diff --git a/crates/ty_python_semantic/resources/mdtest/typed_dict.md b/crates/ty_python_semantic/resources/mdtest/typed_dict.md
index a6dbce3426..17bf0533a1 100644
--- a/crates/ty_python_semantic/resources/mdtest/typed_dict.md
+++ b/crates/ty_python_semantic/resources/mdtest/typed_dict.md
@@ -314,6 +314,75 @@ a_person = {"name": "Alice", "age": 30, "extra": True}
 (a_person := {"name": "Alice", "age": 30, "extra": True})
 ```
 
+## Union of `TypedDict`
+
+When assigning to a union of `TypedDict` types, the type will be narrowed based on the dictionary
+literal:
+
+```py
+from typing import TypedDict
+from typing_extensions import NotRequired
+
+class Foo(TypedDict):
+    foo: int
+
+x1: Foo | None = {"foo": 1}
+reveal_type(x1)  # revealed: Foo
+
+class Bar(TypedDict):
+    bar: int
+
+x2: Foo | Bar = {"foo": 1}
+reveal_type(x2)  # revealed: Foo
+
+x3: Foo | Bar = {"bar": 1}
+reveal_type(x3)  # revealed: Bar
+
+x4: Foo | Bar | None = {"bar": 1}
+reveal_type(x4)  # revealed: Bar
+
+# error: [invalid-assignment]
+x5: Foo | Bar = {"baz": 1}
+reveal_type(x5)  # revealed: Foo | Bar
+
+class FooBar1(TypedDict):
+    foo: int
+    bar: int
+
+class FooBar2(TypedDict):
+    foo: int
+    bar: int
+
+class FooBar3(TypedDict):
+    foo: int
+    bar: int
+    baz: NotRequired[int]
+
+x6: FooBar1 | FooBar2 = {"foo": 1, "bar": 1}
+reveal_type(x6)  # revealed: FooBar1 | FooBar2
+
+x7: FooBar1 | FooBar3 = {"foo": 1, "bar": 1}
+reveal_type(x7)  # revealed: FooBar1 | FooBar3
+
+x8: FooBar1 | FooBar2 | FooBar3 | None = {"foo": 1, "bar": 1}
+reveal_type(x8)  # revealed: FooBar1 | FooBar2 | FooBar3
+```
+
+In doing so, may have to infer the same type with multiple distinct type contexts:
+
+```py
+from typing import TypedDict
+
+class NestedFoo(TypedDict):
+    foo: list[FooBar1]
+
+class NestedBar(TypedDict):
+    foo: list[FooBar2]
+
+x1: NestedFoo | NestedBar = {"foo": [{"foo": 1, "bar": 1}]}
+reveal_type(x1)  # revealed: NestedFoo | NestedBar
+```
+
 ## Type ignore compatibility issues
 
 Users should be able to ignore TypedDict validation errors with `# type: ignore`
diff --git a/crates/ty_python_semantic/src/types/infer/builder.rs b/crates/ty_python_semantic/src/types/infer/builder.rs
index d819726c18..4332542b81 100644
--- a/crates/ty_python_semantic/src/types/infer/builder.rs
+++ b/crates/ty_python_semantic/src/types/infer/builder.rs
@@ -8364,13 +8364,64 @@ impl<'db, 'ast> TypeInferenceBuilder<'db, 'ast> {
         let mut item_types = FxHashMap::default();
 
         // Validate `TypedDict` dictionary literal assignments.
-        if let Some(tcx) = tcx.annotation
-            && let Some(typed_dict) = tcx
-                .filter_union(self.db(), Type::is_typed_dict)
-                .as_typed_dict()
-            && let Some(ty) = self.infer_typed_dict_expression(dict, typed_dict, &mut item_types)
-        {
-            return ty;
+        if let Some(tcx) = tcx.annotation {
+            let tcx = tcx.filter_union(self.db(), Type::is_typed_dict);
+
+            if let Some(typed_dict) = tcx.as_typed_dict() {
+                // If there is a single typed dict annotation, infer against it directly.
+                if let Some(ty) =
+                    self.infer_typed_dict_expression(dict, typed_dict, &mut item_types)
+                {
+                    return ty;
+                }
+            } else if let Type::Union(tcx) = tcx {
+                // Otherwise, disable diagnostics as we attempt to narrow to specific elements of the union.
+                let old_multi_inference = self.context.set_multi_inference(true);
+                let old_multi_inference_state =
+                    self.set_multi_inference_state(MultiInferenceState::Ignore);
+
+                let mut narrowed_typed_dicts = Vec::new();
+                for element in tcx.elements(self.db()) {
+                    let typed_dict = element
+                        .as_typed_dict()
+                        .expect("filtered out non-typed-dict types above");
+
+                    if self
+                        .infer_typed_dict_expression(dict, typed_dict, &mut item_types)
+                        .is_some()
+                    {
+                        narrowed_typed_dicts.push(typed_dict);
+                    }
+
+                    item_types.clear();
+                }
+
+                if !narrowed_typed_dicts.is_empty() {
+                    // Now that we know which typed dict annotations are valid, re-infer with diagnostics enabled,
+                    self.context.set_multi_inference(old_multi_inference);
+
+                    // We may have to infer the same expression multiple times with distinct type context,
+                    // so we take the intersection of all valid inferences for a given expression.
+                    self.set_multi_inference_state(MultiInferenceState::Intersect);
+
+                    let mut narrowed_tys = Vec::new();
+                    for typed_dict in narrowed_typed_dicts {
+                        let mut item_types = FxHashMap::default();
+
+                        let ty = self
+                            .infer_typed_dict_expression(dict, typed_dict, &mut item_types)
+                            .expect("ensured the typed dict is valid above");
+
+                        narrowed_tys.push(ty);
+                    }
+
+                    self.set_multi_inference_state(old_multi_inference_state);
+                    return UnionType::from_elements(self.db(), narrowed_tys);
+                }
+
+                self.context.set_multi_inference(old_multi_inference);
+                self.set_multi_inference_state(old_multi_inference_state);
+            }
         }
 
         // Avoid false positives for the functional `TypedDict` form, which is currently