diff --git a/activerecord/CHANGELOG b/activerecord/CHANGELOG
index bf3a893e7f..38f21e2d04 100644
--- a/activerecord/CHANGELOG
+++ b/activerecord/CHANGELOG
@@ -1,5 +1,7 @@
 *SVN*
 
+* SQLite: binary escaping works with $KCODE='u'.  #7862 [tsuka]
+
 * Base#to_xml supports serialized attributes.  #7502 [jonathan]
 
 * Base.update_all :order and :limit options. Useful for MySQL updates that must be ordered to avoid violating unique constraints.  [Jeremy Kemper]
diff --git a/activerecord/lib/active_record/connection_adapters/sqlite_adapter.rb b/activerecord/lib/active_record/connection_adapters/sqlite_adapter.rb
index da4efd394f..2c4e63b87d 100644
--- a/activerecord/lib/active_record/connection_adapters/sqlite_adapter.rb
+++ b/activerecord/lib/active_record/connection_adapters/sqlite_adapter.rb
@@ -68,7 +68,7 @@ module ActiveRecord
     class SQLiteColumn < Column #:nodoc:
       class <<  self
         def string_to_binary(value)
-          value.gsub(/\0|\%/) do |b|
+          value.gsub(/\0|\%/n) do |b|
             case b
               when "\0" then "%00"
               when "%"  then "%25"
@@ -77,7 +77,7 @@ module ActiveRecord
         end
 
         def binary_to_string(value)
-          value.gsub(/%00|%25/) do |b|
+          value.gsub(/%00|%25/n) do |b|
             case b
               when "%00" then "\0"
               when "%25" then "%"