diff --git a/Python/import.c b/Python/import.c
index a5ea0e2f81df57a..6956dd579189633 100644
--- a/Python/import.c
+++ b/Python/import.c
@@ -815,6 +815,8 @@ static int clear_singlephase_extension(PyInterpreterState *interp,
 
 // Currently, this is only used for testing.
 // (See _testinternalcapi.clear_extension().)
+// If adding another use uses, careful about modules that import themselves
+// recursively (see gh-123880)
 int
 _PyImport_ClearExtension(PyObject *name, PyObject *filename)
 {
@@ -1322,12 +1324,16 @@ _extensions_cache_set(PyObject *path, PyObject *name,
     value = entry == NULL
         ? NULL
         : (struct extensions_cache_value *)entry->value;
-    /* We should never be updating an existing cache value. */
-    assert(value == NULL);
     if (value != NULL) {
-        PyErr_Format(PyExc_SystemError,
-                     "extension module %R is already cached", name);
-        goto finally;
+        /* gh-123880: If there's an existing cache value, it means a module
+         * is being imported recursively from its PyInit_* function.
+         * (The init function presumably handles returning a partially
+         *  constructed module in such a case.)
+         * We can reuse the existing cache value; it is owned byt the cache.
+         * (Entries get removed from it in exceptional circumstances,
+         * after interpreter shutdown, and in runtime shutdown.)
+         */
+        goto finally_oldvalue;
     }
     newvalue = alloc_extensions_cache_value();
     if (newvalue == NULL) {
@@ -1392,6 +1398,7 @@ _extensions_cache_set(PyObject *path, PyObject *name,
         cleanup_old_cached_def(&olddefbase);
     }
 
+finally_oldvalue:
     extensions_lock_release();
     if (key != NULL) {
         hashtable_destroy_str(key);
@@ -2128,6 +2135,7 @@ import_run_extension(PyThreadState *tstate, PyModInitFunction p0,
 }
 
 
+// Used in _PyImport_ClearExtension; see notes there
 static int
 clear_singlephase_extension(PyInterpreterState *interp,
                             PyObject *name, PyObject *path)