diff --git a/Lib/test/test_dict.py b/Lib/test/test_dict.py
index 3104cbc66cb115..69f1a098920b94 100644
--- a/Lib/test/test_dict.py
+++ b/Lib/test/test_dict.py
@@ -338,17 +338,34 @@ def __setitem__(self, key, value):
         self.assertRaises(Exc, baddict2.fromkeys, [1])
 
         # test fast path for dictionary inputs
+        res = dict(zip(range(6), [0]*6))
         d = dict(zip(range(6), range(6)))
-        self.assertEqual(dict.fromkeys(d, 0), dict(zip(range(6), [0]*6)))
-
+        self.assertEqual(dict.fromkeys(d, 0), res)
+        # test fast path for set inputs
+        d = set(range(6))
+        self.assertEqual(dict.fromkeys(d, 0), res)
+        # test slow path for other iterable inputs
+        d = list(range(6))
+        self.assertEqual(dict.fromkeys(d, 0), res)
+
+        # test fast path when object's constructor returns large non-empty dict
         class baddict3(dict):
             def __new__(cls):
                 return d
-        d = {i : i for i in range(10)}
+        d = {i : i for i in range(1000)}
         res = d.copy()
         res.update(a=None, b=None, c=None)
         self.assertEqual(baddict3.fromkeys({"a", "b", "c"}), res)
 
+        # test slow path when object is a proper subclass of dict
+        class baddict4(dict):
+            def __init__(self):
+                dict.__init__(self, d)
+        d = {i : i for i in range(1000)}
+        res = d.copy()
+        res.update(a=None, b=None, c=None)
+        self.assertEqual(baddict4.fromkeys({"a", "b", "c"}), res)
+
     def test_copy(self):
         d = {1: 1, 2: 2, 3: 3}
         self.assertIsNot(d.copy(), d)
diff --git a/Misc/NEWS.d/next/Core_and_Builtins/2025-05-08-13-48-02.gh-issue-132762.tKbygC.rst b/Misc/NEWS.d/next/Core_and_Builtins/2025-05-08-13-48-02.gh-issue-132762.tKbygC.rst
new file mode 100644
index 00000000000000..80b830ebd786f3
--- /dev/null
+++ b/Misc/NEWS.d/next/Core_and_Builtins/2025-05-08-13-48-02.gh-issue-132762.tKbygC.rst
@@ -0,0 +1 @@
+:meth:`~dict.fromkeys` no longer loops forever when adding a small set of keys to a large base dict. Patch by Angela Liss.
diff --git a/Objects/dictobject.c b/Objects/dictobject.c
index 59b0cf1ce7d422..32356f0634db15 100644
--- a/Objects/dictobject.c
+++ b/Objects/dictobject.c
@@ -3178,9 +3178,10 @@ dict_set_fromkeys(PyInterpreterState *interp, PyDictObject *mp,
     Py_ssize_t pos = 0;
     PyObject *key;
     Py_hash_t hash;
-
-    if (dictresize(interp, mp,
-                    estimate_log2_keysize(PySet_GET_SIZE(iterable)), 0)) {
+    uint8_t new_size = Py_MAX(
+        estimate_log2_keysize(PySet_GET_SIZE(iterable)),
+        DK_LOG_SIZE(mp->ma_keys));
+    if (dictresize(interp, mp, new_size, 0)) {
         Py_DECREF(mp);
         return NULL;
     }