diff --git a/Lib/dataclasses.py b/Lib/dataclasses.py
index a4afd50376b..d6164324914 100644
--- a/Lib/dataclasses.py
+++ b/Lib/dataclasses.py
@@ -574,17 +574,18 @@ def _get_field(cls, a_name, a_type):
 
 def _find_fields(cls):
     # Return a list of Field objects, in order, for this class (and no
-    #  base classes).  Fields are found from __annotations__ (which is
-    #  guaranteed to be ordered).  Default values are from class
-    #  attributes, if a field has a default.  If the default value is
-    #  a Field(), then it contains additional info beyond (and
-    #  possibly including) the actual default value.  Pseudo-fields
-    #  ClassVars and InitVars are included, despite the fact that
-    #  they're not real fields.  That's dealt with later.
+    #  base classes).  Fields are found from the class dict's
+    #  __annotations__ (which is guaranteed to be ordered).  Default
+    #  values are from class attributes, if a field has a default.  If
+    #  the default value is a Field(), then it contains additional
+    #  info beyond (and possibly including) the actual default value.
+    #  Pseudo-fields ClassVars and InitVars are included, despite the
+    #  fact that they're not real fields.  That's dealt with later.
 
-    annotations = getattr(cls, '__annotations__', {})
-    return [_get_field(cls, a_name, a_type)
-            for a_name, a_type in annotations.items()]
+    # If __annotations__ isn't present, then this class adds no new
+    #  annotations.
+    annotations = cls.__dict__.get('__annotations__', {})
+    return [_get_field(cls, name, type) for name, type in annotations.items()]
 
 
 def _set_new_attribute(cls, name, value):
diff --git a/Lib/test/test_dataclasses.py b/Lib/test/test_dataclasses.py
index db03ec1925f..9b5aad25745 100755
--- a/Lib/test/test_dataclasses.py
+++ b/Lib/test/test_dataclasses.py
@@ -1147,6 +1147,55 @@ class TestCase(unittest.TestCase):
         C().x
         self.assertEqual(factory.call_count, 2)
 
+    def test_default_factory_derived(self):
+        # See bpo-32896.
+        @dataclass
+        class Foo:
+            x: dict = field(default_factory=dict)
+
+        @dataclass
+        class Bar(Foo):
+            y: int = 1
+
+        self.assertEqual(Foo().x, {})
+        self.assertEqual(Bar().x, {})
+        self.assertEqual(Bar().y, 1)
+
+        @dataclass
+        class Baz(Foo):
+            pass
+        self.assertEqual(Baz().x, {})
+
+    def test_intermediate_non_dataclass(self):
+        # Test that an intermediate class that defines
+        #  annotations does not define fields.
+
+        @dataclass
+        class A:
+            x: int
+
+        class B(A):
+            y: int
+
+        @dataclass
+        class C(B):
+            z: int
+
+        c = C(1, 3)
+        self.assertEqual((c.x, c.z), (1, 3))
+
+        # .y was not initialized.
+        with self.assertRaisesRegex(AttributeError,
+                                    'object has no attribute'):
+            c.y
+
+        # And if we again derive a non-dataclass, no fields are added.
+        class D(C):
+            t: int
+        d = D(4, 5)
+        self.assertEqual((d.x, d.z), (4, 5))
+
+
     def x_test_classvar_default_factory(self):
         # XXX: it's an error for a ClassVar to have a factory function
         @dataclass
diff --git a/Misc/NEWS.d/next/Library/2018-03-20-20-53-21.bpo-32896.ewW3Ln.rst b/Misc/NEWS.d/next/Library/2018-03-20-20-53-21.bpo-32896.ewW3Ln.rst
new file mode 100644
index 00000000000..8363da4667a
--- /dev/null
+++ b/Misc/NEWS.d/next/Library/2018-03-20-20-53-21.bpo-32896.ewW3Ln.rst
@@ -0,0 +1,2 @@
+Fix an error where subclassing a dataclass with a field that uses a
+default_factory would generate an incorrect class.