diff --git a/mercurial/exchange.py b/mercurial/exchange.py
--- a/mercurial/exchange.py
+++ b/mercurial/exchange.py
@@ -12,23 +12,28 @@ import util, scmutil, changegroup, base8
 import discovery, phases, obsolete, bookmarks, bundle2
 
 def readbundle(ui, fh, fname, vfs=None):
-    header = changegroup.readexactly(fh, 6)
+    header = changegroup.readexactly(fh, 4)
 
+    alg = None
     if not fname:
         fname = "stream"
         if not header.startswith('HG') and header.startswith('\0'):
             fh = changegroup.headerlessfixup(fh, header)
-            header = "HG10UN"
+            header = "HG10"
+            alg = 'UN'
     elif vfs:
         fname = vfs.join(fname)
 
-    magic, version, alg = header[0:2], header[2:4], header[4:6]
+    magic, version = header[0:2], header[2:4]
 
     if magic != 'HG':
         raise util.Abort(_('%s: not a Mercurial bundle') % fname)
-    if version != '10':
+    if version == '10':
+        if alg is None:
+            alg = changegroup.readexactly(fh, 2)
+        return changegroup.unbundle10(fh, alg)
+    else:
         raise util.Abort(_('%s: unknown bundle version %s') % (fname, version))
-    return changegroup.unbundle10(fh, alg)
 
 
 class pushoperation(object):