diff --git a/README.md b/README.md
index 9f23f0f8..352a3ab3 100644
--- a/README.md
+++ b/README.md
@@ -905,6 +905,7 @@ Below is the complete list of available options that can be used to customize yo
 | `SIDEKIQ_MEMORY_KILLER_MAX_RSS` | Non-zero value enables the SidekiqMemoryKiller. Defaults to `1000000`. For additional options refer [Configuring the MemoryKiller](http://doc.gitlab.com/ce/operations/sidekiq_memory_killer.html) |
 | `DB_ADAPTER` | The database type. Possible values: `mysql2`, `postgresql`. Defaults to `postgresql`. |
 | `DB_ENCODING` | The database encoding. For `DB_ADAPTER` values `postresql` and `mysql2`, this parameter defaults to `unicode` and `utf8` respectively. |
+| `DB_COLLATION` | The database collation. Defaults to `utf8_general_ci` for `DB_ADAPTER` `mysql2`. This parameter is not supported for `DB_ADAPTER` `postresql` and will be removed. |
 | `DB_HOST` | The database server hostname. Defaults to `localhost`. |
 | `DB_PORT` | The database server port. Defaults to `3306` for mysql and `5432` for postgresql. |
 | `DB_NAME` | The database database name. Defaults to `gitlabhq_production` |
diff --git a/assets/runtime/config/gitlabhq/database.yml b/assets/runtime/config/gitlabhq/database.yml
index 018d28a3..9cfd8037 100644
--- a/assets/runtime/config/gitlabhq/database.yml
+++ b/assets/runtime/config/gitlabhq/database.yml
@@ -4,7 +4,7 @@
 production:
   adapter: {{DB_ADAPTER}}
   encoding: {{DB_ENCODING}}
-  collation: utf8_general_ci
+  collation: {{DB_COLLATION}}
   reconnect: false
   database: {{DB_NAME}}
   host: {{DB_HOST}}
diff --git a/assets/runtime/env-defaults b/assets/runtime/env-defaults
index b7772e05..13396e7d 100644
--- a/assets/runtime/env-defaults
+++ b/assets/runtime/env-defaults
@@ -34,6 +34,7 @@ NGINX_HSTS_MAXAGE=${NGINX_HSTS_MAXAGE:-31536000}
 ## DATABASE
 DB_ADAPTER=${DB_ADAPTER:-}
 DB_ENCODING=${DB_ENCODING:-}
+DB_COLLATION=${DB_COLLATION:-}
 DB_HOST=${DB_HOST:-}
 DB_PORT=${DB_PORT:-}
 DB_NAME=${DB_NAME:-}
diff --git a/assets/runtime/functions b/assets/runtime/functions
index 7d4a647f..2b2e51df 100644
--- a/assets/runtime/functions
+++ b/assets/runtime/functions
@@ -150,10 +150,12 @@ gitlab_finalize_database_parameters() {
   case ${DB_ADAPTER} in
     mysql2)
       DB_ENCODING=${DB_ENCODING:-utf8}
+      DB_COLLATION=${DB_COLLATION:-utf8_general_ci}
       DB_PORT=${DB_PORT:-3306}
       ;;
     postgresql)
       DB_ENCODING=${DB_ENCODING:-unicode}
+      # DB_COLLATION: Not supported for postgresql and will be removed below.
       DB_PORT=${DB_PORT:-5432}
       ;;
     *)
@@ -205,6 +207,7 @@ gitlab_configure_database() {
   update_template ${GITLAB_DATABASE_CONFIG} \
     DB_ADAPTER \
     DB_ENCODING \
+    DB_COLLATION \
     DB_HOST \
     DB_PORT \
     DB_NAME \