diff --git a/include/pybind11/pybind11.h b/include/pybind11/pybind11.h
index 61716ad820..2c4713d5e1 100644
--- a/include/pybind11/pybind11.h
+++ b/include/pybind11/pybind11.h
@@ -1392,11 +1392,17 @@ class class_ : public detail::generic_type {
         auto* tinfo = get_type_info();
         // TODO(eric.cousineau): Should relax this to not require a holder be constructed,
         // only that the holder itself be default (unique_ptr<>).
-        if (inst->owned || v_h.holder_constructed()) {
-            throw std::runtime_error("Derived Python object should live in C++");
+        if (inst->owned) {
+            throw std::runtime_error(
+                "reclaim_from_cpp: Python object already owned! Did you forget to explicitly use a "
+                "py::return_value_policy (e.g. reference or reference internal) when passing back "
+                "non-owned pointers of the C++ object?");
+        }
+        if (v_h.holder_constructed()) {
+            throw std::runtime_error("reclaim_from_cpp: Holder already exists - internal error?");
         }
         if (!external_holder_raw) {
-            throw std::runtime_error("Internal error - not external holder?");
+            throw std::runtime_error("reclaim_from_cpp: No external holder - internal error?");
         }
         // Is this valid?
         handle h(reinterpret_cast<PyObject*>(inst));
@@ -1425,7 +1431,7 @@ class class_ : public detail::generic_type {
                 break;
             }
             default: {
-                throw std::runtime_error("Unsupported load type");
+                throw std::runtime_error("reclaim_from_cpp: Unsupported load type");
             }
         }
         inst->owned = true;
@@ -1716,6 +1722,9 @@ class class_ : public detail::generic_type {
         // method? (Rather than a class method?)
         object del_orig = getattr(h_type, "__del__", none());
 
+        // Set reclaim method.
+        inst->reclaim_from_cpp = reclaim_from_cpp;
+
 #if defined(PYPY_VERSION)
         // PyPy will not execute an arbitrarily-added `__del__` method.
         // Later version of PyPy throw an error if this happens.
diff --git a/tests/test_smart_ptr.cpp b/tests/test_smart_ptr.cpp
index f7c46339c0..b4e2c195c7 100644
--- a/tests/test_smart_ptr.cpp
+++ b/tests/test_smart_ptr.cpp
@@ -462,4 +462,27 @@ TEST_SUBMODULE(smart_ptr, m) {
         [](std::shared_ptr<SharedPtrHeld> obj) {
             return obj != nullptr && obj->value == 10;
         });
+
+    // Test passing ownership of registered, but unowned, C++ instances back to
+    // Python. This happens when a raw pointer is passed first, and then
+    // ownership is transfered.
+    struct UniquePtrHeldContainer {
+        UniquePtrHeldContainer() {
+            value_.reset(new UniquePtrHeld(10));
+        }
+        UniquePtrHeld* get() const {
+            return value_.get();
+        }
+        using Ptr = std::unique_ptr<UniquePtrHeld>;
+        Ptr reset(Ptr to) {
+            Ptr from = std::move(value_);
+            value_ = std::move(to);
+            return from;
+        }
+        std::unique_ptr<UniquePtrHeld> value_;
+    };
+    py::class_<UniquePtrHeldContainer>(m, "UniquePtrHeldContainer")
+        .def(py::init())
+        .def("get", &UniquePtrHeldContainer::get, py::return_value_policy::reference_internal)
+        .def("reset", &UniquePtrHeldContainer::reset);
 }
diff --git a/tests/test_smart_ptr.py b/tests/test_smart_ptr.py
index a79a84a9ac..63d9171b59 100644
--- a/tests/test_smart_ptr.py
+++ b/tests/test_smart_ptr.py
@@ -335,3 +335,17 @@ def test_unique_ptr_overload_fail():
     out = m.unique_ptr_overload(obj, m.SecondT())
     assert out["obj"] is obj
     assert out["overload"] == 2
+
+
+def test_unique_ptr_held_container_from_cpp():
+
+    def check_reset(obj_new):
+        c = m.UniquePtrHeldContainer()
+        obj = c.get()
+        assert obj is not None
+        obj_ref = c.reset(obj_new)
+        assert obj is obj_ref
+        assert c.get() is obj_new
+
+    check_reset(obj_new=m.UniquePtrHeld(10))
+    check_reset(obj_new=None)