By default jqGrid is configured to work with utf-8 charset, but in some cases this is not applicable for existing legacy aplications. In order to work with charset diffrent than utf-8, you need to change is the $encoding variable.

However, the are a few steps that you need to do in addition to that to make sure everything works as expected:

1. In the html or php file where the grid is constructed, the appropriate meta tag should be set.

...
<head>
<meta http-equiv="Content-Type" content="text/html; charset=windows-1251" />
...
</head>
...

2. The connection command to the database should be set in order characters to be displayed properly

For MySQL and PostgreSQL this is a 

SET NAMES 'charset'
This command should be executed before interacting with the grid.

For Microsoft SQL Server the connection info string should contain the charset setting as well:

<?php
// Example connection
$connectionInfo = array("UID" => 'user', "PWD" => 'password',"Database"=>"test", "CharacterSet" => "windows-1251", "ReturnDatesAsStrings" => true);
$serverName = "localhost\SQLEXPRESS";
$conn = sqlsrv_connect( $serverName, $connectionInfo);
...
// include the jqGrid Class
require_once "php/jqGrid.php";
// include the SQL Server driver class
require_once "php/jqGridSqlsrv.php";
...
?>

3. And at end we should set $encoding variable in the grid. When this command is set the grid executes a PHP header function to send the appropriate header to the browser and more importantly - in case of 'json' output uses his own encode (when charset is <> utf-8). This is need because the built-in PHP functions for json encoding and decoding are utf-8 compatible only.

Related methods
exportToExcel
queryGrid
querySubGrid
editGrid
renderGrid

Related variable(s)
encoding

Again we ilustrate this with example. Let suppose that the database is encoded in windows-1251 charset. Using our example

Changes in the html file 

<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd">
<html xmlns="http://www.w3.org/1999/xhtml" xml:lang="en" lang="en">
<head>
<meta http-equiv="Content-Type" content="text/html; charset=windows-1251" />
<title>PHP jqGrid Class Example</title> 
...

The changes in the PHP script:

<?php
require_once 'jq-config.php';
// include the jqGrid Class
require_once "php/jqGrid.php";
// include the PDO driver class
require_once "php/jqGridPdo.php";
// Connection to the server
$conn = new PDO(DB_DSN,DB_USER,DB_PASSWORD);

// perform the set names command
$conn->query("SET NAMES cp1251");


// Create the jqGrid instance
$grid = new jqGrid($conn);

// Set the encoding
$grid->encoding = "windows-1251";

// Write the SQL Query
$grid->SelectCommand = 'SELECT OrderID, OrderDate, CustomerID, Freight, ShipName FROM orders';
$grid->dataType = "json";
$grid->queryGrid();
?>