diff --git a/PIL/DdsImagePlugin.py b/PIL/DdsImagePlugin.py
index b375f53f7..b6228c2ad 100644
--- a/PIL/DdsImagePlugin.py
+++ b/PIL/DdsImagePlugin.py
@@ -93,6 +93,13 @@ DXT3_FOURCC = 0x33545844
 DXT5_FOURCC = 0x35545844
 
 
+# dxgiformat.h
+
+DXGI_FORMAT_BC7_TYPELESS = 97
+DXGI_FORMAT_BC7_UNORM = 98
+DXGI_FORMAT_BC7_UNORM_SRGB = 99
+
+
 class DdsImageFile(ImageFile.ImageFile):
     format = "DDS"
     format_description = "DirectDraw Surface"
@@ -119,6 +126,8 @@ class DdsImageFile(ImageFile.ImageFile):
         bitcount, rmask, gmask, bmask, amask = struct.unpack("<5I",
                                                              header.read(20))
 
+        data_start = header_size + 4
+        n = 0
         if fourcc == b"DXT1":
             self.pixel_format = "DXT1"
             n = 1
@@ -128,12 +137,27 @@ class DdsImageFile(ImageFile.ImageFile):
         elif fourcc == b"DXT5":
             self.pixel_format = "DXT5"
             n = 3
+        elif fourcc == b"DX10":
+            data_start += 20
+            # ignoring flags which pertain to volume textures and cubemaps
+            dxt10 = BytesIO(self.fp.read(20))
+            dxgi_format, dimension = struct.unpack("<II", dxt10.read(8))
+            if dxgi_format in (DXGI_FORMAT_BC7_TYPELESS, DXGI_FORMAT_BC7_UNORM):
+                self.pixel_format = "BC7"
+                n = 7
+            elif dxgi_format == DXGI_FORMAT_BC7_UNORM_SRGB:
+                self.pixel_format = "BC7"
+                self.im_info["gamma"] = 1/2.2
+                n = 7
+            else:
+                raise NotImplementedError("Unimplemented DXGI format %d" %
+                                          (dxgi_format))
         else:
             raise NotImplementedError("Unimplemented pixel format %r" %
                                       (fourcc))
 
         self.tile = [
-            ("bcn", (0, 0) + self.size, 4 + header_size, (n))
+            ("bcn", (0, 0) + self.size, data_start, (n))
         ]
 
     def load_seek(self, pos):
diff --git a/Tests/images/bc7-argb-8bpp_MipMaps-1.dds b/Tests/images/bc7-argb-8bpp_MipMaps-1.dds
new file mode 100644
index 000000000..2f3c00ec3
Binary files /dev/null and b/Tests/images/bc7-argb-8bpp_MipMaps-1.dds differ
diff --git a/Tests/images/bc7-argb-8bpp_MipMaps-1.png b/Tests/images/bc7-argb-8bpp_MipMaps-1.png
new file mode 100644
index 000000000..3570ccf35
Binary files /dev/null and b/Tests/images/bc7-argb-8bpp_MipMaps-1.png differ
diff --git a/Tests/test_file_dds.py b/Tests/test_file_dds.py
index 8f0de63bb..89d265ec2 100644
--- a/Tests/test_file_dds.py
+++ b/Tests/test_file_dds.py
@@ -6,6 +6,7 @@ from PIL import Image, DdsImagePlugin
 TEST_FILE_DXT1 = "Tests/images/dxt1-rgb-4bbp-noalpha_MipMaps-1.dds"
 TEST_FILE_DXT3 = "Tests/images/dxt3-argb-8bbp-explicitalpha_MipMaps-1.dds"
 TEST_FILE_DXT5 = "Tests/images/dxt5-argb-8bbp-interpolatedalpha_MipMaps-1.dds"
+TEST_FILE_DX10_BC7 = "Tests/images/bc7-argb-8bpp_MipMaps-1.dds"
 
 
 class TestFileDds(PillowTestCase):
@@ -52,6 +53,20 @@ class TestFileDds(PillowTestCase):
 
         self.assert_image_equal(target, im)
 
+    def test_dx10_bc7(self):
+        """Check DX10 images can be opened"""
+
+        target = Image.open(TEST_FILE_DX10_BC7.replace('.dds', '.png'))
+
+        im = Image.open(TEST_FILE_DX10_BC7)
+        im.load()
+
+        self.assertEqual(im.format, "DDS")
+        self.assertEqual(im.mode, "RGBA")
+        self.assertEqual(im.size, (256, 256))
+
+        self.assert_image_equal(target, im)
+
     def test__validate_true(self):
         """Check valid prefix"""
         # Arrange
diff --git a/libImaging/BcnDecode.c b/libImaging/BcnDecode.c
index 244fde49e..b24a3ebb5 100644
--- a/libImaging/BcnDecode.c
+++ b/libImaging/BcnDecode.c
@@ -327,10 +327,10 @@ static UINT8 expand_quantized(UINT8 v, int bits) {
 static void bc7_lerp(rgba *dst, const rgba *e, int s0, int s1) {
 	int t0 = 64 - s0;
 	int t1 = 64 - s1;
-	dst->r = (UINT8)((t0 * e[0].r + s0 * e[1].r) >> 6);
-	dst->g = (UINT8)((t0 * e[0].g + s0 * e[1].g) >> 6);
-	dst->b = (UINT8)((t0 * e[0].b + s0 * e[1].b) >> 6);
-	dst->a = (UINT8)((t1 * e[0].a + s1 * e[1].a) >> 6);
+	dst->r = (UINT8)((t0 * e[0].r + s0 * e[1].r + 32) >> 6);
+	dst->g = (UINT8)((t0 * e[0].g + s0 * e[1].g + 32) >> 6);
+	dst->b = (UINT8)((t0 * e[0].b + s0 * e[1].b + 32) >> 6);
+	dst->a = (UINT8)((t1 * e[0].a + s1 * e[1].a + 32) >> 6);
 }
 
 static void decode_bc7_block(rgba *col, const UINT8* src) {
@@ -359,7 +359,7 @@ static void decode_bc7_block(rgba *col, const UINT8* src) {
 	cb = info->cb;
 	ab = info->ab;
 	cw = bc7_get_weights(info->ib);
-	aw = bc7_get_weights(ab ? info->ib2 : info->ib);
+	aw = bc7_get_weights((ab && info->ib2) ? info->ib2 : info->ib);
 
 #define LOAD(DST, N) \
 	DST = get_bits(src, bit, N); \
@@ -401,29 +401,33 @@ static void decode_bc7_block(rgba *col, const UINT8* src) {
 #define ASSIGN_P(x) x = (x << 1) | val
 	if (info->epb) {
 		/* per endpoint */
+		cb++;
+		if (ab) {
+			ab++;
+		}
 		for (i = 0; i < numep; i++) {
 			LOAD(val, 1);
-			cb++;
 			ASSIGN_P(endpoints[i].r);
 			ASSIGN_P(endpoints[i].g);
 			ASSIGN_P(endpoints[i].b);
 			if (ab) {
-				ab++;
 				ASSIGN_P(endpoints[i].a);
 			}
 		}
 	}
 	if (info->spb) {
 		/* per subset */
+		cb++;
+		if (ab) {
+			ab++;
+		}
 		for (i = 0; i < numep; i+=2) {
 			LOAD(val, 1);
-			cb++;
 			for (j = 0; j < 2; j++) {
 				ASSIGN_P(endpoints[i+j].r);
 				ASSIGN_P(endpoints[i+j].g);
 				ASSIGN_P(endpoints[i+j].b);
 				if (ab) {
-					ab++;
 					ASSIGN_P(endpoints[i+j].a);
 				}
 			}
@@ -462,7 +466,7 @@ static void decode_bc7_block(rgba *col, const UINT8* src) {
 		i0 = get_bits(src, cibit, ib);
 		cibit += ib;
 
-		if (ab) {
+		if (ab && info->ib2) {
 			ib2 = info->ib2;
 			if (ib2 && i == 0) {
 				ib2--;