diff --git a/psycopg/psycopgmodule.c b/psycopg/psycopgmodule.c
index 0736d260..737a7811 100644
--- a/psycopg/psycopgmodule.c
+++ b/psycopg/psycopgmodule.c
@@ -115,17 +115,21 @@ psyco_connect(PyObject *self, PyObject *args, PyObject *keywds)
 #define psyco_parse_dsn_doc "parse_dsn(dsn) -> dict"
 
 static PyObject *
-psyco_parse_dsn(PyObject *self, PyObject *args)
+psyco_parse_dsn(PyObject *self, PyObject *args, PyObject *kwargs)
 {
-    char *dsn, *err = NULL;
+    char *err = NULL;
     PQconninfoOption *options = NULL, *o;
-    PyObject *res = NULL, *value;
+    PyObject *dict = NULL, *res = NULL, *dsn;
 
-    if (!PyArg_ParseTuple(args, "s", &dsn)) {
+    static char *kwlist[] = {"dsn", NULL};
+    if (!PyArg_ParseTupleAndKeywords(args, kwargs, "O", kwlist, &dsn)) {
         return NULL;
     }
 
-    options = PQconninfoParse(dsn, &err);
+    Py_INCREF(dsn); /* for ensure_bytes */
+    if (!(dsn = psycopg_ensure_bytes(dsn))) { goto exit; }
+
+    options = PQconninfoParse(Bytes_AS_STRING(dsn), &err);
     if (options == NULL) {
         if (err != NULL) {
             PyErr_Format(ProgrammingError, "error parsing the dsn: %s", err);
@@ -133,31 +137,30 @@ psyco_parse_dsn(PyObject *self, PyObject *args)
         } else {
             PyErr_SetString(OperationalError, "PQconninfoParse() failed");
         }
-        return NULL;
+        goto exit;
     }
 
-    res = PyDict_New();
-    if (res != NULL) {
-        for (o = options; o->keyword != NULL; o++) {
-            if (o->val != NULL) {
-                value = Text_FromUTF8(o->val);
-                if (value == NULL) {
-                    Py_DECREF(res);
-                    res = NULL;
-                    break;
-                }
-                if (PyDict_SetItemString(res, o->keyword, value) != 0) {
-                    Py_DECREF(value);
-                    Py_DECREF(res);
-                    res = NULL;
-                    break;
-                }
+    if (!(dict = PyDict_New())) { goto exit; }
+    for (o = options; o->keyword != NULL; o++) {
+        if (o->val != NULL) {
+            PyObject *value;
+            if (!(value = Text_FromUTF8(o->val))) { goto exit; }
+            if (PyDict_SetItemString(dict, o->keyword, value) != 0) {
                 Py_DECREF(value);
+                goto exit;
             }
+            Py_DECREF(value);
         }
     }
 
-    PQconninfoFree(options);
+    /* success */
+    res = dict;
+    dict = NULL;
+
+exit:
+    PQconninfoFree(options);    /* safe on null */
+    Py_XDECREF(dict);
+    Py_XDECREF(dsn);
 
     return res;
 }
@@ -759,7 +762,7 @@ static PyMethodDef psycopgMethods[] = {
     {"_connect",  (PyCFunction)psyco_connect,
      METH_VARARGS|METH_KEYWORDS, psyco_connect_doc},
     {"parse_dsn",  (PyCFunction)psyco_parse_dsn,
-     METH_VARARGS, psyco_parse_dsn_doc},
+     METH_VARARGS|METH_KEYWORDS, psyco_parse_dsn_doc},
     {"adapt",  (PyCFunction)psyco_microprotocols_adapt,
      METH_VARARGS, psyco_microprotocols_adapt_doc},
 
diff --git a/tests/test_connection.py b/tests/test_connection.py
index 4cf50622..ee742580 100755
--- a/tests/test_connection.py
+++ b/tests/test_connection.py
@@ -23,6 +23,7 @@
 # License for more details.
 
 import os
+import sys
 import time
 import threading
 from operator import attrgetter
@@ -341,7 +342,6 @@ class ParseDsnTestCase(ConnectingTestCase):
 
     @skip_before_libpq(9, 2)
     def test_parse_dsn_uri(self):
-        from psycopg2 import ProgrammingError
         from psycopg2.extensions import parse_dsn
 
         self.assertEqual(parse_dsn('postgresql://tester:secret@/test'),
@@ -351,8 +351,8 @@ class ParseDsnTestCase(ConnectingTestCase):
         raised = False
         try:
             # extra '=' after port value
-            parse_dsn('postgresql://tester:secret@/test?port=1111=x')
-        except ProgrammingError, e:
+            parse_dsn(dsn='postgresql://tester:secret@/test?port=1111=x')
+        except psycopg2.ProgrammingError, e:
             raised = True
             self.assertTrue(str(e).find('secret') < 0,
                             "URI was not exposed in error message")
@@ -360,6 +360,26 @@ class ParseDsnTestCase(ConnectingTestCase):
             self.fail("unexpected error condition: " + repr(e))
         self.assertTrue(raised, "ProgrammingError raised due to invalid URI")
 
+    def test_unicode_value(self):
+        from psycopg2.extensions import parse_dsn
+        snowman = u"\u2603"
+        d = parse_dsn('dbname=' + snowman)
+        if sys.version_info[0] < 3:
+            self.assertEqual(d['dbname'], snowman.encode('utf8'))
+        else:
+            self.assertEqual(d['dbname'], snowman)
+
+    def test_unicode_key(self):
+        from psycopg2.extensions import parse_dsn
+        snowman = u"\u2603"
+        self.assertRaises(psycopg2.ProgrammingError, parse_dsn,
+            snowman + '=' + snowman)
+
+    def test_bad_param(self):
+        from psycopg2.extensions import parse_dsn
+        self.assertRaises(TypeError, parse_dsn, None)
+        self.assertRaises(TypeError, parse_dsn, 42)
+
 
 class IsolationLevelsTestCase(ConnectingTestCase):