diff --git a/src/Composer/Repository/Vcs/GitLabDriver.php b/src/Composer/Repository/Vcs/GitLabDriver.php
index 5f3538869..c5d794321 100644
--- a/src/Composer/Repository/Vcs/GitLabDriver.php
+++ b/src/Composer/Repository/Vcs/GitLabDriver.php
@@ -220,7 +220,9 @@ class GitLabDriver extends VcsDriver
         $encoded = '';
         for ($i = 0; isset($string[$i]); $i++) {
             $character = $string[$i];
-            if (!ctype_alnum($character)) $character = '%' . sprintf('%02X', ord($character));
+            if (!ctype_alnum($character) && !in_array($character, array('-', '_'), true)) {
+                $character = '%' . sprintf('%02X', ord($character));
+            }
             $encoded .= $character;
         }
         return $encoded;
diff --git a/tests/Composer/Test/Repository/Vcs/GitLabDriverTest.php b/tests/Composer/Test/Repository/Vcs/GitLabDriverTest.php
index 268d0c0a0..2190410e3 100644
--- a/tests/Composer/Test/Repository/Vcs/GitLabDriverTest.php
+++ b/tests/Composer/Test/Repository/Vcs/GitLabDriverTest.php
@@ -290,8 +290,8 @@ JSON;
 
     public function testGitlabSubDirectory()
     {
-        $url = 'https://mycompany.com/gitlab/mygroup/myproject';
-        $apiUrl = 'https://mycompany.com/gitlab/api/v3/projects/mygroup%2Fmyproject';
+        $url = 'https://mycompany.com/gitlab/mygroup/my-pro.ject';
+        $apiUrl = 'https://mycompany.com/gitlab/api/v3/projects/mygroup%2Fmy-pro%2Eject';
 
         $driver  = new GitLabDriver(array('url' => $url), $this->io->reveal(), $this->config, $this->process->reveal(), $this->remoteFilesystem->reveal());
         $driver->initialize();