diff --git a/mypyc/codegen/emitclass.py b/mypyc/codegen/emitclass.py
index 8f8d74255a87..8c3fa5de98f8 100644
--- a/mypyc/codegen/emitclass.py
+++ b/mypyc/codegen/emitclass.py
@@ -412,9 +412,7 @@ def emit_line() -> None:
 
     emitter.emit_line()
     if generate_full:
-        generate_setup_for_class(
-            cl, defaults_fn, vtable_name, shadow_vtable_name, coroutine_setup_name, emitter
-        )
+        generate_setup_for_class(cl, defaults_fn, vtable_name, shadow_vtable_name, emitter)
         emitter.emit_line()
         generate_constructor_for_class(cl, cl.ctor, init_fn, setup_name, vtable_name, emitter)
         emitter.emit_line()
@@ -606,7 +604,6 @@ def generate_setup_for_class(
     defaults_fn: FuncIR | None,
     vtable_name: str,
     shadow_vtable_name: str | None,
-    coroutine_setup_name: str,
     emitter: Emitter,
 ) -> None:
     """Generate a native function that allocates an instance of a class."""
@@ -662,13 +659,6 @@ def generate_setup_for_class(
     if defaults_fn is not None:
         emit_attr_defaults_func_call(defaults_fn, "self", emitter)
 
-    # Initialize function wrapper for callable classes. As opposed to regular functions,
-    # each instance of a callable class needs its own wrapper because they might be instantiated
-    # inside other functions.
-    if cl.coroutine_name:
-        emitter.emit_line(f"if ({NATIVE_PREFIX}{coroutine_setup_name}((PyObject *)self) != 1)")
-        emitter.emit_line("  return NULL;")
-
     emitter.emit_line("return (PyObject *)self;")
     emitter.emit_line("}")
 
diff --git a/mypyc/irbuild/builder.py b/mypyc/irbuild/builder.py
index 88161f45bf03..5099f7053b92 100644
--- a/mypyc/irbuild/builder.py
+++ b/mypyc/irbuild/builder.py
@@ -69,6 +69,7 @@
     Assign,
     BasicBlock,
     Branch,
+    Call,
     ComparisonOp,
     GetAttr,
     InitStatic,
@@ -91,6 +92,7 @@
     RType,
     RUnion,
     bitmap_rprimitive,
+    bool_rprimitive,
     bytes_rprimitive,
     c_pyssize_t_rprimitive,
     dict_rprimitive,
@@ -1461,6 +1463,20 @@ def get_current_class_ir(self) -> ClassIR | None:
         type_info = self.fn_info.fitem.info
         return self.mapper.type_to_ir.get(type_info)
 
+    def add_coroutine_setup_call(self, class_name: str, obj: Value) -> Value:
+        return self.add(
+            Call(
+                FuncDecl(
+                    class_name + "_coroutine_setup",
+                    None,
+                    self.module_name,
+                    FuncSignature([RuntimeArg("type", object_rprimitive)], bool_rprimitive),
+                ),
+                [obj],
+                -1,
+            )
+        )
+
 
 def gen_arg_defaults(builder: IRBuilder) -> None:
     """Generate blocks for arguments that have default values.
diff --git a/mypyc/irbuild/callable_class.py b/mypyc/irbuild/callable_class.py
index 59645d2597a7..22784ca12dfa 100644
--- a/mypyc/irbuild/callable_class.py
+++ b/mypyc/irbuild/callable_class.py
@@ -232,4 +232,9 @@ def instantiate_callable_class(builder: IRBuilder, fn_info: FuncInfo) -> Value:
         curr_env_reg = builder.fn_info.curr_env_reg
     if curr_env_reg:
         builder.add(SetAttr(func_reg, ENV_ATTR_NAME, curr_env_reg, fitem.line))
+    # Initialize function wrapper for callable classes. As opposed to regular functions,
+    # each instance of a callable class needs its own wrapper because they might be instantiated
+    # inside other functions.
+    if not fn_info.in_non_ext and fn_info.is_coroutine:
+        builder.add_coroutine_setup_call(fn_info.callable_class.ir.name, func_reg)
     return func_reg
diff --git a/mypyc/irbuild/classdef.py b/mypyc/irbuild/classdef.py
index 2e67d7aa785e..2fd7357ec4f0 100644
--- a/mypyc/irbuild/classdef.py
+++ b/mypyc/irbuild/classdef.py
@@ -31,7 +31,7 @@
 from mypy.types import Instance, UnboundType, get_proper_type
 from mypyc.common import PROPSET_PREFIX
 from mypyc.ir.class_ir import ClassIR, NonExtClassInfo
-from mypyc.ir.func_ir import FuncDecl, FuncSignature, RuntimeArg
+from mypyc.ir.func_ir import FuncDecl, FuncSignature
 from mypyc.ir.ops import (
     NAMESPACE_TYPE,
     BasicBlock,
@@ -473,19 +473,7 @@ def allocate_class(builder: IRBuilder, cdef: ClassDef) -> Value:
                 -1,
             )
         )
-
-        builder.add(
-            Call(
-                FuncDecl(
-                    cdef.name + "_coroutine_setup",
-                    None,
-                    builder.module_name,
-                    FuncSignature([RuntimeArg("type", object_rprimitive)], bool_rprimitive),
-                ),
-                [tp],
-                -1,
-            )
-        )
+        builder.add_coroutine_setup_call(cdef.name, tp)
 
     # Populate a '__mypyc_attrs__' field containing the list of attrs
     builder.primitive_op(
diff --git a/mypyc/test-data/run-async.test b/mypyc/test-data/run-async.test
index 361dcffbbe73..f0320e60ee1a 100644
--- a/mypyc/test-data/run-async.test
+++ b/mypyc/test-data/run-async.test
@@ -1739,3 +1739,63 @@ async def m_future_with_reraised_exception(first_exc: Exception, second_exc: Exc
         return await make_future(first_exc)
     except type(first_exc):
         raise second_exc
+
+[case testCPyFunctionWithFreedInstance]
+import asyncio
+
+from functools import wraps
+from typing import Any
+
+class ctx_man:
+    async def __aenter__(self) -> None:
+        pass
+
+    async def __aexit__(self, *args: Any) -> None:
+        pass
+
+def with_ctx_man():
+    def decorator(f):
+        @wraps(f)
+        async def inner():
+            async with ctx_man():
+                return await f()
+
+        return inner
+
+    return decorator
+
+async def func() -> int:
+    return 33
+
+async def run_wrapped():
+    wrapped = with_ctx_man()(func)
+    return await wrapped()
+
+def test_native():
+    assert asyncio.run(run_wrapped()) == 33
+
+[file driver.py]
+import asyncio
+
+from native import test_native, with_ctx_man
+
+async def func() -> int:
+    return 42
+
+async def run_wrapped():
+    wrapped = with_ctx_man()(func)
+    return await wrapped()
+
+def test_interpreted():
+    assert asyncio.run(run_wrapped()) == 42
+
+# Run multiple times to test that the CPyFunction attribute is still
+# set correctly after reusing a freed instance of the inner callable class object.
+for i in range(10):
+    test_interpreted()
+    test_native()
+
+[file asyncio/__init__.pyi]
+from typing import Any, Generator
+
+def run(x: object) -> object: ...