diff --git a/Misc/NEWS.d/next/Core and Builtins/2025-07-06-14-53-19.gh-issue-109700.KVNQQi.rst b/Misc/NEWS.d/next/Core and Builtins/2025-07-06-14-53-19.gh-issue-109700.KVNQQi.rst
new file mode 100644
index 00000000000000..a37f4a51050947
--- /dev/null
+++ b/Misc/NEWS.d/next/Core and Builtins/2025-07-06-14-53-19.gh-issue-109700.KVNQQi.rst
@@ -0,0 +1 @@
+Fix memory error handling in :c:func:`PyDict_SetDefault`.
diff --git a/Objects/dictobject.c b/Objects/dictobject.c
index baac54911f0371..69a69e13faefe6 100644
--- a/Objects/dictobject.c
+++ b/Objects/dictobject.c
@@ -4340,6 +4340,7 @@ dict_setdefault_ref_lock_held(PyObject *d, PyObject *key, PyObject *default_valu
if (result) {
*result = NULL;
}
+ return -1;
}
MAINTAIN_TRACKING(mp, key, value);
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