diff --git a/src/ast/ddl.rs b/src/ast/ddl.rs
index d6da8368e..261c51b5a 100644
--- a/src/ast/ddl.rs
+++ b/src/ast/ddl.rs
@@ -3522,6 +3522,28 @@ impl fmt::Display for CreateDomain {
     }
 }
 
+/// The return type of a `CREATE FUNCTION` statement.
+#[derive(Debug, Clone, PartialEq, PartialOrd, Eq, Ord, Hash)]
+#[cfg_attr(feature = "serde", derive(Serialize, Deserialize))]
+#[cfg_attr(feature = "visitor", derive(Visit, VisitMut))]
+pub enum FunctionReturnType {
+    /// `RETURNS <type>`
+    DataType(DataType),
+    /// `RETURNS SETOF <type>`
+    ///
+    /// [PostgreSQL](https://www.postgresql.org/docs/current/sql-createfunction.html)
+    SetOf(DataType),
+}
+
+impl fmt::Display for FunctionReturnType {
+    fn fmt(&self, f: &mut fmt::Formatter) -> fmt::Result {
+        match self {
+            FunctionReturnType::DataType(data_type) => write!(f, "{data_type}"),
+            FunctionReturnType::SetOf(data_type) => write!(f, "SETOF {data_type}"),
+        }
+    }
+}
+
 #[derive(Debug, Clone, PartialEq, PartialOrd, Eq, Ord, Hash)]
 #[cfg_attr(feature = "serde", derive(Serialize, Deserialize))]
 #[cfg_attr(feature = "visitor", derive(Visit, VisitMut))]
@@ -3542,7 +3564,7 @@ pub struct CreateFunction {
     /// List of arguments for the function.
     pub args: Option<Vec<OperateFunctionArg>>,
     /// The return type of the function.
-    pub return_type: Option<DataType>,
+    pub return_type: Option<FunctionReturnType>,
     /// The expression that defines the function.
     ///
     /// Examples:
diff --git a/src/ast/mod.rs b/src/ast/mod.rs
index e201f7842..3bdf1b751 100644
--- a/src/ast/mod.rs
+++ b/src/ast/mod.rs
@@ -72,13 +72,13 @@ pub use self::ddl::{
     CreatePolicyCommand, CreatePolicyType, CreateTable, CreateTrigger, CreateView, Deduplicate,
     DeferrableInitial, DistStyle, DropBehavior, DropExtension, DropFunction, DropOperator,
     DropOperatorClass, DropOperatorFamily, DropOperatorSignature, DropPolicy, DropTrigger,
-    ForValues, GeneratedAs, GeneratedExpressionMode, IdentityParameters, IdentityProperty,
-    IdentityPropertyFormatKind, IdentityPropertyKind, IdentityPropertyOrder, IndexColumn,
-    IndexOption, IndexType, KeyOrIndexDisplay, Msck, NullsDistinctOption, OperatorArgTypes,
-    OperatorClassItem, OperatorFamilyDropItem, OperatorFamilyItem, OperatorOption, OperatorPurpose,
-    Owner, Partition, PartitionBoundValue, ProcedureParam, ReferentialAction, RenameTableNameKind,
-    ReplicaIdentity, TagsColumnOption, TriggerObjectKind, Truncate,
-    UserDefinedTypeCompositeAttributeDef, UserDefinedTypeInternalLength,
+    ForValues, FunctionReturnType, GeneratedAs, GeneratedExpressionMode, IdentityParameters,
+    IdentityProperty, IdentityPropertyFormatKind, IdentityPropertyKind, IdentityPropertyOrder,
+    IndexColumn, IndexOption, IndexType, KeyOrIndexDisplay, Msck, NullsDistinctOption,
+    OperatorArgTypes, OperatorClassItem, OperatorFamilyDropItem, OperatorFamilyItem,
+    OperatorOption, OperatorPurpose, Owner, Partition, PartitionBoundValue, ProcedureParam,
+    ReferentialAction, RenameTableNameKind, ReplicaIdentity, TagsColumnOption, TriggerObjectKind,
+    Truncate, UserDefinedTypeCompositeAttributeDef, UserDefinedTypeInternalLength,
     UserDefinedTypeRangeOption, UserDefinedTypeRepresentation, UserDefinedTypeSqlDefinitionOption,
     UserDefinedTypeStorage, ViewColumnDef,
 };
diff --git a/src/keywords.rs b/src/keywords.rs
index 9ea85fd3a..65cff9c10 100644
--- a/src/keywords.rs
+++ b/src/keywords.rs
@@ -936,6 +936,7 @@ define_keywords!(
     SESSION_USER,
     SET,
     SETERROR,
+    SETOF,
     SETS,
     SETTINGS,
     SHARE,
diff --git a/src/parser/mod.rs b/src/parser/mod.rs
index 274449ff7..57cdd1867 100644
--- a/src/parser/mod.rs
+++ b/src/parser/mod.rs
@@ -5581,7 +5581,7 @@ impl<'a> Parser<'a> {
         self.expect_token(&Token::RParen)?;
 
         let return_type = if self.parse_keyword(Keyword::RETURNS) {
-            Some(self.parse_data_type()?)
+            Some(self.parse_function_return_type()?)
         } else {
             None
         };
@@ -5761,7 +5761,7 @@ impl<'a> Parser<'a> {
         let (name, args) = self.parse_create_function_name_and_params()?;
 
         let return_type = if self.parse_keyword(Keyword::RETURNS) {
-            Some(self.parse_data_type()?)
+            Some(self.parse_function_return_type()?)
         } else {
             None
         };
@@ -5864,11 +5864,11 @@ impl<'a> Parser<'a> {
             })
         })?;
 
-        let return_type = if return_table.is_some() {
-            return_table
-        } else {
-            Some(self.parse_data_type()?)
+        let data_type = match return_table {
+            Some(table_type) => table_type,
+            None => self.parse_data_type()?,
         };
+        let return_type = Some(FunctionReturnType::DataType(data_type));
 
         let _ = self.parse_keyword(Keyword::AS);
 
@@ -5920,6 +5920,14 @@ impl<'a> Parser<'a> {
         })
     }
 
+    fn parse_function_return_type(&mut self) -> Result<FunctionReturnType, ParserError> {
+        if self.parse_keyword(Keyword::SETOF) {
+            Ok(FunctionReturnType::SetOf(self.parse_data_type()?))
+        } else {
+            Ok(FunctionReturnType::DataType(self.parse_data_type()?))
+        }
+    }
+
     fn parse_create_function_name_and_params(
         &mut self,
     ) -> Result<(ObjectName, Vec<OperateFunctionArg>), ParserError> {
@@ -8561,7 +8569,7 @@ impl<'a> Parser<'a> {
         }
     }
 
-    /// Parse a single [PartitionBoundValue].
+    /// Parse a single partition bound value (MINVALUE, MAXVALUE, or expression).
     fn parse_partition_bound_value(&mut self) -> Result<PartitionBoundValue, ParserError> {
         if self.parse_keyword(Keyword::MINVALUE) {
             Ok(PartitionBoundValue::MinValue)
diff --git a/tests/sqlparser_bigquery.rs b/tests/sqlparser_bigquery.rs
index a6b0906ff..bfc8f95e7 100644
--- a/tests/sqlparser_bigquery.rs
+++ b/tests/sqlparser_bigquery.rs
@@ -2289,7 +2289,7 @@ fn test_bigquery_create_function() {
                 Ident::new("myfunction"),
             ]),
             args: Some(vec![OperateFunctionArg::with_name("x", DataType::Float64),]),
-            return_type: Some(DataType::Float64),
+            return_type: Some(FunctionReturnType::DataType(DataType::Float64)),
             function_body: Some(CreateFunctionBody::AsAfterOptions(Expr::Value(
                 number("42").with_empty_span()
             ))),
diff --git a/tests/sqlparser_mssql.rs b/tests/sqlparser_mssql.rs
index da6ecace6..bb8bed2a5 100644
--- a/tests/sqlparser_mssql.rs
+++ b/tests/sqlparser_mssql.rs
@@ -255,7 +255,7 @@ fn parse_create_function() {
                     default_expr: None,
                 },
             ]),
-            return_type: Some(DataType::Int(None)),
+            return_type: Some(FunctionReturnType::DataType(DataType::Int(None))),
             function_body: Some(CreateFunctionBody::AsBeginEnd(BeginEndStatements {
                 begin_token: AttachedToken::empty(),
                 statements: vec![Statement::Return(ReturnStatement {
@@ -430,7 +430,7 @@ fn parse_create_function_parameter_default_values() {
                 data_type: DataType::Int(None),
                 default_expr: Some(Expr::Value((number("42")).with_empty_span())),
             },]),
-            return_type: Some(DataType::Int(None)),
+            return_type: Some(FunctionReturnType::DataType(DataType::Int(None))),
             function_body: Some(CreateFunctionBody::AsBeginEnd(BeginEndStatements {
                 begin_token: AttachedToken::empty(),
                 statements: vec![Statement::Return(ReturnStatement {
diff --git a/tests/sqlparser_postgres.rs b/tests/sqlparser_postgres.rs
index 60aca14b3..a5d55df04 100644
--- a/tests/sqlparser_postgres.rs
+++ b/tests/sqlparser_postgres.rs
@@ -4441,7 +4441,7 @@ $$"#;
                     DataType::Varchar(None),
                 ),
             ]),
-            return_type: Some(DataType::Boolean),
+            return_type: Some(FunctionReturnType::DataType(DataType::Boolean)),
             language: Some("plpgsql".into()),
             behavior: None,
             called_on_null: None,
@@ -4484,7 +4484,7 @@ $$"#;
                     DataType::Int(None)
                 )
             ]),
-            return_type: Some(DataType::Boolean),
+            return_type: Some(FunctionReturnType::DataType(DataType::Boolean)),
             language: Some("plpgsql".into()),
             behavior: None,
             called_on_null: None,
@@ -4531,7 +4531,7 @@ $$"#;
                     DataType::Int(None)
                 ),
             ]),
-            return_type: Some(DataType::Boolean),
+            return_type: Some(FunctionReturnType::DataType(DataType::Boolean)),
             language: Some("plpgsql".into()),
             behavior: None,
             called_on_null: None,
@@ -4578,7 +4578,7 @@ $$"#;
                     DataType::Int(None)
                 ),
             ]),
-            return_type: Some(DataType::Boolean),
+            return_type: Some(FunctionReturnType::DataType(DataType::Boolean)),
             language: Some("plpgsql".into()),
             behavior: None,
             called_on_null: None,
@@ -4618,7 +4618,7 @@ $$"#;
                 ),
                 OperateFunctionArg::with_name("b", DataType::Varchar(None)),
             ]),
-            return_type: Some(DataType::Boolean),
+            return_type: Some(FunctionReturnType::DataType(DataType::Boolean)),
             language: Some("plpgsql".into()),
             behavior: None,
             called_on_null: None,
@@ -4661,7 +4661,7 @@ fn parse_create_function() {
                 OperateFunctionArg::unnamed(DataType::Integer(None)),
                 OperateFunctionArg::unnamed(DataType::Integer(None)),
             ]),
-            return_type: Some(DataType::Integer(None)),
+            return_type: Some(FunctionReturnType::DataType(DataType::Integer(None))),
             language: Some("SQL".into()),
             behavior: Some(FunctionBehavior::Immutable),
             called_on_null: Some(FunctionCalledOnNull::Strict),
@@ -4698,6 +4698,30 @@ fn parse_create_function_detailed() {
     );
 }
 
+#[test]
+fn parse_create_function_returns_setof() {
+    pg_and_generic().verified_stmt(
+        "CREATE FUNCTION get_users() RETURNS SETOF TEXT LANGUAGE sql AS 'SELECT name FROM users'",
+    );
+    pg_and_generic().verified_stmt(
+        "CREATE FUNCTION get_ids() RETURNS SETOF INTEGER LANGUAGE sql AS 'SELECT id FROM users'",
+    );
+    pg_and_generic().verified_stmt(
+        r#"CREATE FUNCTION get_all() RETURNS SETOF my_schema."MyType" LANGUAGE sql AS 'SELECT * FROM t'"#,
+    );
+    pg_and_generic().verified_stmt(
+        "CREATE FUNCTION get_rows() RETURNS SETOF RECORD LANGUAGE sql AS 'SELECT * FROM t'",
+    );
+
+    let sql = "CREATE FUNCTION get_names() RETURNS SETOF TEXT LANGUAGE sql AS 'SELECT name FROM t'";
+    match pg_and_generic().verified_stmt(sql) {
+        Statement::CreateFunction(CreateFunction { return_type, .. }) => {
+            assert_eq!(return_type, Some(FunctionReturnType::SetOf(DataType::Text)));
+        }
+        _ => panic!("Expected CreateFunction"),
+    }
+}
+
 #[test]
 fn parse_create_function_with_security() {
     let sql =
@@ -4773,10 +4797,10 @@ fn parse_create_function_c_with_module_pathname() {
                 "input",
                 DataType::Custom(ObjectName::from(vec![Ident::new("cstring")]), vec![]),
             ),]),
-            return_type: Some(DataType::Custom(
+            return_type: Some(FunctionReturnType::DataType(DataType::Custom(
                 ObjectName::from(vec![Ident::new("cas")]),
                 vec![]
-            )),
+            ))),
             language: Some("c".into()),
             behavior: Some(FunctionBehavior::Immutable),
             called_on_null: None,
@@ -6491,7 +6515,7 @@ fn parse_trigger_related_functions() {
             if_not_exists: false,
             name: ObjectName::from(vec![Ident::new("emp_stamp")]),
             args: Some(vec![]),
-            return_type: Some(DataType::Trigger),
+            return_type: Some(FunctionReturnType::DataType(DataType::Trigger)),
             function_body: Some(
                 CreateFunctionBody::AsBeforeOptions {
                     body: Expr::Value((