diff --git a/call_test.go b/call_test.go
index 48134c4c..c867f235 100644
--- a/call_test.go
+++ b/call_test.go
@@ -104,7 +104,7 @@ func (h *testStreamHandler) handleStream(t *testing.T, s *transport.Stream) {
 		}
 	}
 	// send a response back to end the stream.
-	data, err := encode(testCodec{}, &expectedResponse, nil, nil, nil)
+	data, err := encode(testCodec{}, &expectedResponse, nil)
 	if err != nil {
 		t.Errorf("Failed to encode the response: %v", err)
 		return
diff --git a/encoding/proto/proto.go b/encoding/proto/proto.go
index 66b97a6f..9ca00911 100644
--- a/encoding/proto/proto.go
+++ b/encoding/proto/proto.go
@@ -65,6 +65,9 @@ func marshal(v interface{}, cb *cachedProtoBuffer) ([]byte, error) {
 }
 
 func (codec) Marshal(v interface{}) ([]byte, error) {
+	if v == nil {
+		return nil, nil
+	}
 	if pm, ok := v.(proto.Marshaler); ok {
 		// object can marshal itself, no need for buffer
 		return pm.Marshal()
diff --git a/interop/test_utils.go b/interop/test_utils.go
index cbc7756d..38a20990 100644
--- a/interop/test_utils.go
+++ b/interop/test_utils.go
@@ -573,9 +573,8 @@ func DoUnimplementedService(tc testpb.UnimplementedServiceClient) {
 
 // DoUnimplementedMethod attempts to call an unimplemented method.
 func DoUnimplementedMethod(cc *grpc.ClientConn) {
-	var req, reply proto.Message
-	if err := cc.Invoke(context.Background(), "/grpc.testing.TestService/UnimplementedCall", req, reply); err == nil || status.Code(err) != codes.Unimplemented {
-		grpclog.Fatalf("ClientConn.Invoke(_, _, _, _, _) = %v, want error code %s", err, codes.Unimplemented)
+	if err := grpc.Invoke(context.Background(), "/grpc.testing.TestService/UnimplementedCall", &testpb.Empty{}, &testpb.Empty{}, cc); err == nil || status.Code(err) != codes.Unimplemented {
+		grpclog.Fatalf("grpc.Invoke(_, _, _, _, _) = %v, want error code %s", err, codes.Unimplemented)
 	}
 }
 
diff --git a/rpc_util.go b/rpc_util.go
index 90d1b849..407f69df 100644
--- a/rpc_util.go
+++ b/rpc_util.go
@@ -435,45 +435,49 @@ func recvMsg(s *transport.Stream, maxRecvMsgSize int) (bool, []byte, error) {
 }
 
 // encode serializes msg and returns a buffer of msg.
-// If msg is nil, it generates an empty buffer.
-// TODO(ddyihai): eliminate extra Compressor parameter.
-func encode(c baseCodec, msg interface{}, cp Compressor, outPayload *stats.OutPayload, compressor encoding.Compressor) ([]byte, error) {
-	var (
-		b    []byte
-		cbuf *bytes.Buffer
-	)
-	if msg != nil {
-		var err error
-		b, err = c.Marshal(msg)
-		if err != nil {
-			return nil, status.Errorf(codes.Internal, "grpc: error while marshaling: %v", err.Error())
+func encode(c baseCodec, msg interface{}, outPayload *stats.OutPayload) ([]byte, error) {
+	b, err := c.Marshal(msg)
+	if err != nil {
+		return nil, status.Errorf(codes.Internal, "grpc: error while marshaling: %v", err.Error())
+	}
+	if b == nil {
+		// If there was no error while marshalling, yet payload was nil,
+		// we update it to an empty slice, since a nil payload leads to
+		// an empty data frame(no gRPC message header is added).
+		b = []byte{}
+	}
+	if outPayload != nil {
+		outPayload.Payload = msg
+		// TODO truncate large payload.
+		outPayload.Data = b
+		outPayload.Length = len(b)
+	}
+	return b, nil
+}
+
+// compress the message if there is a compressor registered.
+// TODO(mmukhi, dfawley): eliminate extra Compressor parameter.
+func compress(b []byte, cp Compressor, compressor encoding.Compressor, outPayload *stats.OutPayload) ([]byte, bool, error) {
+	if len(b) <= 0 || (compressor == nil && cp == nil) {
+		return b, false, nil
+	}
+	cbuf := new(bytes.Buffer)
+	// Has compressor, check Compressor is set by UseCompressor first.
+	if compressor != nil {
+		z, _ := compressor.Compress(cbuf)
+		if _, err := z.Write(b); err != nil {
+			return nil, false, status.Errorf(codes.Internal, "grpc: error while compressing: %v", err.Error())
 		}
-		if outPayload != nil {
-			outPayload.Payload = msg
-			// TODO truncate large payload.
-			outPayload.Data = b
-			outPayload.Length = len(b)
-		}
-		if compressor != nil || cp != nil {
-			cbuf = new(bytes.Buffer)
-			// Has compressor, check Compressor is set by UseCompressor first.
-			if compressor != nil {
-				z, _ := compressor.Compress(cbuf)
-				if _, err := z.Write(b); err != nil {
-					return nil, status.Errorf(codes.Internal, "grpc: error while compressing: %v", err.Error())
-				}
-				z.Close()
-			} else {
-				// If Compressor is not set by UseCompressor, use default Compressor
-				if err := cp.Do(cbuf, b); err != nil {
-					return nil, status.Errorf(codes.Internal, "grpc: error while compressing: %v", err.Error())
-				}
-			}
-			b = cbuf.Bytes()
+		z.Close()
+	} else {
+		// If Compressor is not set by UseCompressor, use default Compressor
+		if err := cp.Do(cbuf, b); err != nil {
+			return nil, false, status.Errorf(codes.Internal, "grpc: error while compressing: %v", err.Error())
 		}
 	}
+	b = cbuf.Bytes()
 	if uint(len(b)) > math.MaxUint32 {
-		return nil, status.Errorf(codes.ResourceExhausted, "grpc: message too large (%d bytes)", len(b))
+		return nil, false, status.Errorf(codes.ResourceExhausted, "grpc: message too large (%d bytes)", len(b))
 	}
 
 	if outPayload != nil {
@@ -481,7 +485,7 @@ func encode(c baseCodec, msg interface{}, cp Compressor, outPayload *stats.OutPa
 		// before it's put on wire.
 		outPayload.WireLength = 5 + len(b)
 	}
-	return b, nil
+	return b, true, nil
 }
 
 func checkRecvPayload(recvCompress string, haveCompressor bool) *status.Status {
diff --git a/rpc_util_test.go b/rpc_util_test.go
index 2cf2b43a..004c5386 100644
--- a/rpc_util_test.go
+++ b/rpc_util_test.go
@@ -48,16 +48,15 @@ func TestEncode(t *testing.T) {
 	for _, test := range []struct {
 		// input
 		msg proto.Message
-		cp  Compressor
 		// outputs
 		data []byte
 		err  error
 	}{
-		{nil, nil, []byte{}, nil},
+		{&perfpb.Buffer{}, []byte{}, nil},
 	} {
-		data, err := encode(encoding.GetCodec(protoenc.Name), test.msg, nil, nil, nil)
+		data, err := encode(encoding.GetCodec(protoenc.Name), test.msg, nil)
 		if err != test.err || !bytes.Equal(data, test.data) {
-			t.Fatalf("encode(_, _, %v, _) = %v, %v\nwant %v, %v", test.cp, data, err, test.data, test.err)
+			t.Fatalf("encode(_, _, _, _) = %v, %v\nwant %v, %v", data, err, test.data, test.err)
 		}
 	}
 }
@@ -156,7 +155,7 @@ func TestParseDialTarget(t *testing.T) {
 func bmEncode(b *testing.B, mSize int) {
 	cdc := encoding.GetCodec(protoenc.Name)
 	msg := &perfpb.Buffer{Body: make([]byte, mSize)}
-	encodeData, _ := encode(cdc, msg, nil, nil, nil)
+	encodeData, _ := encode(cdc, msg, nil)
 	// 5 bytes of gRPC-specific message header
 	// is added to the message before it is written
 	// to the wire.
@@ -164,7 +163,7 @@ func bmEncode(b *testing.B, mSize int) {
 	b.ReportAllocs()
 	b.ResetTimer()
 	for i := 0; i < b.N; i++ {
-		encode(cdc, msg, nil, nil, nil)
+		encode(cdc, msg, nil)
 	}
 	b.SetBytes(encodedSz)
 }
diff --git a/server.go b/server.go
index 9d37a210..7ade17bd 100644
--- a/server.go
+++ b/server.go
@@ -833,7 +833,7 @@ func (s *Server) sendResponse(t transport.ServerTransport, stream *transport.Str
 	if s.opts.statsHandler != nil {
 		outPayload = &stats.OutPayload{}
 	}
-	data, err := encode(s.getCodec(stream.ContentSubtype()), msg, cp, outPayload, comp)
+	data, err := encode(s.getCodec(stream.ContentSubtype()), msg, outPayload)
 	if err != nil {
 		grpclog.Errorln("grpc: server failed to encode response: ", err)
 		return err
@@ -841,7 +841,12 @@ func (s *Server) sendResponse(t transport.ServerTransport, stream *transport.Str
 	if len(data) > s.opts.maxSendMessageSize {
 		return status.Errorf(codes.ResourceExhausted, "grpc: trying to send message larger than max (%d vs. %d)", len(data), s.opts.maxSendMessageSize)
 	}
-	opts.IsCompressed = cp != nil || comp != nil
+	data, isCompressed, err := compress(data, cp, comp, outPayload)
+	opts.IsCompressed = isCompressed
+	if err != nil {
+		grpclog.Errorln("grpc: server failed to compress response: ", err)
+		return err
+	}
 	err = t.Write(stream, data, opts)
 	if err == nil && outPayload != nil {
 		outPayload.SentTime = time.Now()
diff --git a/stream.go b/stream.go
index 1b5dd495..ade358f7 100644
--- a/stream.go
+++ b/stream.go
@@ -470,19 +470,23 @@ func (a *csAttempt) sendMsg(m interface{}) (err error) {
 			Client: true,
 		}
 	}
-	data, err := encode(cs.codec, m, cs.cp, outPayload, cs.comp)
+	data, err := encode(cs.codec, m, outPayload)
 	if err != nil {
 		return err
 	}
 	if len(data) > *cs.c.maxSendMessageSize {
 		return status.Errorf(codes.ResourceExhausted, "trying to send message larger than max (%d vs. %d)", len(data), *cs.c.maxSendMessageSize)
 	}
+	data, isCompressed, err := compress(data, cs.cp, cs.comp, outPayload)
+	if err != nil {
+		return err
+	}
 	if !cs.desc.ClientStreams {
 		cs.sentLast = true
 	}
 	opts := &transport.Options{
 		Last:         !cs.desc.ClientStreams,
-		IsCompressed: cs.cp != nil || cs.comp != nil,
+		IsCompressed: isCompressed,
 	}
 	err = a.t.Write(a.s, data, opts)
 	if err == nil {
@@ -701,16 +705,20 @@ func (ss *serverStream) SendMsg(m interface{}) (err error) {
 	if ss.statsHandler != nil {
 		outPayload = &stats.OutPayload{}
 	}
-	data, err := encode(ss.codec, m, ss.cp, outPayload, ss.comp)
+	data, err := encode(ss.codec, m, outPayload)
 	if err != nil {
 		return err
 	}
 	if len(data) > ss.maxSendMessageSize {
 		return status.Errorf(codes.ResourceExhausted, "trying to send message larger than max (%d vs. %d)", len(data), ss.maxSendMessageSize)
 	}
+	data, isCompressed, err := compress(data, ss.cp, ss.comp, outPayload)
+	if err != nil {
+		return err
+	}
 	opts := &transport.Options{
 		Last:         false,
-		IsCompressed: ss.cp != nil || ss.comp != nil,
+		IsCompressed: isCompressed,
 	}
 	if err := ss.t.Write(ss.s, data, opts); err != nil {
 		return toRPCErr(err)
diff --git a/test/end2end_test.go b/test/end2end_test.go
index ace57cb7..a452c44b 100644
--- a/test/end2end_test.go
+++ b/test/end2end_test.go
@@ -5923,7 +5923,7 @@ func TestMethodFromServerStream(t *testing.T) {
 
 	te.startServer(nil)
 	defer te.tearDown()
-	_ = te.clientConn().Invoke(context.Background(), testMethod, nil, nil)
+	_ = te.clientConn().Invoke(context.Background(), testMethod, &testpb.Empty{}, &testpb.Empty{})
 	if !ok || method != testMethod {
 		t.Fatalf("Invoke with method %q, got %q, %v, want %q, true", testMethod, method, ok, testMethod)
 	}