diff --git a/mercurial/filelog.py b/mercurial/filelog.py
--- a/mercurial/filelog.py
+++ b/mercurial/filelog.py
@@ -11,7 +11,7 @@ from demandload import *
 demandload(globals(), "bdiff")
 
 class filelog(revlog):
-    def __init__(self, opener, path, defversion=0):
+    def __init__(self, opener, path, defversion=REVLOG_DEFAULT_VERSION):
         revlog.__init__(self, opener,
                         os.path.join("data", self.encodedir(path + ".i")),
                         os.path.join("data", self.encodedir(path + ".d")),
diff --git a/mercurial/localrepo.py b/mercurial/localrepo.py
--- a/mercurial/localrepo.py
+++ b/mercurial/localrepo.py
@@ -43,11 +43,15 @@ class localrepository(object):
             pass
 
         v = self.ui.revlogopts
-        self.revlogversion = int(v.get('format', revlog.REVLOGV0))
+        self.revlogversion = int(v.get('format', revlog.REVLOG_DEFAULT_FORMAT))
         self.revlogv1 = self.revlogversion != revlog.REVLOGV0
+        fl = v.get('flags', None)
         flags = 0
-        for x in v.get('flags', "").split():
-            flags |= revlog.flagstr(x)
+        if fl != None:
+            for x in fl.split():
+                flags |= revlog.flagstr(x)
+        elif self.revlogv1:
+            flags = revlog.REVLOG_DEFAULT_FLAGS
 
         v = self.revlogversion | flags
         self.manifest = manifest.manifest(self.opener, v)
diff --git a/mercurial/revlog.py b/mercurial/revlog.py
--- a/mercurial/revlog.py
+++ b/mercurial/revlog.py
@@ -22,6 +22,10 @@ REVLOGNG = 1
 
 # revlog flags
 REVLOGNGINLINEDATA = (1 << 16)
+REVLOG_DEFAULT_FLAGS = REVLOGNGINLINEDATA
+
+REVLOG_DEFAULT_FORMAT = REVLOGNG
+REVLOG_DEFAULT_VERSION = REVLOG_DEFAULT_FORMAT | REVLOG_DEFAULT_FLAGS
 
 def flagstr(flag):
     if flag == "inline":
@@ -293,7 +297,8 @@ class revlog(object):
     remove data, and can use some simple techniques to avoid the need
     for locking while reading.
     """
-    def __init__(self, opener, indexfile, datafile, defversion=REVLOGV0):
+    def __init__(self, opener, indexfile, datafile,
+                 defversion=REVLOG_DEFAULT_VERSION):
         """
         create a revlog object