diff --git a/mercurial/simplemerge.py b/mercurial/simplemerge.py
--- a/mercurial/simplemerge.py
+++ b/mercurial/simplemerge.py
@@ -423,12 +423,17 @@
     return [name_a, name_b, name_base]
 
 def simplemerge(ui, localfile, basefile, otherfile,
-                localctx=None, basectx=None, otherctx=None, repo=None, **opts):
+                localctx=None, basectx=None, otherctx=None, repo=None,
+                filtereddata=False, **opts):
     """Performs the simplemerge algorithm.
 
     {local|base|other}ctx are optional. If passed, they (local/base/other) will
     be read from and the merge result written to (local). You should pass
-    explicit labels in this mode since the default is to use the file paths."""
+    explicit labels in this mode since the default is to use the file paths.
+
+    filtereddata should only be True if the data() in your context returns
+    decoded data.
+    """
     def readfile(filename):
         f = open(filename, "rb")
         text = f.read()
@@ -438,15 +443,19 @@
     def readctx(ctx):
         if not ctx:
             return None
-        if not repo:
-            raise error.ProgrammingError('simplemerge: repo must be passed if '
-                                         'using contexts')
-        # `wwritedata` is used to get the post-filter data from `ctx` (i.e.,
-        # what would have been in the working copy). Since merges were run in
-        # the working copy, and thus used post-filter data, we do the same to
-        # maintain behavior.
-        return repo.wwritedata(ctx.path(),
-                               _verifytext(ctx.data(), ctx.path(), ui, opts))
+        if filtereddata:
+            return _verifytext(ctx.data(), ctx.path(), ui, opts)
+        else:
+            if not repo:
+                raise error.ProgrammingError('simplemerge: repo must be passed '
+                                             'if using contexts and '
+                                             'filtereddata is False.')
+            # `wwritedata` is used to get the post-filter data from `ctx` (i.e.,
+            # what would have been in the working copy). Since merges were run
+            # in the working copy, and thus used post-filter data, we do the
+            # same to maintain behavior.
+            text = _verifytext(ctx.data(), ctx.path(), ui, opts)
+            return repo.wwritedata(ctx.path(), text)
 
     class ctxwriter(object):
         def __init__(self, ctx):