diff --git a/AUTHORS b/AUTHORS
index e2fad5e8364..b264089180b 100644
--- a/AUTHORS
+++ b/AUTHORS
@@ -406,6 +406,7 @@ Pulkit Goyal
 Punyashloka Biswal
 Quentin Pradet
 q0w
+qinpeili
 Ralf Schmitt
 Ralph Giles
 Ram Rachum
diff --git a/changelog/14998.bugfix.rst b/changelog/14998.bugfix.rst
new file mode 100644
index 00000000000..6a7352112e8
--- /dev/null
+++ b/changelog/14998.bugfix.rst
@@ -0,0 +1 @@
+Fixed :confval:`tmp_path_retention_policy` ``failed`` to retain ``tmp_path`` directories when tests fail during setup or teardown.
diff --git a/src/_pytest/tmpdir.py b/src/_pytest/tmpdir.py
index 745a3c95670..45a7298b4ab 100644
--- a/src/_pytest/tmpdir.py
+++ b/src/_pytest/tmpdir.py
@@ -37,6 +37,7 @@
 
 
 tmppath_result_key = StashKey[dict[str, bool]]()
+tmppath_path_key = StashKey[Path]()
 RetentionType = Literal["all", "failed", "none"]
 
 
@@ -293,19 +294,9 @@ def tmp_path(
     as discussed in :ref:`temporary directory location and retention`.
     """
     path = _mk_tmp(request, tmp_path_factory)
+    request.node.stash[tmppath_path_key] = path
     yield path
 
-    # Remove the tmpdir if the policy is "failed" and the test passed.
-    policy = tmp_path_factory._retention_policy
-    result_dict = request.node.stash[tmppath_result_key]
-
-    if policy == "failed" and result_dict.get("call", True):
-        # We do a "best effort" to remove files, but it might not be possible due to some leaked resource,
-        # permissions, etc, in which case we ignore it.
-        rmtree(path, ignore_errors=True)
-
-    del request.node.stash[tmppath_result_key]
-
 
 def pytest_sessionfinish(session, exitstatus: int | ExitCode):
     """After each session, remove base directory if all the tests passed,
@@ -342,5 +333,17 @@ def pytest_runtest_makereport(
     rep = yield
     assert rep.when is not None
     empty: dict[str, bool] = {}
-    item.stash.setdefault(tmppath_result_key, empty)[rep.when] = rep.passed
+    result_dict = item.stash.setdefault(tmppath_result_key, empty)
+    result_dict[rep.when] = rep.failed
+    if rep.when == "teardown":
+        # The teardown report is the first point where all phase outcomes are known.
+        path = item.stash.get(tmppath_path_key, None)
+        if path is not None:
+            policy = item.config._tmp_path_factory._retention_policy  # type: ignore[attr-defined]
+            if policy == "failed" and not any(result_dict.values()):
+                # We do a "best effort" to remove files, but it might not be possible due to some leaked resource,
+                # permissions, etc, in which case we ignore it.
+                rmtree(path, ignore_errors=True)
+            del item.stash[tmppath_path_key]
+        del item.stash[tmppath_result_key]
     return rep
diff --git a/testing/test_tmpdir.py b/testing/test_tmpdir.py
index 0b33a74b926..16a39631423 100644
--- a/testing/test_tmpdir.py
+++ b/testing/test_tmpdir.py
@@ -223,6 +223,87 @@ def test_1(tmp_path):
             # Check the base dir itself is gone
             assert len(list(base_dir)) == 0
 
+    @pytest.mark.parametrize(
+        ("test_source", "outcomes", "kept"),
+        [
+            (
+                """
+                import pytest
+
+                @pytest.fixture
+                def broken_setup(tmp_path):
+                    raise RuntimeError("setup error")
+
+                def test_setup_error(broken_setup):
+                    pass
+                """,
+                {"errors": 1},
+                True,
+            ),
+            (
+                """
+                def test_call_failure(tmp_path):
+                    assert False
+                """,
+                {"failed": 1},
+                True,
+            ),
+            (
+                """
+                import pytest
+
+                @pytest.fixture
+                def broken_teardown(tmp_path):
+                    yield
+                    raise RuntimeError("teardown error")
+
+                def test_teardown_error(broken_teardown):
+                    pass
+                """,
+                {"passed": 1, "errors": 1},
+                True,
+            ),
+            (
+                """
+                import pytest
+
+                @pytest.fixture
+                def skipped_setup(tmp_path):
+                    pytest.skip("setup skip")
+
+                def test_setup_skip(skipped_setup):
+                    pass
+                """,
+                {"skipped": 1},
+                False,
+            ),
+            (
+                """
+                def test_pass(tmp_path):
+                    pass
+                """,
+                {"passed": 1},
+                False,
+            ),
+        ],
+        ids=["setup-error", "call-failure", "teardown-error", "setup-skip", "pass"],
+    )
+    def test_policy_failed_retains_dirs_for_errors(
+        self, pytester: Pytester, test_source: str, outcomes: dict[str, int], kept: bool
+    ) -> None:
+        pytester.makepyprojecttoml(
+            """
+            [tool.pytest.ini_options]
+            tmp_path_retention_policy = "failed"
+            """
+        )
+        pytester.makepyfile(test_source)
+        result = pytester.runpytest()
+        result.assert_outcomes(**outcomes)
+
+        retained = list((pytester.path.parent / "basetemp").glob("test_*"))
+        assert bool(retained) is kept
+
     # issue #10502
     def test_policy_failed_removes_dir_when_skipped_from_fixture(
         self, pytester: Pytester