diff --git a/src/roboticstoolbox/models/URDF/URDFRobot.py b/src/roboticstoolbox/models/URDF/URDFRobot.py
index efcaa7359..a6a620e64 100644
--- a/src/roboticstoolbox/models/URDF/URDFRobot.py
+++ b/src/roboticstoolbox/models/URDF/URDFRobot.py
@@ -324,18 +324,37 @@ def _parse_urdf(urdf_str: str, source: str = "<URDF text>"):
         raise
 
 
+def _inertia_in_link_frame(inertial) -> "tuple[np.ndarray | None, np.ndarray | None]":
+    """Centre of mass and inertia tensor of a URDF link, in the link frame.
+
+    URDF gives the inertia tensor in the link's *inertial* frame, whose pose
+    relative to the link frame is ``<inertial><origin xyz rpy>``. The toolbox
+    wants the tensor about the centre of mass but with axes parallel to the
+    link frame (see :attr:`Link.I`), so rotate it: ``I_link = R I R^T``.
+    ``xyz`` is already the centre of mass in the link frame.
+
+    :param inertial: a parsed :class:`~roboticstoolbox.tools.urdf.Inertial`
+    :returns: ``(r, I)``, either of which is ``None`` when not given
+    """
+    origin = inertial.origin
+    r = None if origin is None else origin[:3, 3]
+
+    I = inertial.inertia
+    if I is not None and origin is not None:
+        R = origin[:3, :3]
+        I = R @ I @ R.T
+        I = 0.5 * (I + I.T)  # remove rounding asymmetry; Link.I checks to 1e-8
+    return r, I
+
+
 def _links_from_urdf(urdf: URDF):
     """Convert a parsed :class:`URDF` into (elinks, name)."""
     elinks = []
     elinkdict = {}
 
     for link in urdf._links:
-        elink = Link(
-            name=link.name,
-            m=link.inertial.mass,
-            r=link.inertial.origin[:3, 3] if link.inertial.origin is not None else None,
-            I=link.inertial.inertia,
-        )
+        r, I = _inertia_in_link_frame(link.inertial)
+        elink = Link(name=link.name, m=link.inertial.mass, r=r, I=I)
         elinks.append(elink)
         elinkdict[link.name] = elink
 
diff --git a/tests/test_urdf_inertial.py b/tests/test_urdf_inertial.py
new file mode 100644
index 000000000..7481584d5
--- /dev/null
+++ b/tests/test_urdf_inertial.py
@@ -0,0 +1,82 @@
+"""
+URDF inertia tensors must be rotated from the inertial frame into the link frame.
+
+URDF gives each link's inertia tensor in its <inertial> frame, which may be
+rotated relative to the link frame by <origin rpy="...">. The toolbox's
+Link.I is the tensor about the centre of mass with axes parallel to the link
+frame, so the loader has to apply I_link = R I R^T. It used to keep only the
+translation of the inertial origin and pass the tensor through unrotated,
+silently giving wrong dynamics for any link with a rotated inertial frame.
+"""
+
+import io
+import unittest
+
+import numpy as np
+import numpy.testing as nt
+from spatialmath import SE3
+
+import roboticstoolbox as rtb
+from roboticstoolbox.models.URDF.URDFRobot import URDF_file
+
+TEMPLATE = """<?xml version="1.0"?>
+<robot name="one_link">
+  <link name="base"/>
+  <link name="arm">
+    <inertial>
+      <origin xyz="{xyz}" rpy="{rpy}"/>
+      <mass value="1.0"/>
+      <inertia ixx="1" iyy="2" izz="3" ixy="0" ixz="0" iyz="0"/>
+    </inertial>
+  </link>
+  <joint name="j1" type="revolute">
+    <parent link="base"/>
+    <child link="arm"/>
+    <origin xyz="0 0 0" rpy="0 0 0"/>
+    <axis xyz="0 0 1"/>
+    <limit lower="-3" upper="3" effort="10" velocity="1"/>
+  </joint>
+</robot>
+"""
+
+
+def arm_link(xyz="0 0 0", rpy="0 0 0"):
+    links, _, _ = URDF_file(io.StringIO(TEMPLATE.format(xyz=xyz, rpy=rpy)))
+    return next(link for link in links if link.name == "arm")
+
+
+class TestURDFInertialFrame(unittest.TestCase):
+    def test_unrotated_inertial_frame_is_unchanged(self):
+        link = arm_link()
+        nt.assert_array_almost_equal(link.I, np.diag([1, 2, 3]))
+
+    def test_yaw_swaps_x_and_y_moments(self):
+        link = arm_link(rpy=f"0 0 {np.pi / 2}")
+        nt.assert_array_almost_equal(link.I, np.diag([2, 1, 3]))
+
+    def test_general_rotation_matches_R_I_Rt(self):
+        rpy = [0.3, -0.7, 1.1]
+        link = arm_link(rpy=" ".join(str(a) for a in rpy))
+        R = SE3.RPY(rpy).R
+        nt.assert_array_almost_equal(link.I, R @ np.diag([1, 2, 3]) @ R.T)
+        nt.assert_array_almost_equal(link.I, link.I.T)
+
+    def test_centre_of_mass_is_the_origin_translation(self):
+        link = arm_link(xyz="0.1 0.2 0.3", rpy="0.4 0.5 0.6")
+        nt.assert_array_almost_equal(link.r, [0.1, 0.2, 0.3])
+
+    def test_rne_uses_the_rotated_tensor(self):
+        # Joint rotates about z. Rolling the inertial frame by 90 deg about x
+        # puts the principal moment iyy=2 on the link z axis, so a unit joint
+        # acceleration (no gravity, centre of mass on the axis) needs a torque
+        # of 2. With the tensor left unrotated it would wrongly be izz=3.
+        links, _, _ = URDF_file(
+            io.StringIO(TEMPLATE.format(xyz="0 0 0", rpy=f"{np.pi / 2} 0 0"))
+        )
+        robot = rtb.Robot(links)
+        tau = robot.rne([0.0], [0.0], [1.0], gravity=[0, 0, 0])
+        nt.assert_array_almost_equal(tau, [2.0])
+
+
+if __name__ == "__main__":
+    unittest.main()