diff --git a/lib/script/script.js b/lib/script/script.js
index 4893f71f908..41215b0df7f 100644
--- a/lib/script/script.js
+++ b/lib/script/script.js
@@ -682,12 +682,13 @@ Script.buildPublicKeyOut = function(pubkey) {
 
 /**
  * @returns {Script} a new OP_RETURN script with data
- * @param {(string|Buffer)} to - the data to embed in the output
+ * @param {(string|Buffer)} data - the data to embed in the output
+ * @param {(string)} encoding - the type of encoding of the string
  */
-Script.buildDataOut = function(data) {
+Script.buildDataOut = function(data, encoding) {
   $.checkArgument(_.isUndefined(data) || _.isString(data) || BufferUtil.isBuffer(data));
-  if (typeof data === 'string') {
-    data = new Buffer(data);
+  if (_.isString(data)) {
+    data = new Buffer(data, encoding);
   }
   var s = new Script();
   s.add(Opcode.OP_RETURN);
diff --git a/test/script/script.js b/test/script/script.js
index cd94da8bf1e..6d16b77101a 100644
--- a/test/script/script.js
+++ b/test/script/script.js
@@ -599,6 +599,13 @@ describe('Script', function() {
       s.toString().should.equal('OP_RETURN 14 0x68656c6c6f20776f726c64212121');
       s.isDataOut().should.equal(true);
     });
+    it('should create script from a hex string', function() {
+      var hexString = 'abcdef0123456789';
+      var s = Script.buildDataOut(hexString, 'hex');
+      should.exist(s);
+      s.toString().should.equal('OP_RETURN 8 0xabcdef0123456789');
+      s.isDataOut().should.equal(true);
+     });
   });
   describe('#buildScriptHashOut', function() {
     it('should create script from another script', function() {