diff --git a/rhodecode/config/utils.py b/rhodecode/config/utils.py
--- a/rhodecode/config/utils.py
+++ b/rhodecode/config/utils.py
@@ -56,8 +56,6 @@ def configure_vcs(config):
         'svn': 'rhodecode.lib.vcs.backends.svn.SubversionRepository',
     }
 
-    conf.settings.HG_USE_REBASE_FOR_MERGING = config.get(
-        'rhodecode_hg_use_rebase_for_merging', False)
     conf.settings.GIT_REV_FILTER = shlex.split(
         config.get('git_rev_filter', '--all').strip())
     conf.settings.DEFAULT_ENCODINGS = aslist(config.get('default_encoding',
diff --git a/rhodecode/lib/vcs/conf/settings.py b/rhodecode/lib/vcs/conf/settings.py
--- a/rhodecode/lib/vcs/conf/settings.py
+++ b/rhodecode/lib/vcs/conf/settings.py
@@ -29,8 +29,6 @@ DEFAULT_ENCODINGS = ['utf8']
 # It can also be ['--branches', '--tags']
 GIT_REV_FILTER = ['--all']
 
-HG_USE_REBASE_FOR_MERGING = False
-
 # Compatibility version when creating SVN repositories. None means newest.
 # Other available options are: pre-1.4-compatible, pre-1.5-compatible,
 # pre-1.6-compatible, pre-1.8-compatible
diff --git a/rhodecode/tests/vcs/test_hg.py b/rhodecode/tests/vcs/test_hg.py
--- a/rhodecode/tests/vcs/test_hg.py
+++ b/rhodecode/tests/vcs/test_hg.py
@@ -711,12 +711,10 @@ TODO: To be written...
         source_ref = Reference('book', bookmark_name, source_commit.raw_id)
         workspace = 'test-merge'
 
-        with mock.patch.object(rhodecode.lib.vcs.conf.settings,
-                               'HG_USE_REBASE_FOR_MERGING', return_value=True):
-            merge_response = target_repo.merge(
-                target_ref, source_repo, source_ref, workspace,
-                'test user', 'test@rhodecode.com', 'merge message 1',
-                dry_run=False)
+        merge_response = target_repo.merge(
+            target_ref, source_repo, source_ref, workspace,
+            'test user', 'test@rhodecode.com', 'merge message 1',
+            dry_run=False, use_rebase=True)
 
         expected_merge_response = MergeResponse(
             True, True, merge_response.merge_commit_id,