diff --git a/tests/test_virtual_functions.cpp b/tests/test_virtual_functions.cpp
index 1eba534dd..6e06db9fc 100644
--- a/tests/test_virtual_functions.cpp
+++ b/tests/test_virtual_functions.cpp
@@ -174,6 +174,25 @@ struct DispatchIssue : Base {
     }
 };
 
+// An abstract adder class that uses visitor pattern to add two data
+// objects and send the result to the visitor functor
+struct AdderBase {
+    struct Data {};
+    using DataVisitor = std::function<void (const Data&)>;
+
+    virtual void operator()(const Data& first, const Data& second, const DataVisitor& visitor) const = 0;
+    virtual ~AdderBase() = default;
+    AdderBase() = default;
+    AdderBase(const AdderBase&) = delete;
+};
+
+struct Adder : AdderBase {
+    void operator()(const Data& first, const Data& second, const DataVisitor& visitor) const override {
+        PYBIND11_OVERRIDE_PURE_NAME(void, AdderBase, "__call__", operator(), first, second, visitor);
+    }
+};
+
+
 static void test_gil() {
     {
         py::gil_scoped_acquire lock;
@@ -295,6 +314,27 @@ TEST_SUBMODULE(virtual_functions, m) {
 
     m.def("dispatch_issue_go", [](const Base * b) { return b->dispatch(); });
 
+    // test_recursive_dispatch_issue
+    // #3357: Recursive dispatch fails to find python function override
+    pybind11::class_<AdderBase, Adder>(m, "Adder")
+        .def(pybind11::init<>())
+        .def("__call__", &AdderBase::operator());
+
+    pybind11::class_<AdderBase::Data>(m, "Data")
+        .def(pybind11::init<>());
+
+    m.def("add2", [](const AdderBase::Data& first, const AdderBase::Data& second,
+                     const AdderBase& adder, const AdderBase::DataVisitor& visitor) {
+        adder(first, second, visitor);
+    });
+
+    m.def("add3", [](const AdderBase::Data& first, const AdderBase::Data& second, const AdderBase::Data& third,
+                     const AdderBase& adder, const AdderBase::DataVisitor& visitor) {
+        adder(first, second, [&] (const AdderBase::Data& first_plus_second) {
+            adder(first_plus_second, third, visitor);
+        });
+    });
+
     // test_override_ref
     // #392/397: overriding reference-returning functions
     class OverrideTest {
diff --git a/tests/test_virtual_functions.py b/tests/test_virtual_functions.py
index f7d3bd1e4..0b550992f 100644
--- a/tests/test_virtual_functions.py
+++ b/tests/test_virtual_functions.py
@@ -257,6 +257,39 @@ def test_dispatch_issue(msg):
     assert m.dispatch_issue_go(b) == "Yay.."
 
 
+def test_recursive_dispatch_issue(msg):
+    """#3357: Recursive dispatch fails to find python function override"""
+
+    class Data(m.Data):
+        def __init__(self, value):
+            super(Data, self).__init__()
+            self.value = value
+
+    class Adder(m.Adder):
+        def __call__(self, first, second, visitor):
+            # lambda is a workaround, which adds extra frame to the
+            # current CPython thread. Removing lambda reveals the bug
+            # [https://github.com/pybind/pybind11/issues/3357]
+            (lambda: visitor(Data(first.value + second.value)))()
+
+    class StoreResultVisitor:
+        def __init__(self):
+            self.result = None
+
+        def __call__(self, data):
+            self.result = data.value
+
+    store = StoreResultVisitor()
+
+    m.add2(Data(1), Data(2), Adder(), store)
+    assert store.result == 3
+
+    # without lambda in Adder class, this function fails with
+    # RuntimeError: Tried to call pure virtual function "AdderBase::__call__"
+    m.add3(Data(1), Data(2), Data(3), Adder(), store)
+    assert store.result == 6
+
+
 def test_override_ref():
     """#392/397: overriding reference-returning functions"""
     o = m.OverrideTest("asdf")