diff --git a/pyomo/common/config.py b/pyomo/common/config.py
index 94e81531aa1..82f0966036b 100644
--- a/pyomo/common/config.py
+++ b/pyomo/common/config.py
@@ -1600,7 +1600,13 @@ def __call__(
 
         # ... and set the value, if appropriate
         if value is not NOTSET:
-            ans.set_value(value)
+            # Change in response to Pyomo/pyomo#3721
+            # If setting a ConfigDict from a (nonempty) dict during __call__,
+            # do not mark the container itself as user-set; only the children.
+            if isinstance(ans, ConfigDict) and isinstance(value, dict):
+                ans.set_value(value, _mark_container_userSet=False)
+            else:
+                ans.set_value(value)
         return ans
 
     def name(self, fully_qualified=False):
@@ -2580,7 +2586,7 @@ def value(self, accessValue=True):
             self._userAccessed = True
         return {cfg._name: cfg.value(accessValue) for cfg in self._data.values()}
 
-    def set_value(self, value, skip_implicit=False):
+    def set_value(self, value, skip_implicit=False, _mark_container_userSet=True):
         if value is None:
             return self
         if isinstance(value, str):
@@ -2631,7 +2637,9 @@ def set_value(self, value, skip_implicit=False):
             self.reset()
             self.set_value(_old_data)
             raise
-        self._userSet = True
+        # Change in response to Pyomo/pyomo#3721
+        if _mark_container_userSet:
+            self._userSet = True
         return self
 
     def reset(self):
diff --git a/pyomo/common/tests/test_config.py b/pyomo/common/tests/test_config.py
index eda594dfd0e..ea1a461bed4 100644
--- a/pyomo/common/tests/test_config.py
+++ b/pyomo/common/tests/test_config.py
@@ -1599,6 +1599,24 @@ def test_UserValues_declare_subBlock(self):
         test = '\n'.join(x.name(True) for x in self.config.user_values())
         self.assertEqual(test, "")
 
+    def test_userValues_call_nonempty(self):
+        # See bug report in Pyomo/pyomo#3721
+        default = ConfigDict()
+        default.declare("filename", ConfigValue(default=None, domain=str))
+        cfg = default(value={"filename": "example.txt"})
+        names = [x.name(True) for x in cfg.user_values()]
+        self.assertEqual(names, ["filename"])
+        self.assertTrue(all(x is not cfg for x in cfg.user_values()))
+
+    def test_userValues_call_empty_then_set(self):
+        # See bug report in Pyomo/pyomo#3721
+        default = ConfigDict()
+        default.declare("filename", ConfigValue(default=None, domain=str))
+        cfg = default({})
+        cfg["filename"] = "example.txt"
+        names = [x.name(True) for x in cfg.user_values()]
+        self.assertEqual(names, ["filename"])
+
     @unittest.skipIf(not yaml_available, "Test requires PyYAML")
     def test_parseDisplayAndValue_default(self):
         test = _display(self.config)