diff --git a/mercurial/i18n.py b/mercurial/i18n.py
--- a/mercurial/i18n.py
+++ b/mercurial/i18n.py
@@ -22,5 +22,30 @@ for dir in ('.', '..'):
         break
 
 t = gettext.translation('hg', localedir, fallback=True)
-gettext = t.gettext
+
+def gettext(message):
+    """Translate message.
+
+    The message is looked up in the catalog to get a Unicode string,
+    which is encoded in the local encoding before being returned.
+
+    Important: message is restricted to characters in the encoding
+    given by sys.getdefaultencoding() which is most likely 'ascii'.
+    """
+    # If message is None, t.ugettext will return u'None' as the
+    # translation whereas our callers expect us to return None.
+    if message is None:
+        return message
+
+    # We cannot just run the text through util.tolocal since that
+    # leads to infinite recursion when util._encoding is invalid.
+    try:
+        u = t.ugettext(message)
+        return u.encode(util._encoding, "replace")
+    except LookupError:
+        return message
+
 _ = gettext
+
+# Moved after _ because of circular import.
+import util