diff --git a/Lib/test/test_decimal.py b/Lib/test/test_decimal.py
index ea18c6393e8..dd4c73cdf14 100644
--- a/Lib/test/test_decimal.py
+++ b/Lib/test/test_decimal.py
@@ -2029,7 +2029,7 @@ class UsabilityTest(unittest.TestCase):
         Decimal = self.decimal.Decimal
 
         class MyDecimal(Decimal):
-            pass
+            y = None
 
         d1 = MyDecimal(1)
         d2 = MyDecimal(2)
@@ -2047,14 +2047,29 @@ class UsabilityTest(unittest.TestCase):
         self.assertIs(type(d), MyDecimal)
         self.assertEqual(d, d1)
 
-        a = Decimal('1.0')
-        b = MyDecimal(a)
-        self.assertIs(type(b), MyDecimal)
-        self.assertEqual(a, b)
+        # Decimal(Decimal)
+        d = Decimal('1.0')
+        x = Decimal(d)
+        self.assertIs(type(x), Decimal)
+        self.assertEqual(x, d)
 
-        c = Decimal(b)
-        self.assertIs(type(c), Decimal)
-        self.assertEqual(a, c)
+        # MyDecimal(Decimal)
+        m = MyDecimal(d)
+        self.assertIs(type(m), MyDecimal)
+        self.assertEqual(m, d)
+        self.assertIs(m.y, None)
+
+        # Decimal(MyDecimal)
+        x = Decimal(m)
+        self.assertIs(type(x), Decimal)
+        self.assertEqual(x, d)
+
+        # MyDecimal(MyDecimal)
+        m.y = 9
+        x = MyDecimal(m)
+        self.assertIs(type(x), MyDecimal)
+        self.assertEqual(x, d)
+        self.assertIs(x.y, None)
 
     def test_implicit_context(self):
         Decimal = self.decimal.Decimal
diff --git a/Modules/_decimal/_decimal.c b/Modules/_decimal/_decimal.c
index 0e1d3044cad..e951ded5fff 100644
--- a/Modules/_decimal/_decimal.c
+++ b/Modules/_decimal/_decimal.c
@@ -2338,14 +2338,14 @@ PyDecType_FromFloat(PyTypeObject *type, PyObject *v,
     return dec;
 }
 
-/* Return a new PyDecObject (subtype) from a Decimal. */
+/* Return a new PyDecObject or a subtype from a Decimal. */
 static PyObject *
 PyDecType_FromDecimalExact(PyTypeObject *type, PyObject *v, PyObject *context)
 {
     PyObject *dec;
     uint32_t status = 0;
 
-    if (type == Py_TYPE(v)) {
+    if (type == &PyDec_Type && PyDec_CheckExact(v)) {
         Py_INCREF(v);
         return v;
     }