diff --git a/lib/ansible/runner.py b/lib/ansible/runner.py
index 135130c5750..31f835585dd 100644
--- a/lib/ansible/runner.py
+++ b/lib/ansible/runner.py
@@ -29,6 +29,7 @@ import tempfile
 import time
 import base64
 import getpass
+import codecs
 
 import ansible.constants as C 
 import ansible.connection
@@ -202,7 +203,7 @@ class Runner(object):
 
         afd, afile = tempfile.mkstemp()
         afo = os.fdopen(afd, 'w')
-        afo.write(data)
+        afo.write(data.encode("utf8"))
         afo.flush()
         afo.close()
 
@@ -512,6 +513,7 @@ class Runner(object):
 
         source = utils.template(source, inject, self.setup_cache)
 
+        print source
         (host, ok, data, err) = (None, None, None, None)
 
         if not self.is_playbook:
@@ -542,7 +544,8 @@ class Runner(object):
         copy_module = self._transfer_module(conn, tmp, 'copy')
 
         # template the source data locally
-        source_data = file(utils.path_dwim(self.basedir, source)).read()
+        source_data = codecs.open(utils.path_dwim(self.basedir, source), encoding="utf8").read()
+        print source_data
         resultant = ''            
         try:
             resultant = utils.template(source_data, inject, self.setup_cache)
diff --git a/lib/ansible/utils.py b/lib/ansible/utils.py
index 1b3b355c43c..a66640ab4f0 100644
--- a/lib/ansible/utils.py
+++ b/lib/ansible/utils.py
@@ -21,6 +21,7 @@ import sys
 import os
 import shlex
 import re
+import codecs
 import jinja2
 import yaml
 import optparse
@@ -233,7 +234,7 @@ def varReplace(raw, vars):
 def template(text, vars, setup_cache, no_engine=False):
     ''' run a text buffer through the templating engine '''
     vars = vars.copy()
-    text = varReplace(str(text), vars)
+    text = varReplace(unicode(text), vars)
     vars['hostvars'] = setup_cache
     if no_engine:
         # used when processing include: directives so that Jinja is evaluated
@@ -248,7 +249,7 @@ def double_template(text, vars, setup_cache):
 
 def template_from_file(path, vars, setup_cache, no_engine=False):
     ''' run a file through the templating engine '''
-    data = file(path).read()
+    data = codecs.open(path, encoding="utf8").read()
     return template(data, vars, setup_cache, no_engine=no_engine)
 
 def parse_yaml(data):