diff --git a/setup.py b/setup.py
index c6cdc123f6e4da831ca577044f5b5aefdad929f1_c2V0dXAucHk=..ef500b2f100b8cbc20dfc90b78e17092e730de48_c2V0dXAucHk= 100644
--- a/setup.py
+++ b/setup.py
@@ -301,7 +301,7 @@
             if '\0' in data:
                 continue
 
-            data = data.replace('@LIBDIR@', libdir)
+            data = data.replace('@LIBDIR@', libdir.encode('string_escape'))
             open(outfile, 'wb').write(data)
 
 cmdclass = {'build_mo': hgbuildmo,