diff --git a/Misc/NEWS b/Misc/NEWS
index 36981d2a89a..97ddbb12f3d 100644
--- a/Misc/NEWS
+++ b/Misc/NEWS
@@ -10,6 +10,8 @@ Release date: tba
 Core and Builtins
 -----------------
 
+- Issue #26991: Fix possible refleak when creating a function with annotations.
+
 - Issue #27039: Fixed bytearray.remove() for values greater than 127.  Patch by
   Joe Jevnik.
 
diff --git a/Python/ceval.c b/Python/ceval.c
index ee79c219555..3758b0936ab 100644
--- a/Python/ceval.c
+++ b/Python/ceval.c
@@ -3284,6 +3284,7 @@ PyEval_EvalFrameEx(PyFrameObject *f, int throwflag)
                 PyObject *anns = PyDict_New();
                 if (anns == NULL) {
                     Py_DECREF(func);
+                    Py_DECREF(names);
                     goto error;
                 }
                 name_ix = PyTuple_Size(names);
@@ -3299,9 +3300,11 @@ PyEval_EvalFrameEx(PyFrameObject *f, int throwflag)
                     if (err != 0) {
                         Py_DECREF(anns);
                         Py_DECREF(func);
+                        Py_DECREF(names);
                         goto error;
                     }
                 }
+                Py_DECREF(names);
 
                 if (PyFunction_SetAnnotations(func, anns) != 0) {
                     /* Can't happen unless
@@ -3311,7 +3314,6 @@ PyEval_EvalFrameEx(PyFrameObject *f, int throwflag)
                     goto error;
                 }
                 Py_DECREF(anns);
-                Py_DECREF(names);
             }
 
             /* XXX Maybe this should be a separate opcode? */