diff --git a/docs/guide/db-dao.md b/docs/guide/db-dao.md
index b7355d1a9a..98351e8853 100644
--- a/docs/guide/db-dao.md
+++ b/docs/guide/db-dao.md
@@ -107,6 +107,18 @@ and [[yii\db\Connection::password|password]]. Please refer to [[yii\db\Connectio
 > ],
 > ```
 
+For MS SQL Server additional connection option is needed for proper binary data handling:
+
+```php
+'db' => [
+ 'class' => 'yii\db\Connection',
+    'dsn' => 'sqlsrv:Server=localhost;Database=mydatabase',
+    'attributes' => [
+        \PDO::SQLSRV_ATTR_ENCODING => \PDO::SQLSRV_ENCODING_SYSTEM
+    ]
+],
+```
+
 
 ## Executing SQL Queries <span id="executing-sql-queries"></span>
 
diff --git a/framework/CHANGELOG.md b/framework/CHANGELOG.md
index 6db7a93c30..17d35cd0f5 100644
--- a/framework/CHANGELOG.md
+++ b/framework/CHANGELOG.md
@@ -18,6 +18,7 @@ Yii Framework 2 Change Log
 - Enh #17792: Added support for `aria` attributes to `yii\helpers\BaseHtml::renderTagAttributes()` (brandonkelly)
 - Bug #17793: Fix inconsistent handling of null `data` attribute values in `yii\helpers\BaseHtml::renderTagAttributes()` (brandonkelly)
 - Bug #17300: Fix class-level Event handling with wildcards (Toma91)
+- Bug #17635: Fix varbinary data handling for MSSQL (toatall)
 
 
 2.0.31 December 18, 2019
diff --git a/framework/db/mssql/QueryBuilder.php b/framework/db/mssql/QueryBuilder.php
index 350a9c8729..12a5d97a0c 100644
--- a/framework/db/mssql/QueryBuilder.php
+++ b/framework/db/mssql/QueryBuilder.php
@@ -426,7 +426,8 @@ class QueryBuilder extends \yii\db\QueryBuilder
                 // @see https://github.com/yiisoft/yii2/issues/12599
                 if (isset($columnSchemas[$name]) && $columnSchemas[$name]->type === Schema::TYPE_BINARY && $columnSchemas[$name]->dbType === 'varbinary' && (is_string($value) || $value === null)) {
                     $phName = $this->bindParam($value, $params);
-                    $columns[$name] = new Expression("CONVERT(VARBINARY, $phName)", $params);
+                    // @see https://github.com/yiisoft/yii2/issues/12599                    
+                    $columns[$name] = new Expression("CONVERT(VARBINARY(MAX), $phName)", $params);
                 }
             }
         }