diff lib/erb.rb lib/erb.rb
index 51b128e..683242e 100644
--- lib/erb.rb
+++ lib/erb.rb
@@ -948,8 +948,8 @@ class ERB
     #   Programming%20Ruby%3A%20%20The%20Pragmatic%20Programmer%27s%20Guide
     #
     def url_encode(s)
-      s.to_s.dup.force_encoding("ASCII-8BIT").gsub(/[^a-zA-Z0-9_\-.]/n) {
-        sprintf("%%%02X", $&.unpack("C")[0])
+      s.to_s.dup.force_encoding("ASCII-8BIT").gsub(/[^a-zA-Z0-9_\-.]/n) { |m|
+        sprintf("%%%02X", m.unpack("C")[0])
       }
     end
     alias u url_encode
diff test/erb/test_erb.rb test/erb/test_erb.rb
index 89fdbff..c2f290b 100644
--- test/erb/test_erb.rb
+++ test/erb/test_erb.rb
@@ -62,6 +62,16 @@ class TestERB < Test::Unit::TestCase
 end
 
 class TestERBCore < Test::Unit::TestCase
+  class MyString < String
+    def to_s
+      self
+    end
+
+    def gsub(*args, &block)
+      to_str.gsub(*args, &block)
+    end
+  end
+
   def setup
     @erb = ERB
   end
@@ -471,6 +481,16 @@ EOS
                  ERB::Util.url_encode("\xA5\xB5\xA5\xF3\xA5\xD7\xA5\xEB".force_encoding("EUC-JP")))
   end
 
+  def test_url_encode_string_subclass
+    string = "\xCE\x94\xCE\xBF\xCE\xBA\xCE\xB9\xCE\xBC\xCE\xAE".force_encoding("UTF-8")
+
+    assert_equal("%CE%94%CE%BF%CE%BA%CE%B9%CE%BC%CE%AE",
+                 ERB::Util.url_encode(string))
+
+    assert_equal("%CE%94%CE%BF%CE%BA%CE%B9%CE%BC%CE%AE",
+                 ERB::Util.url_encode(MyString.new(string)))
+  end
+
   def test_percent_after_etag
     assert_equal("1%", @erb.new("<%= 1 %>%", nil, "%").result)
   end