diff --git a/CHANGELOG.md b/CHANGELOG.md
index deb060a..2317c2d 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -14,6 +14,15 @@
   value. The same remainder is now also reflected in the `:inexact` flag,
   which was previously suppressed when the remainder was a power of ten.
 
+* Re-round the coefficient when a rounding carry lengthens it past the
+  context precision. Rounding an all-nines coefficient up (e.g. `9.99` to
+  precision 2, or `Decimal.div(95, 10)` at precision 1) produced a
+  coefficient with one digit more than `precision` (`d(1, 100, -1)`,
+  `d(1, 10, 0)`) instead of re-rounding to exactly `precision` significant
+  digits (`d(1, 10, 0)`, `d(1, 1, 1)`). This affects every context
+  operation (`add`, `sub`, `mult`, `div`) and now matches the General
+  Decimal Arithmetic spec and Python's decimal.
+
 ## v3.1.1 (2026-05-27)
 
 ### Bug fixes
diff --git a/lib/decimal.ex b/lib/decimal.ex
index 9987bd4..b8f705d 100644
--- a/lib/decimal.ex
+++ b/lib/decimal.ex
@@ -2456,7 +2456,15 @@ defmodule Decimal do
 
     signals = if any_nonzero?(remain, sticky?), do: [:inexact, :rounded], else: [:rounded]
 
-    exp = exp + (num_digits - precision)
+    # A rounding carry can lengthen the coefficient past `precision` (e.g.
+    # [?9] -> [?1, ?0] at precision 1). Drop the trailing zero the carry
+    # introduced and raise the exponent so the result keeps exactly
+    # `precision` significant digits, matching the General Decimal Arithmetic
+    # spec's round operation and Python's decimal.
+    {signif, carry} =
+      if length(signif) > precision, do: {:lists.droplast(signif), 1}, else: {signif, 0}
+
+    exp = exp + (num_digits - precision) + carry
     coef = digits_to_integer(signif)
     dec = %Decimal{sign: sign, coef: coef, exp: exp}
     {dec, signals}
diff --git a/test/decimal/context_test.exs b/test/decimal/context_test.exs
index c36e207..079d674 100644
--- a/test/decimal/context_test.exs
+++ b/test/decimal/context_test.exs
@@ -50,13 +50,15 @@ defmodule Decimal.ContextTest do
 
   test "with_context/2: half even" do
     Context.with(%Context{precision: 2, rounding: :half_even}, fn ->
-      assert Decimal.add(~d"0", ~d"9.99") == d(1, 100, -1)
+      # 9.99 rounds up to 10 at precision 2; the carry re-rounds to two
+      # significant digits (d(1, 10, 0)), not the three-digit d(1, 100, -1).
+      assert Decimal.add(~d"0", ~d"9.99") == d(1, 10, 0)
       assert Decimal.add(~d"0", ~d"1.0") == d(1, 10, -1)
       assert Decimal.add(~d"0", ~d"123") == d(1, 12, 1)
       assert Decimal.add(~d"0", ~d"6.66") == d(1, 67, -1)
-      assert Decimal.add(~d"0", ~d"9.99") == d(1, 100, -1)
+      assert Decimal.add(~d"0", ~d"9.99") == d(1, 10, 0)
       assert Decimal.add(~d"0", ~d"-6.66") == d(-1, 67, -1)
-      assert Decimal.add(~d"0", ~d"-9.99") == d(-1, 100, -1)
+      assert Decimal.add(~d"0", ~d"-9.99") == d(-1, 10, 0)
     end)
 
     Context.with(%Context{precision: 3, rounding: :half_even}, fn ->
@@ -95,6 +97,27 @@ defmodule Decimal.ContextTest do
     end)
   end
 
+  test "with_context/2: rounding carry keeps exactly precision digits" do
+    # When rounding overflows an all-nines coefficient (9.99 -> 10.0 at
+    # precision 2, 9.5 -> 10 at precision 1), the result must be re-rounded
+    # to `precision` significant digits rather than keeping the extra digit.
+    # Applies to every context operation. Expected values match the General
+    # Decimal Arithmetic spec and Python's decimal.
+    Context.with(%Context{precision: 1, rounding: :half_even}, fn ->
+      assert Decimal.div(~d"95", ~d"10") == d(1, 1, 1)
+    end)
+
+    Context.with(%Context{precision: 2, rounding: :half_even}, fn ->
+      assert Decimal.add(~d"0", ~d"9.99") == d(1, 10, 0)
+      assert Decimal.mult(~d"3.33", ~d"3") == d(1, 10, 0)
+      assert Decimal.sub(~d"10", ~d"0.001") == d(1, 10, 0)
+    end)
+
+    Context.with(%Context{precision: 3, rounding: :ceiling}, fn ->
+      assert Decimal.div(~d"9995", ~d"1000") == d(1, 100, -1)
+    end)
+  end
+
   test "with_context/2: large exponent gap addition" do
     num = d(1, 1, 100_000)
     one = d(1, 1, 0)
@@ -137,14 +160,17 @@ defmodule Decimal.ContextTest do
     num = d(1, 1, 100_000)
     one = d(1, 1, 0)
 
+    # Modes that round up carry 9.99e99999 to 1.00e100000; the carry
+    # re-rounds to three significant digits, d(1, 100, 99_998), rather than
+    # the four-digit d(1, 1000, 99_997). :down and :floor truncate (no carry).
     for {rounding, result} <- [
           down: d(1, 999, 99_997),
-          half_up: d(1, 1000, 99_997),
-          half_even: d(1, 1000, 99_997),
-          half_down: d(1, 1000, 99_997),
-          up: d(1, 1000, 99_997),
+          half_up: d(1, 100, 99_998),
+          half_even: d(1, 100, 99_998),
+          half_down: d(1, 100, 99_998),
+          up: d(1, 100, 99_998),
           floor: d(1, 999, 99_997),
-          ceiling: d(1, 1000, 99_997)
+          ceiling: d(1, 100, 99_998)
         ] do
       Context.with(
         %Context{precision: 3, rounding: rounding, emax: :infinity, emin: :infinity},
@@ -170,7 +196,9 @@ defmodule Decimal.ContextTest do
 
     Context.with(%Context{precision: 3, emax: :infinity, emin: :infinity}, fn ->
       assert_runs_quickly("sub/2 large exponent gap", fn ->
-        assert Decimal.sub(num, one) == %Decimal{sign: 1, coef: 1000, exp: @bounded_smoke_exp - 3}
+        # default :half_up carries 9.99e(N-1) to 1.00eN; the carry re-rounds
+        # to three significant digits (coef 100, exp N-2).
+        assert Decimal.sub(num, one) == %Decimal{sign: 1, coef: 100, exp: @bounded_smoke_exp - 2}
       end)
     end)
   end