diff --git a/crates/ty_python_semantic/resources/mdtest/literal/collections/dictionary.md b/crates/ty_python_semantic/resources/mdtest/literal/collections/dictionary.md
index 73e63e5b44c49..e91b007ae7730 100644
--- a/crates/ty_python_semantic/resources/mdtest/literal/collections/dictionary.md
+++ b/crates/ty_python_semantic/resources/mdtest/literal/collections/dictionary.md
@@ -189,25 +189,54 @@ def _(x: dict[str, int | str], flag: bool):
     # error: [invalid-argument-type]
     f1(**x)
 
-x2: dict[str, object] = {"outer": {"a": 1}}
+x2: dict[str, object] = {"inner": {"a": 1}}
 # error: [invalid-argument-type]
 f1(**x2)
 
-class Y:
-    x: dict[str, object]
-
-y1 = Y()
-y1.x = {"a": 1, "b": "a"}
+x3: dict[str, dict[str, object]] = {"inner": {"a": 1, "b": "a"}}
 
-f2(**y1.x)  # ok
-f1(**y1.x)  # ok
+f2(**x3["inner"])  # ok
+f1(**x3["inner"])  # ok
 # error: [invalid-argument-type]
-f3(**y1.x)
+f3(**x3["inner"])
 
-y1.x["c"] = 1.0
-f3(**y1.x)  # ok
+x3["inner"]["c"] = 1.0
+f3(**x3["inner"])  # ok
 
-y1.x = {"outer": {"a": 1}}
+x3["inner"] = {"inner": {"a": 1}}
 # error: [invalid-argument-type]
-f1(**y1.x)
+f1(**x3["inner"])
+
+def _(x: dict[str, object]):
+    x["inner"]: dict[str, float | str] = {"a": 1, "b": "a"}
+
+    f2(**x["inner"])  # ok
+    f1(**x["inner"])  # ok
+    # error: [invalid-argument-type]
+    f3(**x["inner"])
+
+    x["inner"]["c"] = 1.0
+    f3(**x["inner"])  # ok
+
+    x["inner"] = {"inner": {"a": 1}}
+    # error: [invalid-argument-type]
+    f1(**x["inner"])
+
+class Y:
+    inner: dict[str, object]
+
+def _(y: Y):
+    y.inner = {"a": 1, "b": "a"}
+
+    f2(**y.inner)  # ok
+    f1(**y.inner)  # ok
+    # error: [invalid-argument-type]
+    f3(**y.inner)
+
+    y.inner["c"] = 1.0
+    f3(**y.inner)  # ok
+
+    y.inner = {"inner": {"a": 1}}
+    # error: [invalid-argument-type]
+    f1(**y.inner)
 ```
diff --git a/crates/ty_python_semantic/src/semantic_index/builder.rs b/crates/ty_python_semantic/src/semantic_index/builder.rs
index 8c0a2bff91192..f47c72e69a45b 100644
--- a/crates/ty_python_semantic/src/semantic_index/builder.rs
+++ b/crates/ty_python_semantic/src/semantic_index/builder.rs
@@ -857,14 +857,7 @@ impl<'db, 'ast> SemanticIndexBuilder<'db, 'ast> {
                 continue;
             };
 
-            // Recurse into nested dictionaries.
-            self.add_dict_key_assignment_definitions_impl(
-                &member_expr,
-                (&item.value).into(),
-                assignment,
-            );
-
-            if let Some(place_expr) = PlaceExpr::try_from_member_expr(member_expr) {
+            if let Some(place_expr) = PlaceExpr::try_from_member_expr(member_expr.clone()) {
                 let place_id = self.add_place(place_expr);
 
                 self.add_definition(
@@ -875,6 +868,16 @@ impl<'db, 'ast> SemanticIndexBuilder<'db, 'ast> {
                         value: &item.value,
                     },
                 );
+
+                // Recurse into nested dictionaries.
+                //
+                // Note that we must do this _after_ adding the outer place in order to track
+                // sub-member places correctly.
+                self.add_dict_key_assignment_definitions_impl(
+                    &member_expr,
+                    (&item.value).into(),
+                    assignment,
+                );
             }
         }
     }