diff --git a/tests/test_handler.py b/tests/test_handler.py
index fcbbb032c..4736a31f0 100644
--- a/tests/test_handler.py
+++ b/tests/test_handler.py
@@ -297,6 +297,24 @@ def test_wsgi_script_binary_support_base64_behavior(self):
         self.assertTrue(response['isBase64Encoded'])
         self.assertTrue(is_base64(response['body']))
 
+        content_encoded_json = {**text_plain_event, **{'path': '/content_encoding_header_json1'}}
+
+        response = lh.handler(content_encoded_json, None)
+
+        self.assertEqual(response['statusCode'], 200)
+        self.assertIn('isBase64Encoded', response)
+        self.assertTrue(response['isBase64Encoded'])
+        self.assertTrue(is_base64(response['body']))
+
+        content_encoded_text_arbitrary = {**text_plain_event, **{'path': '/content_encoding_header_textarbitrary1'}}
+
+        response = lh.handler(content_encoded_text_arbitrary, None)
+
+        self.assertEqual(response['statusCode'], 200)
+        self.assertIn('isBase64Encoded', response)
+        self.assertTrue(response['isBase64Encoded'])
+        self.assertTrue(is_base64(response['body']))
+
     def test_wsgi_script_on_cognito_event_request(self):
         """
         Ensure that requests sent by cognito behave sensibly
diff --git a/tests/test_wsgi_binary_support_app.py b/tests/test_wsgi_binary_support_app.py
index 51a1989e9..212fa4f8d 100644
--- a/tests/test_wsgi_binary_support_app.py
+++ b/tests/test_wsgi_binary_support_app.py
@@ -28,3 +28,21 @@ def json_mimetype_response_1():
 @app.route('/arbitrarybinary_mimetype_response1', methods=['GET'])
 def arbitrary_mimetype_response_1():
     return Response(response=b"some binary data", mimetype="arbitrary/binary_mimetype")
+
+
+@app.route('/content_encoding_header_json1', methods=['GET'])
+def response_with_content_encoding_mimetype1():
+    return Response(
+        response=json.dumps({'some': 'data'}),
+        mimetype="application/json",
+        headers={'Content-Encoding': 'gzip'}
+    )
+
+
+@app.route('/content_encoding_header_textarbitrary1', methods=['GET'])
+def response_with_content_encoding_mimetype2():
+    return Response(
+        response="OK",
+        mimetype="text/arbitrary",
+        headers={'Content-Encoding': 'shouldnt_matter'}
+    )
diff --git a/zappa/handler.py b/zappa/handler.py
index 1474cf453..4f27f5775 100644
--- a/zappa/handler.py
+++ b/zappa/handler.py
@@ -551,7 +551,13 @@ def handler(self, event, context):
                         zappa_returndict.setdefault('statusDescription', response.status)
 
                     if response.data:
-                        if settings.BINARY_SUPPORT and \
+                        if settings.BINARY_SUPPORT and response.headers.get("Content-Encoding"):
+                            # We could have a text response that's gzip
+                            # encoded. Therefore, we base-64 encode it.
+                            # Related: https://github.com/zappa/Zappa/issues/908
+                            zappa_returndict['body'] = base64.b64encode(response.data).decode('utf-8')
+                            zappa_returndict["isBase64Encoded"] = True
+                        elif settings.BINARY_SUPPORT and \
                                 not response.mimetype.startswith("text/") \
                                 and response.mimetype != "application/json":
                             zappa_returndict['body'] = base64.b64encode(response.data).decode('utf-8')