diff --git a/src/interfaces.ts b/src/interfaces.ts
index bf20a89d8..22faa8ea2 100644
--- a/src/interfaces.ts
+++ b/src/interfaces.ts
@@ -59,7 +59,7 @@ export interface ITerminal {
   /**
    * Set the pty socket encoding.
    */
-  setEncoding(encoding: string): void;
+  setEncoding(encoding: string | null): void;
 
   /**
    * Resume the pty socket.
diff --git a/src/terminal.ts b/src/terminal.ts
index 22bc6bf2b..fb7f60908 100644
--- a/src/terminal.ts
+++ b/src/terminal.ts
@@ -124,7 +124,7 @@ export abstract class Terminal implements ITerminal {
   }
 
   /** See net.Socket.setEncoding */
-  public setEncoding(encoding: string): void {
+  public setEncoding(encoding: string | null): void {
     if ((<any>this._socket)._decoder) {
       delete (<any>this._socket)._decoder;
     }
diff --git a/typings/node-pty.d.ts b/typings/node-pty.d.ts
index d7a45db57..7382794d8 100644
--- a/typings/node-pty.d.ts
+++ b/typings/node-pty.d.ts
@@ -50,7 +50,7 @@ declare module 'node-pty' {
      * If unset, incoming data will be delivered as raw bytes (Buffer type).
      * By default 'utf8' is assumed, to unset it explicitly set it to `null`.
      */
-    encoding?: string;
+    encoding?: string | null;
 
     /**
      * Whether to enable flow control handling (false by default). If enabled a message of `flowControlPause`