)/?$#, 1
       components = tree.split("/").size
-      hg "archive --type tgz -p . -I", tree, "--rev", fetch(:branch), "| tar -x --strip-components #{components} -f - -C", release_path
+      temp_tar = "#{fetch(:tmp_dir)}/#{SecureRandom.hex(10)}.tar"
+
+      hg "archive -p . -I", tree, "--rev", fetch(:branch), temp_tar
+
+      backend.execute :mkdir, "-p", release_path
+      backend.execute :tar, "-x --strip-components #{components} -f", temp_tar, "-C", release_path
+      backend.execute :rm, temp_tar
     else
       hg "archive", release_path, "--rev", fetch(:branch)
     end
diff --git a/spec/lib/capistrano/scm/hg_spec.rb b/spec/lib/capistrano/scm/hg_spec.rb
index c43fae3c..482d0867 100644
--- a/spec/lib/capistrano/scm/hg_spec.rb
+++ b/spec/lib/capistrano/scm/hg_spec.rb
@@ -85,8 +85,13 @@ module Capistrano
         env.set(:repo_tree, "tree")
         env.set(:branch, :branch)
         env.set(:release_path, "path")
+        env.set(:tmp_dir, "/tmp")
 
-        backend.expects(:execute).with(:hg, "archive --type tgz -p . -I", "tree", "--rev", :branch, "| tar -x --strip-components 1 -f - -C", "path")
+        SecureRandom.stubs(:hex).with(10).returns("random")
+        backend.expects(:execute).with(:hg, "archive -p . -I", "tree", "--rev", :branch, "/tmp/random.tar")
+        backend.expects(:execute).with(:mkdir, "-p", "path")
+        backend.expects(:execute).with(:tar, "-x --strip-components 1 -f", "/tmp/random.tar", "-C", "path")
+        backend.expects(:execute).with(:rm, "/tmp/random.tar")
 
         subject.archive_to_release_path
       end