diff --git a/Lib/test/test_set.py b/Lib/test/test_set.py
index dedd1fb5e59..49bdec34454 100644
--- a/Lib/test/test_set.py
+++ b/Lib/test/test_set.py
@@ -468,6 +468,16 @@ class SetSubclass(set):
 class TestSetSubclass(TestSet):
     thetype = SetSubclass
 
+class SetSubclassWithKeywordArgs(set):
+    def __init__(self, iterable=[], newarg=None):
+        set.__init__(self, iterable)
+
+class TestSetSubclassWithKeywordArgs(TestSet):
+    
+    def test_keywords_in_subclass(self):
+        'SF bug #1486663 -- this used to erroneously raise a TypeError'
+        SetSubclassWithKeywordArgs(newarg=1)
+
 class TestFrozenSet(TestJointOps):
     thetype = frozenset
 
@@ -1450,6 +1460,7 @@ def test_main(verbose=None):
     test_classes = (
         TestSet,
         TestSetSubclass,
+        TestSetSubclassWithKeywordArgs,        
         TestFrozenSet,
         TestFrozenSetSubclass,
         TestSetOfSets,
diff --git a/Objects/setobject.c b/Objects/setobject.c
index 507a07bdcc7..f038ee3fdeb 100644
--- a/Objects/setobject.c
+++ b/Objects/setobject.c
@@ -1004,7 +1004,7 @@ frozenset_new(PyTypeObject *type, PyObject *args, PyObject *kwds)
 {
 	PyObject *iterable = NULL, *result;
 
-	if (!_PyArg_NoKeywords("frozenset()", kwds))
+	if (type == &PyFrozenSet_Type && !_PyArg_NoKeywords("frozenset()", kwds))
 		return NULL;
 
 	if (!PyArg_UnpackTuple(args, type->tp_name, 0, 1, &iterable))
@@ -1048,7 +1048,7 @@ PySet_Fini(void)
 static PyObject *
 set_new(PyTypeObject *type, PyObject *args, PyObject *kwds)
 {
-	if (!_PyArg_NoKeywords("set()", kwds))
+	if (type == &PySet_Type && !_PyArg_NoKeywords("set()", kwds))
 		return NULL;
 	
 	return make_new_set(type, NULL);