diff --git a/src/apps/terminal/Shell.cpp b/src/apps/terminal/Shell.cpp
index be93b97114..11793568ba 100644
--- a/src/apps/terminal/Shell.cpp
+++ b/src/apps/terminal/Shell.cpp
@@ -412,6 +412,8 @@ Shell::_Spawn(int row, int col, const ShellParameters& parameters)
 	} else
 		fShellInfo.SetDefaultShell(false);
 
+	fShellInfo.SetEncoding(parameters.Encoding());
+
 	signal(SIGTTOU, SIG_IGN);
 
 	// get a pseudo-tty
@@ -548,7 +550,7 @@ Shell::_Spawn(int row, int col, const ShellParameters& parameters)
 		 */
 		setenv("TERM", kTerminalType, true);
 		setenv("TTY", ttyName, true);
-		setenv("TTYPE", parameters.Encoding(), true);
+		setenv("TTYPE", fShellInfo.EncodingName(), true);
 
 		// set the current working directory, if one is given
 		if (parameters.CurrentDirectory().Length() > 0)
diff --git a/src/apps/terminal/Shell.h b/src/apps/terminal/Shell.h
index bc01fc9e42..df14406e82 100644
--- a/src/apps/terminal/Shell.h
+++ b/src/apps/terminal/Shell.h
@@ -49,6 +49,11 @@ public:
 			const ShellInfo&	Info() const
 									{ return fShellInfo; }
 
+			int					Encoding() const
+									{ return fShellInfo.Encoding(); }
+			void				SetEncoding(int encoding)
+									{ fShellInfo.SetEncoding(encoding); }
+
 			bool				HasActiveProcesses() const;
 			bool				GetActiveProcessInfo(
 									ActiveProcessInfo& _info) const;
diff --git a/src/apps/terminal/ShellInfo.cpp b/src/apps/terminal/ShellInfo.cpp
index c4dcf97bee..c3b64051b0 100644
--- a/src/apps/terminal/ShellInfo.cpp
+++ b/src/apps/terminal/ShellInfo.cpp
@@ -6,10 +6,30 @@
 
 #include "ShellInfo.h"
 
+#include <CharacterSet.h>
+#include <CharacterSetRoster.h>
+
+#include "TermConst.h"
+
+using namespace BPrivate ; // BCharacterSet stuff
+
 
 ShellInfo::ShellInfo()
 	:
 	fProcessID(-1),
-	fIsDefaultShell(true)
+	fIsDefaultShell(true),
+	fEncoding(M_UTF8),
+	fEncodingName("UTF-8")
 {
 }
+
+
+void
+ShellInfo::SetEncoding(int encoding)
+{
+	fEncoding = encoding;
+
+	const BCharacterSet* charset
+		= BCharacterSetRoster::GetCharacterSetByConversionID(fEncoding);
+	fEncodingName = charset ? charset->GetName() : "UTF-8";
+}
diff --git a/src/apps/terminal/ShellInfo.h b/src/apps/terminal/ShellInfo.h
index 540868527d..63d9eed898 100644
--- a/src/apps/terminal/ShellInfo.h
+++ b/src/apps/terminal/ShellInfo.h
@@ -7,6 +7,7 @@
 
 
 #include <OS.h>
+#include <String.h>
 
 
 class ShellInfo {
@@ -23,9 +24,17 @@ public:
 			void				SetDefaultShell(bool isDefault)
 									{ fIsDefaultShell = isDefault; }
 
+			int					Encoding() const
+									{ return fEncoding; }
+	const	BString&			EncodingName() const
+									{ return fEncodingName; }
+			void				SetEncoding(int encoding);
+
 private:
 			pid_t				fProcessID;
 			bool				fIsDefaultShell;
+			int					fEncoding;
+			BString				fEncodingName;
 };
 
 
diff --git a/src/apps/terminal/ShellParameters.cpp b/src/apps/terminal/ShellParameters.cpp
index e5cb02af99..136abcc856 100644
--- a/src/apps/terminal/ShellParameters.cpp
+++ b/src/apps/terminal/ShellParameters.cpp
@@ -6,6 +6,8 @@
 
 #include "ShellParameters.h"
 
+#include "TermConst.h"
+
 
 ShellParameters::ShellParameters(int argc, const char* const* argv,
 	const BString& currentDirectory)
@@ -13,7 +15,7 @@ ShellParameters::ShellParameters(int argc, const char* const* argv,
 	fArguments(argv),
 	fArgumentCount(argc),
 	fCurrentDirectory(currentDirectory),
-	fEncoding("UTF8")
+	fEncoding(M_UTF8)
 {
 }
 
@@ -34,7 +36,7 @@ ShellParameters::SetCurrentDirectory(const BString& currentDirectory)
 
 
 void
-ShellParameters::SetEncoding(const BString& encoding)
+ShellParameters::SetEncoding(int encoding)
 {
 	fEncoding = encoding;
 }
diff --git a/src/apps/terminal/ShellParameters.h b/src/apps/terminal/ShellParameters.h
index 8074cb19e3..ccbd2c3f0f 100644
--- a/src/apps/terminal/ShellParameters.h
+++ b/src/apps/terminal/ShellParameters.h
@@ -27,15 +27,15 @@ public:
 			const BString&		CurrentDirectory() const
 									{ return fCurrentDirectory; }
 
-			void				SetEncoding(const BString& encoding);
-			const BString&		Encoding() const
+			void				SetEncoding(int encoding);
+			int					Encoding() const
 									{ return fEncoding; }
 
 private:
 			const char* const*	fArguments;
 			int					fArgumentCount;
 			BString				fCurrentDirectory;
-			BString				fEncoding;
+			int					fEncoding;
 };
 
 
diff --git a/src/apps/terminal/TermConst.cpp b/src/apps/terminal/TermConst.cpp
index e3d5efa1c6..1b88bc0493 100644
--- a/src/apps/terminal/TermConst.cpp
+++ b/src/apps/terminal/TermConst.cpp
@@ -26,6 +26,7 @@ const char* const kTooTipSetWindowTitlePlaceholders = B_TRANSLATE(
 	"\t\t\tcurrent tab. Optionally the maximum number of path components\n"
 	"\t\t\tcan be specified. E.g. '%2d' for at most two components.\n"
 	"\t%T\t-\tThe Terminal application name for the current locale.\n"
+	"\t%e\t-\tThe encoding of the current tab. Not shown for UTF-8.\n"
 	"\t%i\t-\tThe index of the window.\n"
 	"\t%p\t-\tThe name of the active process in the current tab.\n"
 	"\t%t\t-\tThe title of the current tab.\n"
diff --git a/src/apps/terminal/TermView.cpp b/src/apps/terminal/TermView.cpp
index e6e3d4be01..17d2d428c7 100644
--- a/src/apps/terminal/TermView.cpp
+++ b/src/apps/terminal/TermView.cpp
@@ -30,8 +30,6 @@
 #include <Application.h>
 #include <Beep.h>
 #include <Catalog.h>
-#include <CharacterSet.h>
-#include <CharacterSetRoster.h>
 #include <Clipboard.h>
 #include <Debug.h>
 #include <Directory.h>
@@ -67,8 +65,6 @@
 #include "VTkeymap.h"
 
 
-using namespace BPrivate ; // BCharacterSet stuff
-
 // defined in VTKeyTbl.c
 extern int function_keycode_table[];
 extern char *function_key_char_table[];
@@ -364,10 +360,7 @@ TermView::_InitObject(const ShellParameters& shellParameters)
 
 	// set the shell parameters' encoding
 	ShellParameters modifiedShellParameters(shellParameters);
-
-	const BCharacterSet* charset
-		= BCharacterSetRoster::GetCharacterSetByConversionID(fEncoding);
-	modifiedShellParameters.SetEncoding(charset ? charset->GetName() : "UTF-8");
+	modifiedShellParameters.SetEncoding(fEncoding);
 
 	error = fShell->Open(fRows, fColumns, modifiedShellParameters);
 
@@ -700,6 +693,9 @@ TermView::SetEncoding(int encoding)
 {
 	fEncoding = encoding;
 
+	if (fShell != NULL)
+		fShell->SetEncoding(fEncoding);
+
 	BAutolock _(fTextBuffer);
 	fTextBuffer->SetEncoding(fEncoding);
 }
diff --git a/src/apps/terminal/TermView.h b/src/apps/terminal/TermView.h
index 2766f25686..9e0721511a 100644
--- a/src/apps/terminal/TermView.h
+++ b/src/apps/terminal/TermView.h
@@ -60,7 +60,7 @@ public:
 			bool				IsShellBusy() const;
 			bool				GetActiveProcessInfo(
 									ActiveProcessInfo& _info) const;
-			bool			GetShellInfo(ShellInfo& _info) const;
+			bool				GetShellInfo(ShellInfo& _info) const;
 
 			const char*			TerminalName() const;
 
diff --git a/src/apps/terminal/TitlePlaceholderMapper.cpp b/src/apps/terminal/TitlePlaceholderMapper.cpp
index 9cac1b51c8..29e9b4b6ee 100644
--- a/src/apps/terminal/TitlePlaceholderMapper.cpp
+++ b/src/apps/terminal/TitlePlaceholderMapper.cpp
@@ -4,9 +4,11 @@
  */
 
 
+#include "TitlePlaceholderMapper.h"
+
 #include <Catalog.h>
 
-#include "TitlePlaceholderMapper.h"
+#include "TermConst.h"
 
 
 // #pragma mark - TitlePlaceholderMapper
@@ -36,8 +38,8 @@ TitlePlaceholderMapper::MapPlaceholder(char placeholder, int64 number,
 			if (numberGiven && number > 0) {
 				int32 index = directory.Length();
 				while (number > 0 && index > 0) {
-					 index = directory.FindLast('/', index - 1);
-					 number--;
+					index = directory.FindLast('/', index - 1);
+					number--;
 				}
 
 				if (number == 0 && index >= 0 && index + 1 < directory.Length())
@@ -48,6 +50,13 @@ TitlePlaceholderMapper::MapPlaceholder(char placeholder, int64 number,
 			return true;
 		}
 
+		case 'e':
+			if (fShellInfo.Encoding() != M_UTF8) {
+				_string.Truncate(0);
+				_string << "[" << fShellInfo.EncodingName() << "]";
+			}
+			return true;
+
 		case 'p':
 			// process name -- use "--", if the shell is active and it is the
 			// default shell