diff --git a/CHANGELOG.md b/CHANGELOG.md
index efac5a1b0..4e0e1b738 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -2,6 +2,10 @@
 
 Get upgrade notes from Sprockets 3.x to 4.x at https://github.com/rails/sprockets/blob/master/UPGRADING.md
 
+## Next Release
+
+- Fix bug where project Path with spaces throws a bad URI(is not URI?) error - Marc Gayle - https://github.com/marcamillion
+
 ## Master
 
 - Remove remaining support for Ruby < 2.4.[#672](https://github.com/rails/sprockets/pull/672)
diff --git a/lib/sprockets/uri_utils.rb b/lib/sprockets/uri_utils.rb
index 57ab184d9..ee540ab65 100644
--- a/lib/sprockets/uri_utils.rb
+++ b/lib/sprockets/uri_utils.rb
@@ -37,13 +37,23 @@ def join_uri(scheme, userinfo, host, port, registry, path, opaque, query, fragme
       URI::Generic.new(scheme, userinfo, host, port, registry, path, opaque, query, fragment).to_s
     end
 
+    # Internal: Escape the URI
+    #
+    # uri - String uri
+    #
+    # Returns String.
+    def escape_uri(uri)
+      return uri if uri == URI::Generic::DEFAULT_PARSER.escape(URI::Generic::DEFAULT_PARSER.unescape(uri))
+      URI::Generic::DEFAULT_PARSER.escape(uri)
+    end
+
     # Internal: Parse file: URI into component parts.
     #
     # uri - String uri
     #
     # Returns [scheme, host, path, query].
     def split_file_uri(uri)
-      scheme, _, host, _, _, path, _, query, _ = URI.split(uri)
+      scheme, _, host, _, _, path, _, query, _ = URI.split(escape_uri(uri))
 
       path = URI::Generic::DEFAULT_PARSER.unescape(path)
       path.force_encoding(Encoding::UTF_8)
diff --git a/test/test_loader.rb b/test/test_loader.rb
index d7bd9f14a..4093e9a22 100644
--- a/test/test_loader.rb
+++ b/test/test_loader.rb
@@ -50,7 +50,7 @@ def setup
   test 'load uri with index alias' do
     filename = fixture_path('default/coffee/index.js')
     index_alias = fixture_path('default/coffee.js')
-    assert asset = @env.load("file://#{uri_path(filename)}?type=application/javascript&index_alias=#{Rack::Utils.escape(index_alias)}")
+    assert asset = @env.load("file://#{uri_path(filename)}?type=application/javascript&index_alias=#{index_alias}")
     assert_equal filename, asset.filename, asset.inspect
     assert_equal 'coffee.js', asset.logical_path, asset.inspect
     assert_equal fixture_path('default'), asset.to_hash[:load_path], asset.inspect
diff --git a/test/test_uri_utils.rb b/test/test_uri_utils.rb
index 8a0e2a5e3..aaf486afc 100644
--- a/test/test_uri_utils.rb
+++ b/test/test_uri_utils.rb
@@ -35,6 +35,9 @@ def test_inverse_uri_functions
   end
 
   def test_split_file_uri
+    parts = split_file_uri("file:///usr/Company Name Dropbox/local/bin/myapp/assets")
+    assert_equal ['file', nil, '/usr/Company Name Dropbox/local/bin/myapp/assets', nil], parts
+
     parts = split_file_uri("file://localhost/etc/fstab")
     assert_equal ['file', 'localhost', '/etc/fstab', nil], parts