diff --git a/mercurial/store.py b/mercurial/store.py
--- a/mercurial/store.py
+++ b/mercurial/store.py
@@ -461,13 +461,13 @@
             # skip nonexistent file
             self.entries = set()
             return
-        self.entries = set(decodedir(fp.read()).splitlines())
-        if '' in self.entries:
-            fp.seek(0)
-            for n, line in enumerate(util.iterfile(fp)):
-                if not line.rstrip('\n'):
-                    t = _('invalid entry in fncache, line %d') % (n + 1)
-                    raise error.Abort(t)
+        self.entries = set()
+        for n, line in enumerate(util.iterfile(fp)):
+            entry = line.rstrip('\n')
+            if not entry:
+                t = _('invalid entry in fncache, line %d') % (n + 1)
+                raise error.Abort(t)
+            self.entries.add(decodedir(entry))
         fp.close()
 
     def write(self, tr):