diff --git a/framework/CHANGELOG.md b/framework/CHANGELOG.md
index 610fd170dd..3544a66398 100644
--- a/framework/CHANGELOG.md
+++ b/framework/CHANGELOG.md
@@ -62,6 +62,7 @@ Yii Framework 2 Change Log
 - Bug #3989: Fixed yii\log\FileTarget::$rotateByCopy to avoid any rename (cebe)
 - Bug #3996: Traversing `Yii::$app->session` may cause a PHP error (qiangxue)
 - Bug #4020: OCI column detection did not work so gii and other things failed (Sanya1991)
+- Bug #4105: Html::dropDownlist options encodeSpaces was not applied to subgroups (MDMunir)
 - Bug #4123: Trace level in logger had no effect in Targets, traces where not logged (cebe)
 - Bug #4127: `CaptchaValidator` clientside error message wasn't formed properly (samdark)
 - Bug #4162: Fixed bug where schema name was not used in ’SHOW CREATE TABLE’ query in `yii\db\mysql\Schema` (stevekr)
diff --git a/framework/helpers/BaseHtml.php b/framework/helpers/BaseHtml.php
index 07c3bfa1ba..ee0b37f88c 100644
--- a/framework/helpers/BaseHtml.php
+++ b/framework/helpers/BaseHtml.php
@@ -1557,7 +1557,7 @@ class BaseHtml
             if (is_array($value)) {
                 $groupAttrs = isset($groups[$key]) ? $groups[$key] : [];
                 $groupAttrs['label'] = $key;
-                $attrs = ['options' => $options, 'groups' => $groups];
+                $attrs = ['options' => $options, 'groups' => $groups, 'encodeSpaces' => $encodeSpaces];
                 $content = static::renderSelectOptions($selection, $value, $attrs);
                 $lines[] = static::tag('optgroup', "\n" . $content . "\n", $groupAttrs);
             } else {