diff --git a/_pytest/pytester.py b/_pytest/pytester.py
index 2d2683574..fc9b8d9cb 100644
--- a/_pytest/pytester.py
+++ b/_pytest/pytester.py
@@ -480,29 +480,24 @@ class Testdir:
         if not hasattr(self, '_olddir'):
             self._olddir = old
 
-    def _makefile(self, ext, args, kwargs, encoding="utf-8"):
+    def _makefile(self, ext, args, kwargs, encoding='utf-8'):
         items = list(kwargs.items())
+
+        def to_text(s):
+            return s.decode(encoding) if isinstance(s, bytes) else six.text_type(s)
+
         if args:
-            source = six.text_type("\n").join(
-                map(six.text_type, args)) + six.text_type("\n")
+            source = u"\n".join(to_text(x) for x in args)
             basename = self.request.function.__name__
             items.insert(0, (basename, source))
+
         ret = None
-        for name, value in items:
-            p = self.tmpdir.join(name).new(ext=ext)
+        for basename, value in items:
+            p = self.tmpdir.join(basename).new(ext=ext)
             p.dirpath().ensure_dir()
             source = Source(value)
-
-            def my_totext(s, encoding="utf-8"):
-                if isinstance(s, six.binary_type):
-                    s = six.text_type(s, encoding=encoding)
-                return s
-
-            source_unicode = "\n".join([my_totext(line) for line in source.lines])
-            source = six.text_type(source_unicode)
-            content = source.strip().encode(encoding)  # + "\n"
-            # content = content.rstrip() + "\n"
-            p.write(content, "wb")
+            source = u"\n".join(to_text(line) for line in source.lines)
+            p.write(source.strip().encode(encoding), "wb")
             if ret is None:
                 ret = p
         return ret
diff --git a/changelog/2738.bugfix b/changelog/2738.bugfix
new file mode 100644
index 000000000..c53869f49
--- /dev/null
+++ b/changelog/2738.bugfix
@@ -0,0 +1 @@
+Internal ``pytester`` plugin properly encodes ``bytes`` arguments to ``utf-8``.
diff --git a/testing/test_pytester.py b/testing/test_pytester.py
index 0e8669698..9508c2954 100644
--- a/testing/test_pytester.py
+++ b/testing/test_pytester.py
@@ -1,3 +1,4 @@
+# -*- coding: utf-8 -*-
 from __future__ import absolute_import, division, print_function
 import pytest
 import os
@@ -120,6 +121,16 @@ def test_makepyfile_unicode(testdir):
     testdir.makepyfile(unichr(0xfffd))
 
 
+def test_makepyfile_utf8(testdir):
+    """Ensure makepyfile accepts utf-8 bytes as input (#2738)"""
+    utf8_contents = u"""
+        def setup_function(function):
+            mixed_encoding = u'São Paulo'
+    """.encode('utf-8')
+    p = testdir.makepyfile(utf8_contents)
+    assert u"mixed_encoding = u'São Paulo'".encode('utf-8') in p.read('rb')
+
+
 def test_inline_run_clean_modules(testdir):
     test_mod = testdir.makepyfile("def test_foo(): assert True")
     result = testdir.inline_run(str(test_mod))