diff --git a/lib/memcache.ex b/lib/memcache.ex
index a223c2e..cdc24f7 100644
--- a/lib/memcache.ex
+++ b/lib/memcache.ex
@@ -114,12 +114,28 @@ defmodule Memcache do
     connection_options = Keyword.merge(@default_opts, connection_options)
     |> Keyword.update!(:coder, &normalize_coder/1)
     state = connection_options |> Keyword.take(extra_opts) |> Enum.into(%{})
-    {:ok, pid} = Connection.start_link(Keyword.drop(connection_options, extra_opts), options)
+
+    {:ok, pid} = connection_options
+      |> add_flags
+      |> Keyword.drop(extra_opts)
+      |> Connection.start_link(options)
+
     state = Map.put(state, :connection, pid)
     Registry.associate(pid, state)
+
     {:ok, pid}
   end
 
+  # When we're using a serializer/coder, then we need to let Connection know to
+  # set the serialization bit when writing keys. For Dalli compat.
+  defp add_flags(opts) do
+    flags = case opts[:coder] do
+      {Memcache.Coder.Raw, _} -> 0
+      _ -> 1
+    end
+    Keyword.put(opts, :flags, flags)
+  end
+
   @doc """
   Closes the connection to the memcached server.
   """
diff --git a/lib/memcache/connection.ex b/lib/memcache/connection.ex
index d42a830..2993260 100644
--- a/lib/memcache/connection.ex
+++ b/lib/memcache/connection.ex
@@ -244,7 +244,8 @@ defmodule Memcache.Connection do
   end
 
   defp send_and_receive(%State{ sock: sock } = s, from, command, args, opts) do
-    packet = serialize(command, args)
+    flags = Keyword.get(s.opts, :flags, 0)
+    packet = serialize(command, args, 0, flags)
     case :gen_tcp.send(sock, packet) do
       :ok ->
         s = enqueue_receiver(s, from)
@@ -255,7 +256,8 @@ defmodule Memcache.Connection do
   end
 
   defp send_and_receive_quiet(%State{ sock: sock } = s, from, commands) do
-    { packet, commands, i } = Enum.reduce(commands, { [], [], 1 }, &accumulate_commands/2)
+    flags = Keyword.get(s.opts, :flags, 0)
+    { packet, commands, i } = Enum.reduce(commands, { [], [], 1 }, &accumulate_commands(&1, &2, flags))
     packet = [packet | serialize(:NOOP, [], i)]
     case :gen_tcp.send(sock, packet) do
       :ok ->
@@ -271,11 +273,11 @@ defmodule Memcache.Connection do
     %{state| receiver_queue: receiver_queue}
   end
 
-  defp accumulate_commands({ command, args }, { packet, commands, i }) do
-    { [packet | serialize(command, args, i)], [{ i, command, args, %{cas: false} } | commands], i + 1 }
+  defp accumulate_commands({ command, args }, { packet, commands, i }, flags) do
+    { [packet | serialize(command, args, i, flags)], [{ i, command, args, %{cas: false} } | commands], i + 1 }
   end
-  defp accumulate_commands({ command, args, options }, { packet, commands, i }) do
-    { [packet | serialize(command, args, i)], [{ i, command, args, %{cas: Keyword.get(options, :cas, false)}} | commands], i + 1 }
+  defp accumulate_commands({ command, args, options }, { packet, commands, i }, flags) do
+    { [packet | serialize(command, args, i, flags)], [{ i, command, args, %{cas: Keyword.get(options, :cas, false)}} | commands], i + 1 }
   end
 
   defp get_backoff(s) do
@@ -352,7 +354,33 @@ defmodule Memcache.Connection do
     end
   end
 
-  defp serialize(command, args, opaque \\ 0) do
+  defp serialize(command, args), do: serialize(command, args, 0)
+
+  defp serialize(command, args, opaque) do
     apply(Protocol, :to_binary, [command | [opaque | args]])
   end
+
+  # For Dalli compatibility, we need to set the first bit of flags to 1 when
+  # using a coder (serializer) with the following commands. We've stored flags
+  # in our state and now just need to use it when serializing the command.
+  defp serialize(command, args, opaque, flags)
+    when command == :SET
+    when command == :SETQ
+    when command == :ADD
+    when command == :ADDQ
+    when command == :REPLACE
+    when command == :REPLACEQ do
+
+    # to_binary for the above commands can default up to three args: cas, expiry, flags.
+    # And since flags is the last arg, we have to account for that here.
+    args = case length(args) do
+      2 -> args ++ [0, 0, flags]
+      3 -> args ++ [0, flags]
+      4 -> args ++ [flags]
+    end
+
+    serialize(command, args, opaque)
+  end
+
+  defp serialize(command, args, opaque, _flags), do: serialize(command, args, opaque)
 end