diff --git a/include/pybind11/cast.h b/include/pybind11/cast.h
index 72b3a87fd7e..b208e51dec8 100644
--- a/include/pybind11/cast.h
+++ b/include/pybind11/cast.h
@@ -1524,6 +1524,37 @@ struct holder_helper {
     static auto get(const T &p) -> decltype(p.get()) { return p.get(); }
 };
 
+/// Another helper class for holders that helps construct derivative holders from
+/// the original holder
+template <typename T>
+struct holder_retriever {
+    static auto get_derivative_holder(const value_and_holder &v_h) -> decltype(v_h.template holder<T>()) {
+        return v_h.template holder<T>();
+    }
+};
+
+template <typename T>
+struct holder_retriever<std::shared_ptr<T>> {
+    struct shared_ptr_deleter {
+        object ref;
+        void operator()(T *) {}
+    };
+
+    static auto get_derivative_holder(const value_and_holder &v_h) -> std::shared_ptr<T> {
+        // The shared_ptr is always given to C++ code, so construct a new shared_ptr
+        // that is given a custom deleter. The custom deleter increments the python
+        // reference count to bind the python instance lifetime with the lifetime
+        // of the shared_ptr.
+        //
+        // This enables things like passing the last python reference of a subclass to a
+        // C++ function without the python reference dying.
+        //
+        // Reference cycles will cause a leak, but this is a limitation of shared_ptr
+        return std::shared_ptr<T>((T*)v_h.value_ptr(),
+            shared_ptr_deleter{reinterpret_borrow<object>((PyObject*)v_h.inst)});
+    }
+};
+
 /// Type caster for holder types like std::shared_ptr, etc.
 /// The SFINAE hook is provided to help work around the current lack of support
 /// for smart-pointer interoperability. Please consider it an implementation
@@ -1566,7 +1597,7 @@ struct copyable_holder_caster : public type_caster_base<type> {
     bool load_value(value_and_holder &&v_h) {
         if (v_h.holder_constructed()) {
             value = v_h.value_ptr();
-            holder = v_h.template holder<holder_type>();
+            holder = holder_retriever<holder_type>::get_derivative_holder(v_h);
             return true;
         } else {
             throw cast_error("Unable to cast from non-held to held instance (T& to Holder<T>) "
diff --git a/tests/test_smart_ptr.cpp b/tests/test_smart_ptr.cpp
index 59996edeb4d..e9a039bb3cd 100644
--- a/tests/test_smart_ptr.cpp
+++ b/tests/test_smart_ptr.cpp
@@ -397,4 +397,36 @@ TEST_SUBMODULE(smart_ptr, m) {
                 list.append(py::cast(e));
             return list;
         });
+
+    // For testing whether a python subclass of a C++ object dies when the
+    // last python reference is lost
+    struct SpBase {
+        // returns true if the base virtual function is called
+        virtual bool is_base_used() { return true; }
+
+        SpBase() = default;
+        SpBase(const SpBase&) = delete;
+        virtual ~SpBase() = default;
+    };
+
+    struct PySpBase : SpBase {
+        bool is_base_used() override { PYBIND11_OVERRIDE(bool, SpBase, is_base_used); }
+    };
+
+    struct SpBaseTester {
+        std::shared_ptr<SpBase> get_object() { return m_obj; }
+        void set_object(std::shared_ptr<SpBase> obj) { m_obj = obj; }
+        bool is_base_used() { return m_obj->is_base_used(); }
+        std::shared_ptr<SpBase> m_obj;
+    };
+
+    py::class_<SpBase, std::shared_ptr<SpBase>, PySpBase>(m, "SpBase")
+        .def(py::init<>())
+        .def("is_base_used", &SpBase::is_base_used);
+
+    py::class_<SpBaseTester>(m, "SpBaseTester")
+        .def(py::init<>())
+        .def("get_object", &SpBaseTester::get_object)
+        .def("set_object", &SpBaseTester::set_object)
+        .def("is_base_used", &SpBaseTester::is_base_used);
 }
diff --git a/tests/test_smart_ptr.py b/tests/test_smart_ptr.py
index 85f61a32236..691f273c088 100644
--- a/tests/test_smart_ptr.py
+++ b/tests/test_smart_ptr.py
@@ -83,6 +83,7 @@ def test_smart_ptr(capture):
             m.print_myobject3_4(o)
         assert capture == "MyObject3[{i}]\n".format(i=i) * 4
 
+    pytest.gc_collect()
     cstats = ConstructorStats.get(m.MyObject3)
     assert cstats.alive() == 1
     o = None
@@ -194,6 +195,7 @@ def test_shared_ptr_and_references():
     assert s.set_holder(holder_copy)
 
     del ref, copy, holder_ref, holder_copy, s
+    pytest.gc_collect()
     assert stats.alive() == 0
 
 
@@ -316,3 +318,47 @@ def test_shared_ptr_gc():
     pytest.gc_collect()
     for i, v in enumerate(el.get()):
         assert i == v.value()
+
+
+def test_shared_ptr_cpp_arg():
+    import weakref
+
+    class PyChild(m.SpBase):
+        def is_base_used(self):
+            return False
+
+    tester = m.SpBaseTester()
+
+    obj = PyChild()
+    objref = weakref.ref(obj)
+
+    tester.set_object(obj)
+    del obj
+    pytest.gc_collect()
+
+    # python reference is still around since C++ has it now
+    assert objref() is not None
+    assert tester.is_base_used() is False
+    assert tester.get_object() is objref()
+
+
+def test_shared_ptr_arg_identity():
+    import weakref
+
+    tester = m.SpBaseTester()
+
+    obj = m.SpBase()
+    objref = weakref.ref(obj)
+
+    tester.set_object(obj)
+    del obj
+    pytest.gc_collect()
+
+    # python reference is still around since C++ has it
+    assert objref() is not None
+    assert tester.get_object() is objref()
+
+    # python reference disappears once the C++ object releases it
+    tester.set_object(None)
+    pytest.gc_collect()
+    assert objref() is None