diff --git a/requests/models.py b/requests/models.py
index f5afebc8..120968ff 100644
--- a/requests/models.py
+++ b/requests/models.py
@@ -616,11 +616,10 @@ class Response(object):
         large responses.  The chunk size is the number of bytes it should
         read into memory.  This is not necessarily the length of each item
         returned as decoding can take place.
-        """
-        if self._content_consumed:
-            # simulate reading small chunks of the content
-            return iter_slices(self._content, chunk_size)
 
+        If decode_unicode is True, content will be decoded using the best
+        available encoding based on the response.
+        """
         def generate():
             try:
                 # Special case for urllib3.
@@ -641,12 +640,17 @@ class Response(object):
 
             self._content_consumed = True
 
-        gen = generate()
+        # simulate reading small chunks of the content
+        reused_chunks = iter_slices(self._content, chunk_size)
+
+        stream_chunks = generate()
+
+        chunks = reused_chunks if self._content_consumed else stream_chunks
 
         if decode_unicode:
-            gen = stream_decode_response_unicode(gen, self)
+            chunks = stream_decode_response_unicode(chunks, self)
 
-        return gen
+        return chunks
 
     def iter_lines(self, chunk_size=ITER_CHUNK_SIZE, decode_unicode=None):
         """Iterates over the response data, one line at a time.  When
diff --git a/test_requests.py b/test_requests.py
index 55e7a3d1..a1df1f19 100755
--- a/test_requests.py
+++ b/test_requests.py
@@ -10,6 +10,7 @@ import pickle
 import unittest
 import collections
 
+import io
 import requests
 import pytest
 from requests.adapters import HTTPAdapter
@@ -705,6 +706,26 @@ class RequestsTestCase(unittest.TestCase):
         assert next(iter(r))
         io.close()
 
+    def test_response_decode_unicode(self):
+        """
+        When called with decode_unicode, Response.iter_content should always
+        return unicode.
+        """
+        r = requests.Response()
+        r._content_consumed = True
+        r._content = b'the content'
+        r.encoding = 'ascii'
+
+        chunks = r.iter_content(decode_unicode=True)
+        assert all(isinstance(chunk, str) for chunk in chunks)
+
+        # also for streaming
+        r = requests.Response()
+        r.raw = io.BytesIO(b'the content')
+        r.encoding = 'ascii'
+        chunks = r.iter_content(decode_unicode=True)
+        assert all(isinstance(chunk, str) for chunk in chunks)
+
     def test_request_and_response_are_pickleable(self):
         r = requests.get(httpbin('get'))