diff --git a/AUTHORS b/AUTHORS
index daa6a471eb9..0ded3545655 100644
--- a/AUTHORS
+++ b/AUTHORS
@@ -202,6 +202,7 @@ Greg Price
 Gregory Lee
 Grig Gheorghiu
 Grigorii Eremeev (budulianin)
+GruffElixir
 Guido Wesdorp
 Guoqiang Zhang
 Hamza Mobeen
diff --git a/changelog/14998.bugfix.rst b/changelog/14998.bugfix.rst
new file mode 100644
index 00000000000..a1f06bb57ac
--- /dev/null
+++ b/changelog/14998.bugfix.rst
@@ -0,0 +1 @@
+The ``tmp_path_retention_policy = "failed"`` setting now retains temporary directories when a test errors during fixture setup or teardown.
diff --git a/src/_pytest/tmpdir.py b/src/_pytest/tmpdir.py
index 745a3c95670..ecfee45553d 100644
--- a/src/_pytest/tmpdir.py
+++ b/src/_pytest/tmpdir.py
@@ -37,6 +37,8 @@
 
 
 tmppath_result_key = StashKey[dict[str, bool]]()
+tmppath_path_key = StashKey[Path]()
+tmppath_setup_skipped_key = StashKey[bool]()
 RetentionType = Literal["all", "failed", "none"]
 
 
@@ -293,18 +295,15 @@ def tmp_path(
     as discussed in :ref:`temporary directory location and retention`.
     """
     path = _mk_tmp(request, tmp_path_factory)
+    if tmp_path_factory._retention_policy == "failed":
+        request.node.stash[tmppath_path_key] = path
     yield path
 
-    # Remove the tmpdir if the policy is "failed" and the test passed.
-    policy = tmp_path_factory._retention_policy
-    result_dict = request.node.stash[tmppath_result_key]
-
-    if policy == "failed" and result_dict.get("call", True):
-        # We do a "best effort" to remove files, but it might not be possible due to some leaked resource,
-        # permissions, etc, in which case we ignore it.
-        rmtree(path, ignore_errors=True)
-
-    del request.node.stash[tmppath_result_key]
+    # The retention decision is made in pytest_runtest_makereport after the
+    # teardown report is available. This ensures setup and teardown errors are
+    # retained under the "failed" policy too.
+    if tmp_path_factory._retention_policy != "failed":
+        del request.node.stash[tmppath_result_key]
 
 
 def pytest_sessionfinish(session, exitstatus: int | ExitCode):
@@ -343,4 +342,29 @@ def pytest_runtest_makereport(
     assert rep.when is not None
     empty: dict[str, bool] = {}
     item.stash.setdefault(tmppath_result_key, empty)[rep.when] = rep.passed
+
+    tmp_path = item.stash.get(tmppath_path_key, None)
+    if tmp_path is None:
+        return rep
+
+    if rep.when == "setup":
+        # A skipped fixture setup is not a failed test, so preserve the
+        # behavior from #10502 and mark its temporary directory for cleanup.
+        if rep.skipped:
+            item.stash[tmppath_setup_skipped_key] = True
+    elif rep.when == "teardown":
+        result_dict = item.stash[tmppath_result_key]
+        setup_skipped = item.stash.get(tmppath_setup_skipped_key, False)
+        if (
+            setup_skipped
+            or (result_dict.get("setup", True) and result_dict.get("call", True))
+        ) and rep.passed:
+            # We do a "best effort" to remove files, but it might not be
+            # possible due to some leaked resource, permissions, etc.
+            rmtree(tmp_path, ignore_errors=True)
+        del item.stash[tmppath_path_key]
+        del item.stash[tmppath_result_key]
+        if setup_skipped:
+            del item.stash[tmppath_setup_skipped_key]
+
     return rep
diff --git a/testing/test_tmpdir.py b/testing/test_tmpdir.py
index 0b33a74b926..d89f6331c32 100644
--- a/testing/test_tmpdir.py
+++ b/testing/test_tmpdir.py
@@ -254,6 +254,96 @@ def test_fixt(fixt):
             base_dir = list(child.iterdir())
             assert base_dir == []
 
+    def test_policy_failed_defers_cleanup_until_dependent_teardown(
+        self, pytester: Pytester
+    ) -> None:
+        p = pytester.makepyfile(
+            """
+            import pytest
+
+            @pytest.fixture
+            def resource(tmp_path):
+                evidence = tmp_path / "evidence.txt"
+                evidence.write_text("still here", encoding="utf-8")
+                yield tmp_path
+                assert evidence.read_text(encoding="utf-8") == "still here"
+
+            @pytest.fixture
+            def unavailable(resource):
+                pytest.skip("optional service unavailable")
+
+            def test_optional_service(unavailable):
+                pass
+            """
+        )
+        pytester.makepyprojecttoml(
+            """
+            [tool.pytest.ini_options]
+            tmp_path_retention_policy = "failed"
+            """
+        )
+
+        reprec = pytester.inline_run(p)
+        reprec.assertoutcome(skipped=1)
+
+        root = pytester._test_tmproot
+        for child in root.iterdir():
+            assert list(child.iterdir()) == []
+
+    def test_policy_failed_keeps_dir_when_setup_or_teardown_fails(
+        self, pytester: Pytester
+    ) -> None:
+        p = pytester.makepyfile(
+            """
+            import pytest
+
+            def write_evidence(tmp_path, phase):
+                evidence = tmp_path / "debug-evidence.txt"
+                evidence.write_text(f"keep me: {phase}", encoding="utf-8")
+
+            @pytest.fixture
+            def broken_during_setup(tmp_path):
+                write_evidence(tmp_path, "setup")
+                raise RuntimeError("setup failed")
+
+            def test_setup_error(broken_during_setup):
+                pass
+
+            def test_call_failure(tmp_path):
+                write_evidence(tmp_path, "call")
+                assert False
+
+            @pytest.fixture
+            def broken_during_teardown(tmp_path):
+                write_evidence(tmp_path, "teardown")
+                yield
+                raise RuntimeError("teardown failed")
+
+            def test_teardown_error(broken_during_teardown):
+                pass
+            """
+        )
+        pytester.makepyprojecttoml(
+            """
+            [tool.pytest.ini_options]
+            tmp_path_retention_policy = "failed"
+            """
+        )
+
+        reprec = pytester.inline_run(p)
+        reprec.assertoutcome(passed=1, failed=3)
+
+        root = pytester._test_tmproot
+        evidence = {
+            path.read_text(encoding="utf-8")
+            for path in root.rglob("debug-evidence.txt")
+        }
+        assert evidence == {
+            "keep me: setup",
+            "keep me: call",
+            "keep me: teardown",
+        }
+
     # issue #10502
     def test_policy_all_keeps_dir_when_skipped_from_fixture(
         self, pytester: Pytester