diff -r d5d5b363967e Lib/test/test_exceptions.py
--- a/Lib/test/test_exceptions.py	Wed Sep 25 09:04:23 2013 +0200
+++ b/Lib/test/test_exceptions.py	Wed Sep 25 23:51:04 2013 +0300
@@ -148,6 +148,19 @@
         ckmsg(s, "'continue' not properly in loop")
         ckmsg("continue\n", "'continue' not properly in loop")
 
+    def testSyntaxErrorOffset(self):
+        def check(src, lineno, offset):
+            with self.assertRaises(SyntaxError) as cm:
+                compile(src, '<fragment>', 'exec')
+            self.assertEqual(cm.exception.lineno, lineno)
+            self.assertEqual(cm.exception.offset, offset)
+
+        check('def fact(x):\n\treturn x!\n', 2, 10)
+        check('1 +\n', 1, 4)
+        check('def spam():\n  print(1)\n print(2)', 3, 10)
+        check('Python = "Python" +', 1, 20)
+        check('Python = "\u1e54\xfd\u0163\u0125\xf2\xf1" +', 1, 20)
+
     @cpython_only
     def testSettingException(self):
         # test that setting an exception at the C level works even if the
diff -r d5d5b363967e Lib/test/test_traceback.py
--- a/Lib/test/test_traceback.py	Wed Sep 25 09:04:23 2013 +0200
+++ b/Lib/test/test_traceback.py	Wed Sep 25 23:51:04 2013 +0300
@@ -32,6 +32,9 @@
     def syntax_error_bad_indentation(self):
         compile("def spam():\n  print(1)\n print(2)", "?", "exec")
 
+    def syntax_error_with_caret_non_ascii(self):
+        compile('Python = "\u1e54\xfd\u0163\u0125\xf2\xf1" +', "?", "exec")
+
     def test_caret(self):
         err = self.get_exception_format(self.syntax_error_with_caret,
                                         SyntaxError)
@@ -46,6 +49,12 @@
         self.assertTrue(err[2].count('\n') == 1) # and no additional newline
         self.assertTrue(err[1].find("+") == err[2].find("^")) # in the right place
 
+        err = self.get_exception_format(self.syntax_error_with_caret_non_ascii,
+                                        SyntaxError)
+        self.assertIn("^", err[2]) # third line has caret
+        self.assertTrue(err[2].count('\n') == 1) # and no additional newline
+        self.assertTrue(err[1].find("+") == err[2].find("^")) # in the right place
+
     def test_nocaret(self):
         exc = SyntaxError("error", ("x.py", 23, None, "bad syntax"))
         err = traceback.format_exception_only(SyntaxError, exc)
diff -r d5d5b363967e Python/pythonrun.c
--- a/Python/pythonrun.c	Wed Sep 25 09:04:23 2013 +0200
+++ b/Python/pythonrun.c	Wed Sep 25 23:51:04 2013 +0300
@@ -2310,6 +2310,7 @@
     PyObject *v, *w, *errtype, *errtext;
     PyObject *msg_obj = NULL;
     char *msg = NULL;
+    int offset = err->offset;
 
     errtype = PyExc_SyntaxError;
     switch (err->error) {
@@ -2394,11 +2395,20 @@
         errtext = Py_None;
         Py_INCREF(Py_None);
     } else {
-        errtext = PyUnicode_DecodeUTF8(err->text, strlen(err->text),
+        errtext = PyUnicode_DecodeUTF8(err->text, err->offset,
                                        "replace");
+        if (errtext != NULL) {
+            Py_ssize_t len = strlen(err->text);
+            offset = (int)PyUnicode_GET_LENGTH(errtext);
+            if (len != err->offset) {
+                Py_DECREF(errtext);
+                errtext = PyUnicode_DecodeUTF8(err->text, len,
+                                               "replace");
+            }
+        }
     }
     v = Py_BuildValue("(OiiN)", err->filename,
-                      err->lineno, err->offset, errtext);
+                      err->lineno, offset, errtext);
     if (v != NULL) {
         if (msg_obj)
             w = Py_BuildValue("(OO)", msg_obj, v);