diff --git a/mercurial/filemerge.py b/mercurial/filemerge.py
--- a/mercurial/filemerge.py
+++ b/mercurial/filemerge.py
@@ -543,6 +543,7 @@ def _formatlabels(repo, fcd, fco, fca, l
 
     ui = repo.ui
     template = ui.config('ui', 'mergemarkertemplate', _defaultconflictmarker)
+    template = templater.unquotestring(template)
     tmpl = formatter.maketemplater(ui, 'conflictmarker', template)
 
     pad = max(len(l) for l in labels)
diff --git a/tests/test-conflict.t b/tests/test-conflict.t
--- a/tests/test-conflict.t
+++ b/tests/test-conflict.t
@@ -65,7 +65,10 @@
 Verify custom conflict markers
 
   $ hg up -q --clean .
-  $ printf "\n[ui]\nmergemarkertemplate={author} {rev}\n" >> .hg/hgrc
+  $ cat <<EOF >> .hg/hgrc
+  > [ui]
+  > mergemarkertemplate = '{author} {rev}'
+  > EOF
 
   $ hg merge 1
   merging a