diff --git a/doc/source/release.rst b/doc/source/release.rst
index e0532b6be136f..584cc0c8d2b7a 100644
--- a/doc/source/release.rst
+++ b/doc/source/release.rst
@@ -175,6 +175,7 @@ pandas 0.13
     with datetimes (:issue:`4532`)
   - Fix arithmetic with series/datetimeindex and ``np.timedelta64`` not working the same (:issue:`4134`)
     and buggy timedelta in numpy 1.6 (:issue:`4135`)
+  - Fix bug in ``pd.read_clipboard`` on windows with PY3 (:issue:`4561`); not decoding properly
 
 pandas 0.12
 ===========
diff --git a/pandas/compat/__init__.py b/pandas/compat/__init__.py
index 6070c0e9c5379..7a444ab01e10a 100644
--- a/pandas/compat/__init__.py
+++ b/pandas/compat/__init__.py
@@ -55,11 +55,11 @@
     def isidentifier(s):
         return s.isidentifier()
 
-    def str_to_bytes(s, encoding='ascii'):
-        return s.encode(encoding)
+    def str_to_bytes(s, encoding=None):
+        return s.encode(encoding or 'ascii')
 
-    def bytes_to_str(b, encoding='utf-8'):
-        return b.decode(encoding)
+    def bytes_to_str(b, encoding=None):
+        return b.decode(encoding or 'utf-8')
 
     # have to explicitly put builtins into the namespace
     range = range
diff --git a/pandas/io/clipboard.py b/pandas/io/clipboard.py
index 798f30e85544f..c4bea55ce2714 100644
--- a/pandas/io/clipboard.py
+++ b/pandas/io/clipboard.py
@@ -1,4 +1,5 @@
 """ io on the clipboard """
+from pandas import compat, get_option
 from pandas.compat import StringIO
 
 def read_clipboard(**kwargs):  # pragma: no cover
@@ -15,6 +16,13 @@ def read_clipboard(**kwargs):  # pragma: no cover
     from pandas.util.clipboard import clipboard_get
     from pandas.io.parsers import read_table
     text = clipboard_get()
+
+    # try to decode (if needed on PY3)
+    if compat.PY3:
+        try:
+            text = compat.bytes_to_str(text,encoding=kwargs.get('encoding') or get_option('display.encoding'))
+        except:
+            pass
     return read_table(StringIO(text), **kwargs)