diff --git a/mercurial/commands.py b/mercurial/commands.py
--- a/mercurial/commands.py
+++ b/mercurial/commands.py
@@ -2663,7 +2663,7 @@ def grep(ui, repo, pattern, *pats, **opt
 
     Returns 0 if a match is found, 1 otherwise.
     """
-    reflags = 0
+    reflags = re.M
     if opts.get('ignore_case'):
         reflags |= re.I
     try:
diff --git a/tests/test-grep.t b/tests/test-grep.t
--- a/tests/test-grep.t
+++ b/tests/test-grep.t
@@ -59,8 +59,9 @@ other
 
 follow
 
-  $ hg grep --traceback -f 'import$' port2
+  $ hg grep --traceback -f 'import\n\Z' port2
   port:0:import
+  
   $ echo deport >> port2
   $ hg commit -m 5 -u eggs -d '6 0'
   $ hg grep -f --all -nu port port2