diff --git a/ChangeLog.md b/ChangeLog.md
--- a/ChangeLog.md
+++ b/ChangeLog.md
@@ -1,3 +1,7 @@
+## 1.3.2
+
+* Support for iso-8859-1 [#63](https://github.com/snoyberg/xml/issues/63)
+
 ## 1.3.1
 
 * Add functions to ignore subtrees & result-streaming (yield) parsers [#58](https://github.com/snoyberg/xml/pull/58)
diff --git a/Text/XML/Stream/Parse.hs b/Text/XML/Stream/Parse.hs
--- a/Text/XML/Stream/Parse.hs
+++ b/Text/XML/Stream/Parse.hs
@@ -145,6 +145,7 @@
 import           Data.Attoparsec.Text         (Parser, anyChar, char, manyTill,
                                                skipWhile, string, takeWhile,
                                                takeWhile1, try)
+import qualified Data.Attoparsec.Text         as AT
 import           Data.Conduit.Attoparsec      (PositionRange, conduitParser)
 import           Data.XML.Types               (Content (..), Event (..),
                                                ExternalID (..),
@@ -172,8 +173,8 @@
 import           Data.Text                    (Text, pack)
 import qualified Data.Text                    as T
 import qualified Data.Text                    as TS
-import           Data.Text.Encoding           (decodeUtf32BEWith)
-import           Data.Text.Encoding.Error     (ignore)
+import           Data.Text.Encoding           (decodeUtf32BEWith, decodeUtf8With)
+import           Data.Text.Encoding.Error     (ignore, lenientDecode)
 import           Data.Text.Read               (Reader, decimal, hexadecimal)
 import           Data.Typeable                (Typeable)
 import           Data.Word                    (Word32)
@@ -259,30 +260,58 @@
     conduit front = await >>= maybe (return ()) (push front)
 
     push front bss =
-        either conduit (\(bss', continue) -> leftover bss' >> continue)
+        either conduit
+               (uncurry checkXMLDecl)
                (getEncoding front bss)
 
     getEncoding front bs'
         | S.length bs < 4 =
             Left (bs `S.append`)
         | otherwise =
-            Right (bsOut, CT.decode codec)
+            Right (bsOut, mcodec)
       where
         bs = front bs'
         bsOut = S.append (S.drop toDrop x) y
         (x, y) = S.splitAt 4 bs
-        (toDrop, codec) =
+        (toDrop, mcodec) =
             case S.unpack x of
-                [0x00, 0x00, 0xFE, 0xFF] -> (4, CT.utf32_be)
-                [0xFF, 0xFE, 0x00, 0x00] -> (4, CT.utf32_le)
-                0xFE : 0xFF: _           -> (2, CT.utf16_be)
-                0xFF : 0xFE: _           -> (2, CT.utf16_le)
-                0xEF : 0xBB: 0xBF : _    -> (3, CT.utf8)
-                [0x00, 0x00, 0x00, 0x3C] -> (0, CT.utf32_be)
-                [0x3C, 0x00, 0x00, 0x00] -> (0, CT.utf32_le)
-                [0x00, 0x3C, 0x00, 0x3F] -> (0, CT.utf16_be)
-                [0x3C, 0x00, 0x3F, 0x00] -> (0, CT.utf16_le)
-                _                        -> (0, CT.utf8) -- Assuming UTF-8
+                [0x00, 0x00, 0xFE, 0xFF] -> (4, Just $ CT.utf32_be)
+                [0xFF, 0xFE, 0x00, 0x00] -> (4, Just $ CT.utf32_le)
+                0xFE : 0xFF: _           -> (2, Just $ CT.utf16_be)
+                0xFF : 0xFE: _           -> (2, Just $ CT.utf16_le)
+                0xEF : 0xBB: 0xBF : _    -> (3, Just $ CT.utf8)
+                [0x00, 0x00, 0x00, 0x3C] -> (0, Just $ CT.utf32_be)
+                [0x3C, 0x00, 0x00, 0x00] -> (0, Just $ CT.utf32_le)
+                [0x00, 0x3C, 0x00, 0x3F] -> (0, Just $ CT.utf16_be)
+                [0x3C, 0x00, 0x3F, 0x00] -> (0, Just $ CT.utf16_le)
+                _                        -> (0, Nothing) -- Assuming UTF-8
+
+checkXMLDecl :: MonadThrow m
+             => S.ByteString
+             -> Maybe CT.Codec
+             -> Conduit S.ByteString m TS.Text
+checkXMLDecl bs (Just codec) = leftover bs >> CT.decode codec
+checkXMLDecl bs0 Nothing =
+    loop [] (AT.parse (parseToken decodeXmlEntities)) bs0
+  where
+    loop chunks0 parser nextChunk =
+        case parser $ decodeUtf8With lenientDecode nextChunk of
+            AT.Fail _ _ _ -> fallback
+            AT.Partial f -> await >>= maybe fallback (loop chunks f)
+            AT.Done _ (TokenBeginDocument attrs) -> findEncoding attrs
+            AT.Done _ _ -> fallback
+      where
+        chunks = nextChunk : chunks0
+        fallback = complete CT.utf8
+        complete codec = mapM_ leftover chunks >> CT.decode codec
+
+        findEncoding [] = fallback
+        findEncoding ((TName _ "encoding", [ContentText enc]):_) =
+            case enc of
+                "iso-8859-1" -> complete CT.iso8859_1
+                "utf-8" -> complete CT.utf8
+                _ -> complete CT.utf8
+        findEncoding (_:xs) = findEncoding xs
 
 type EventPos = (Maybe PositionRange, Event)
 
diff --git a/test/main.hs b/test/main.hs
--- a/test/main.hs
+++ b/test/main.hs
@@ -93,6 +93,7 @@
         it "works" caseOrderAttrs
     it "parsing CDATA" caseParseCdata
     it "retains namespaces when asked" caseRetainNamespaces
+    it "handles iso-8859-1" caseIso8859_1
 
 documentParseRender :: IO ()
 documentParseRender =
@@ -604,4 +605,16 @@
                 (Map.singleton "xmlns" "bin4")
                 []
             ])
+        []
+
+caseIso8859_1 :: Assertion
+caseIso8859_1 = do
+    let lbs = "<?xml version=\"1.0\" encoding=\"iso-8859-1\"?><foo>\232</foo>"
+        doc = Res.parseLBS_ def lbs
+    doc `shouldBe` Res.Document
+        (Res.Prologue [] Nothing [])
+        (Res.Element
+            "foo"
+            Map.empty
+            [Res.NodeContent "\232"])
         []
diff --git a/xml-conduit.cabal b/xml-conduit.cabal
--- a/xml-conduit.cabal
+++ b/xml-conduit.cabal
@@ -1,5 +1,5 @@
 name:            xml-conduit
-version:         1.3.1
+version:         1.3.2
 license:         MIT
 license-file:    LICENSE
 author:          Michael Snoyman <michael@snoyman.com>, Aristid Breitkreuz <aristidb@googlemail.com>