diff --git a/Misc/NEWS.d/next/Library/2026-10-21-19-55-00.gh-issue-159739.tloc01.rst b/Misc/NEWS.d/next/Library/2026-10-21-19-55-00.gh-issue-159739.tloc01.rst
new file mode 100644
index 00000000000000..9641d11deb84d6
--- /dev/null
+++ b/Misc/NEWS.d/next/Library/2026-10-21-19-55-00.gh-issue-159739.tloc01.rst
@@ -0,0 +1,2 @@
+Avoid a crash when a :class:`threading.local` subclass finalizer accesses
+attributes after construction fails.
diff --git a/Modules/_threadmodule.c b/Modules/_threadmodule.c
index 34c049ed81484a..d0847af17cc625 100644
--- a/Modules/_threadmodule.c
+++ b/Modules/_threadmodule.c
@@ -1470,10 +1470,25 @@ local_new(PyTypeObject *type, PyObject *args, PyObject *kw)
     assert(module != NULL);
     thread_module_state *state = get_thread_state(module);
 
+    // A subclass finalizer may access attributes if construction fails.
+    PyObject *localdicts = PyDict_New();
+    if (localdicts == NULL) {
+        return NULL;
+    }
+    PyObject *thread_watchdogs = PySet_New(NULL);
+    if (thread_watchdogs == NULL) {
+        Py_DECREF(localdicts);
+        return NULL;
+    }
+
     localobject *self = (localobject *)type->tp_alloc(type, 0);
     if (self == NULL) {
+        Py_DECREF(localdicts);
+        Py_DECREF(thread_watchdogs);
         return NULL;
     }
+    self->localdicts = localdicts;
+    self->thread_watchdogs = thread_watchdogs;
 
     // gh-128691: Use deferred reference counting for thread-locals to avoid
     // contention on the shared object.
@@ -1482,16 +1497,6 @@ local_new(PyTypeObject *type, PyObject *args, PyObject *kw)
     self->args = Py_XNewRef(args);
     self->kw = Py_XNewRef(kw);
 
-    self->localdicts = PyDict_New();
-    if (self->localdicts == NULL) {
-        goto err;
-    }
-
-    self->thread_watchdogs = PySet_New(NULL);
-    if (self->thread_watchdogs == NULL) {
-        goto err;
-    }
-
     PyObject *localsdict = NULL;
     PyObject *sentinel_wr = NULL;
     if (create_localsdict(self, state, &localsdict, &sentinel_wr) < 0) {