diff --git a/Lib/test/test_decimal.py b/Lib/test/test_decimal.py
index ec5db9fa423..99faf784b1c 100644
--- a/Lib/test/test_decimal.py
+++ b/Lib/test/test_decimal.py
@@ -2047,6 +2047,11 @@ 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)
+
     def test_implicit_context(self):
         Decimal = self.decimal.Decimal
         getcontext = self.decimal.getcontext
diff --git a/Misc/NEWS b/Misc/NEWS
index 2f2ed8967c1..e09e67d8ae4 100644
--- a/Misc/NEWS
+++ b/Misc/NEWS
@@ -80,6 +80,9 @@ Core and Builtins
 Library
 -------
 
+- Issue #16431: Use the type information when constructing a Decimal subtype
+  from a Decimal argument.
+
 - Issue #16350: zlib.Decompress.decompress() now accumulates data from
   successive calls after EOF in unused_data, instead of only saving the argument
   to the last call. Patch by Serhiy Storchaka.
diff --git a/Modules/_decimal/_decimal.c b/Modules/_decimal/_decimal.c
index 996f9da17be..0bc484f4ab1 100644
--- a/Modules/_decimal/_decimal.c
+++ b/Modules/_decimal/_decimal.c
@@ -2338,6 +2338,32 @@ PyDecType_FromFloat(PyTypeObject *type, PyObject *v,
     return dec;
 }
 
+/* Return a new PyDecObject (subtype) from a Decimal. */
+static PyObject *
+PyDecType_FromDecimalExact(PyTypeObject *type, PyObject *v, PyObject *context)
+{
+    PyObject *dec;
+    uint32_t status = 0;
+
+    if (type == &PyDec_Type) {
+        Py_INCREF(v);
+        return v;
+    }
+
+    dec = PyDecType_New(type);
+    if (dec == NULL) {
+        return NULL;
+    }
+
+    mpd_qcopy(MPD(dec), MPD(v), &status);
+    if (dec_addstatus(context, status)) {
+        Py_DECREF(dec);
+        return NULL;
+    }
+
+    return dec;
+}
+
 static PyObject *
 sequence_as_tuple(PyObject *v, PyObject *ex, const char *mesg)
 {
@@ -2642,8 +2668,7 @@ PyDecType_FromObjectExact(PyTypeObject *type, PyObject *v, PyObject *context)
         return PyDecType_FromSsizeExact(type, 0, context);
     }
     else if (PyDec_Check(v)) {
-        Py_INCREF(v);
-        return v;
+        return PyDecType_FromDecimalExact(type, v, context);
     }
     else if (PyUnicode_Check(v)) {
         return PyDecType_FromUnicodeExactWS(type, v, context);