diff --git a/CHANGELOG.md b/CHANGELOG.md
index e0b3814e..4ef6eff3 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -16,6 +16,10 @@ and this project adheres to [Semantic Versioning](http://semver.org/spec/v2.0.0.
 
 * Implemented `IntoIterator` for `PySet` and `PyFrozenSet`. [#716](https://github.com/PyO3/pyo3/pull/716)
 
+### Fixed
+
+* Clear error indicator when the exception is handled on the Rust side. [#719](https://github.com/PyO3/pyo3/pull/719)
+
 ## [0.8.5]
 
 * Support for `#[name = "foo"]` attribute for `#[pyfunction]` and in `#[pymethods]`. [#692](https://github.com/PyO3/pyo3/pull/692)
diff --git a/src/types/iterator.rs b/src/types/iterator.rs
index 0d7ab4ab..52378caa 100644
--- a/src/types/iterator.rs
+++ b/src/types/iterator.rs
@@ -42,6 +42,7 @@ impl<'p> PyIterator<'p> {
             let ptr = ffi::PyObject_GetIter(obj.as_ptr());
             // Returns NULL if an object cannot be iterated.
             if ptr.is_null() {
+                PyErr::fetch(py);
                 return Err(PyDowncastError);
             }
 
diff --git a/src/types/set.rs b/src/types/set.rs
index 23c43f0b..f565af6f 100644
--- a/src/types/set.rs
+++ b/src/types/set.rs
@@ -93,7 +93,12 @@ impl PySet {
 
     /// Remove and return an arbitrary element from the set
     pub fn pop(&self) -> Option<PyObject> {
-        unsafe { PyObject::from_owned_ptr_or_opt(self.py(), ffi::PySet_Pop(self.as_ptr())) }
+        let element =
+            unsafe { PyObject::from_owned_ptr_or_err(self.py(), ffi::PySet_Pop(self.as_ptr())) };
+        match element {
+            Ok(e) => Some(e),
+            Err(_) => None,
+        }
     }
 
     /// Returns an iterator of values in this set.
@@ -324,6 +329,9 @@ mod test {
         assert!(val.is_some());
         let val2 = set.pop();
         assert!(val2.is_none());
+        assert!(py
+            .eval("print('Exception state should not be set.')", None, None)
+            .is_ok());
     }
 
     #[test]
diff --git a/tests/test_various.rs b/tests/test_various.rs
index 655101db..563166bd 100644
--- a/tests/test_various.rs
+++ b/tests/test_various.rs
@@ -179,4 +179,7 @@ fn incorrect_iter() {
     let int_ref = int.as_ref(py);
     // Should not segfault.
     assert!(int_ref.iter().is_err());
+    assert!(py
+        .eval("print('Exception state should not be set.')", None, None)
+        .is_ok());
 }