diff --git a/ChangeLog b/ChangeLog
index ffc27525ba..329f6d6a88 100644
--- a/ChangeLog
+++ b/ChangeLog
@@ -1,3 +1,13 @@
+Sun Oct 28 21:25:11 2012  Kouhei Sutou  <kou@cozmixng.org>
+
+	* lib/rexml/source.rb (REXML::IOSource#initialize): Reduce
+	  @line_break initialize code. It should be done only in #encoding=.
+	* lib/rexml/parsers/baseparser.rb: Don't set UTF-16 encoding to
+	  source by encoding="UTF-16" in XML declaration because UTF-16XX
+	  source encoding should be set in Source#initialize or
+	  IOSource#intialize. They should handle BOM. Parser should not
+	  consider about it.
+
 Sun Oct 28 21:18:37 2012  Kouhei Sutou  <kou@cozmixng.org>
 
 	* test/rexml/test_document.rb: Add tests for parsing XML encoded
diff --git a/lib/rexml/parsers/baseparser.rb b/lib/rexml/parsers/baseparser.rb
index ebffdaa8c7..dc4a1c8bee 100644
--- a/lib/rexml/parsers/baseparser.rb
+++ b/lib/rexml/parsers/baseparser.rb
@@ -212,7 +212,9 @@ module REXML
             version = version[1] unless version.nil?
             encoding = ENCODING.match(results)
             encoding = encoding[1] unless encoding.nil?
-            @source.encoding = encoding
+            if need_source_encoding_update?(encoding)
+              @source.encoding = encoding
+            end
             standalone = STANDALONE.match(results)
             standalone = standalone[1] unless standalone.nil?
             return [ :xmldecl, version, encoding, standalone ]
@@ -493,6 +495,13 @@ module REXML
         end
         rv
       end
+
+      private
+      def need_source_encoding_update?(xml_declaration_encoding)
+        return false if xml_declaration_encoding.nil?
+        return false if /\AUTF-16\z/i =~ xml_declaration_encoding
+        true
+      end
     end
   end
 end
diff --git a/lib/rexml/source.rb b/lib/rexml/source.rb
index 112393cfd4..c15f63dcc8 100644
--- a/lib/rexml/source.rb
+++ b/lib/rexml/source.rb
@@ -144,22 +144,39 @@ module REXML
       # if there is one.  If there isn't one, the file MUST be UTF-8, as per
       # the XML spec.  If there is one, we can determine the encoding from
       # it.
-      @buffer = ""
-      str = @source.read( 2 ) || ''
       if encoding
-        self.encoding = encoding
-      elsif str[0,2] == "\xfe\xff"
-        @line_break = "\000>"
-      elsif str[0,2] == "\xff\xfe"
-        @line_break = ">\000"
-      elsif str[0,2] == "\xef\xbb"
-        str += @source.read(1)
-        str = '' if (str[2,1] == "\xBF")
-        @line_break = ">"
+        super("", encoding)
       else
-        @line_break = ">"
+        need_super_with_line = false
+        str = @source.read( 2 ) || ''
+        str.force_encoding("ASCII-8BIT")
+        if str[0, 2] == "\xfe\xff"
+          @source.binmode
+          @source.set_encoding("UTF-16BE")
+          super("", "UTF-16BE")
+        elsif str[0, 2] == "\xff\xfe"
+          @source.binmode
+          @source.set_encoding("UTF-16LE")
+          super("", "UTF-16LE")
+        elsif str[0, 2] == "\xef\xbb"
+          str += @source.read(1)
+          if str[2, 1] == "\xBF"
+            @source.set_encoding("UTF-8")
+            super("", "UTF-8")
+          else
+            need_super_with_line = true
+          end
+        else
+          need_super_with_line = true
+        end
+        if need_super_with_line
+          if @source.eof?
+            super(str)
+          else
+            super(str + @source.readline(">"))
+          end
+        end
       end
-      super( @source.eof? ? str : str+@source.readline( @line_break ) )
 
       if !@to_utf and
           @buffer.respond_to?(:force_encoding) and