--- a/crates/jrsonnet-stdlib/src/encoding.rs
+++ b/crates/jrsonnet-stdlib/src/encoding.rs
@@ -1,5 +1,6 @@
 use base64::{engine::general_purpose::STANDARD, Engine};
 use jrsonnet_evaluator::{
+	bail,
 	function::builtin,
 	runtime_error,
 	typed::{Either, Either2},
@@ -12,8 +13,14 @@
 }
 
 #[builtin]
-pub fn builtin_decode_utf8(arr: IBytes) -> Result<IStr> {
-	arr.cast_str().ok_or_else(|| runtime_error!("bad utf8"))
+pub fn builtin_decode_utf8(arr: IBytes, #[default(true)] lossy: bool) -> Result<IStr> {
+	match arr.clone().cast_str() {
+		Some(s) => Ok(s),
+		None if lossy => Ok(String::from_utf8_lossy(arr.as_slice()).into()),
+		None => {
+			bail!("bad utf8")
+		}
+	}
 }
 
 #[builtin]
--- /dev/null
+++ b/tests/golden/issue187.jsonnet
@@ -0,0 +1 @@
+std.decodeUTF8(std.encodeUTF8('foo bar ') + [255] + std.encodeUTF8(' baz'))
--- /dev/null
+++ b/tests/golden/issue187.jsonnet.golden
@@ -0,0 +1 @@
+"foo bar � baz"
\ No newline at end of file
--- /dev/null
+++ b/tests/golden/issue187.rev.jsonnet
@@ -0,0 +1 @@
+std.decodeUTF8(std.encodeUTF8('foo bar ') + [255] + std.encodeUTF8(' baz'), lossy = false)
--- /dev/null
+++ b/tests/golden/issue187.rev.jsonnet.golden
@@ -0,0 +1,2 @@
+runtime error: bad utf8
+    issue187.rev.jsonnet:1:1-92: function <builtin_decode_utf8> call
\ No newline at end of file
--- a/tests/suite/std_param_names.jsonnet
+++ b/tests/suite/std_param_names.jsonnet
@@ -129,7 +129,7 @@
     parseJson: ['str'],
     parseYaml: ['str'],
     encodeUTF8: ['str'],
-    decodeUTF8: ['arr'],
+    decodeUTF8: ['arr', 'lossy'],
 
     sum: ['arr'],
     avg: ['arr', 'onEmpty'],