diff --git a/contrib/testparseutil.py b/contrib/testparseutil.py
--- a/contrib/testparseutil.py
+++ b/contrib/testparseutil.py
@@ -49,7 +49,7 @@
     def sysstr(s):
         if isinstance(s, builtins.str):
             return s
-        return s.decode(u'latin-1')
+        return s.decode('latin-1')
 
     def opentext(f):
         return open(f, 'r')
diff --git a/hgext/lfs/blobstore.py b/hgext/lfs/blobstore.py
--- a/hgext/lfs/blobstore.py
+++ b/hgext/lfs/blobstore.py
@@ -394,7 +394,7 @@
 
         def encodestr(x):
             if isinstance(x, pycompat.unicode):
-                return x.encode(u'utf-8')
+                return x.encode('utf-8')
             return x
 
         return pycompat.rapply(encodestr, response)
diff --git a/mercurial/__init__.py b/mercurial/__init__.py
--- a/mercurial/__init__.py
+++ b/mercurial/__init__.py
@@ -166,14 +166,6 @@
                     if arg1idx is not None:
                         _ensureunicode(arg1idx)
 
-                # .encode() and .decode() on str/bytes/unicode don't accept
-                # byte strings on Python 3.
-                elif fn in ('encode', 'decode') and _isop(i - 1, '.'):
-                    for argn in range(2):
-                        argidx = _findargnofcall(argn)
-                        if argidx is not None:
-                            _ensureunicode(argidx)
-
                 # It changes iteritems/values to items/values as they are not
                 # present in Python 3 world.
                 elif fn in ('iteritems', 'itervalues') and not (
@@ -190,7 +182,7 @@
     # ``replacetoken`` or any mechanism that changes semantics of module
     # loading is changed. Otherwise cached bytecode may get loaded without
     # the new transformation mechanisms applied.
-    BYTECODEHEADER = b'HG\x00\x12'
+    BYTECODEHEADER = b'HG\x00\x13'
 
     class hgloader(importlib.machinery.SourceFileLoader):
         """Custom module loader that transforms source code.
diff --git a/mercurial/pycompat.py b/mercurial/pycompat.py
--- a/mercurial/pycompat.py
+++ b/mercurial/pycompat.py
@@ -206,7 +206,7 @@
             ) and not hasattr(  # hasattr-py3-only
                 s, u'__bytes__'
             ):
-                s = str(s).encode(u'ascii')
+                s = str(s).encode('ascii')
             return bytes.__new__(cls, s)
 
         def __getitem__(self, key):
@@ -237,7 +237,7 @@
         This never raises UnicodeEncodeError, but only ASCII characters
         can be round-trip by sysstr(sysbytes(s)).
         """
-        return s.encode(u'utf-8')
+        return s.encode('utf-8')
 
     def sysstr(s):
         """Return a keyword str to be passed to Python functions such as
@@ -249,18 +249,18 @@
         """
         if isinstance(s, builtins.str):
             return s
-        return s.decode(u'latin-1')
+        return s.decode('latin-1')
 
     def strurl(url):
         """Converts a bytes url back to str"""
         if isinstance(url, bytes):
-            return url.decode(u'ascii')
+            return url.decode('ascii')
         return url
 
     def bytesurl(url):
         """Converts a str url to bytes by encoding in ascii"""
         if isinstance(url, str):
-            return url.encode(u'ascii')
+            return url.encode('ascii')
         return url
 
     def raisewithtb(exc, tb):