diff --git a/cty/function/stdlib/set.go b/cty/function/stdlib/set.go
index ce1a52ee..37eab999 100644
--- a/cty/function/stdlib/set.go
+++ b/cty/function/stdlib/set.go
@@ -167,7 +167,7 @@ func setOperationReturnType(args []cty.Value) (ret cty.Type, err error) {
 
 		// Do not unify types for empty dynamic pseudo typed collections. These
 		// will always convert to any other concrete type.
-		if arg.LengthInt() == 0 && ty.Equals(cty.DynamicPseudoType) {
+		if arg.IsKnown() && arg.LengthInt() == 0 && ty.Equals(cty.DynamicPseudoType) {
 			continue
 		}
 
diff --git a/cty/function/stdlib/set_test.go b/cty/function/stdlib/set_test.go
index bb593f78..9aec2611 100644
--- a/cty/function/stdlib/set_test.go
+++ b/cty/function/stdlib/set_test.go
@@ -76,6 +76,13 @@ func TestSetUnion(t *testing.T) {
 			},
 			cty.SetValEmpty(cty.DynamicPseudoType),
 		},
+		{
+			[]cty.Value{
+				cty.SetVal([]cty.Value{cty.StringVal("5")}),
+				cty.UnknownVal(cty.Set(cty.Number)),
+			},
+			cty.UnknownVal(cty.Set(cty.String)),
+		},
 	}
 
 	for _, test := range tests {
@@ -159,6 +166,13 @@ func TestSetIntersection(t *testing.T) {
 			},
 			cty.SetValEmpty(cty.DynamicPseudoType),
 		},
+		{
+			[]cty.Value{
+				cty.SetVal([]cty.Value{cty.StringVal("5")}),
+				cty.UnknownVal(cty.Set(cty.Number)),
+			},
+			cty.UnknownVal(cty.Set(cty.String)),
+		},
 	}
 
 	for _, test := range tests {
@@ -226,6 +240,11 @@ func TestSetSubtract(t *testing.T) {
 			cty.SetValEmpty(cty.DynamicPseudoType),
 			cty.SetValEmpty(cty.DynamicPseudoType),
 		},
+		{
+			cty.SetVal([]cty.Value{cty.StringVal("5")}),
+			cty.UnknownVal(cty.Set(cty.Number)),
+			cty.UnknownVal(cty.Set(cty.String)),
+		},
 	}
 
 	for _, test := range tests {