Index: Misc/NEWS
===================================================================
--- Misc/NEWS	(revision 75186)
+++ Misc/NEWS	(working copy)
@@ -390,6 +390,9 @@
 Library
 -------
 
+- Issue #7049: Slightly relax restrictions on 3-argument pow for Decimal:
+  the modulus is now only required to be <= 10**prec, not < 10**prec.
+
 - Issue #7031: Add TestCase.assert(Not)IsInstance() methods.
 
 - Issue #6790: Make it possible again to pass an `array.array` to
Index: Doc/library/decimal.rst
===================================================================
--- Doc/library/decimal.rst	(revision 75186)
+++ Doc/library/decimal.rst	(working copy)
@@ -1316,7 +1316,8 @@
          - all three arguments must be integral
          - ``y`` must be nonnegative
          - at least one of ``x`` or ``y`` must be nonzero
-         - ``modulo`` must be nonzero and have at most 'precision' digits
+         - ``modulo`` must be nonzero, and at most ``10**precision`` in
+           absolute value.
 
       The result of ``Context.power(x, y, modulo)`` is identical to the result
       that would be obtained by computing ``(x**y) % modulo`` with unbounded
Index: Lib/decimal.py
===================================================================
--- Lib/decimal.py	(revision 75186)
+++ Lib/decimal.py	(working copy)
@@ -1845,13 +1845,13 @@
             return context._raise_error(InvalidOperation,
                                         'pow() 3rd argument cannot be 0')
 
-        # additional restriction for decimal: the modulus must be less
-        # than 10**prec in absolute value
-        if modulo.adjusted() >= context.prec:
+        # additional restriction for decimal: the modulus must be at
+        # most 10**prec in absolute value
+        if modulo.copy_abs() > _dec_from_triple(0, '1', context.prec):
             return context._raise_error(InvalidOperation,
                                         'insufficient precision: pow() 3rd '
-                                        'argument must not have more than '
-                                        'precision digits')
+                                        'argument must be at most '
+                                        '10**precision')
 
         # define 0**0 == NaN, for consistency with two-argument pow
         # (even though it hurts!)
Index: Lib/test/decimaltestdata/extra.decTest
===================================================================
--- Lib/test/decimaltestdata/extra.decTest	(revision 75186)
+++ Lib/test/decimaltestdata/extra.decTest	(working copy)
@@ -2651,8 +2651,8 @@
 
 -- Modulus must not exceed precision
 pwmx325 power 0 1 1234567890 -> NaN Invalid_operation
-pwmx326 power 1 0 1000000000 -> NaN Invalid_operation
-pwmx327 power -23 5 -1000000000 -> NaN Invalid_operation
+pwmx326 power 1 0 1000000000 -> 1
+pwmx327 power -23 5 -1000000000 -> -6436343
 pwmx328 power 41557 213 -999999999 -> 47650456
 pwmx329 power -2134 199 999999997 -> -946957912
 
@@ -2704,3 +2704,13 @@
 pwmx438 power 18 1728 1729 -> 1
 pwmx439 power 19 1728 1729 -> 456
 pwmx440 power 20 1728 1729 -> 1
+
+-- More modulus and precision checks:  in Python 2.7,
+-- the modulus is allowed to be up to 10**precision;
+-- previously its max value was 10**precision-1.
+pwmx500 power 0 0 1000000001 -> NaN Invalid_operation
+pwmx501 power 1 0 1000000001 -> NaN Invalid_operation
+pwmx502 power 1 1 1000000001 -> NaN Invalid_operation
+pwmx503 power 0 1 1000000001 -> NaN Invalid_operation
+pwmx504 power 1e15 5176 1000000001 -> NaN Invalid_operation
+pwmx504 power 12 132 -1000000001 -> NaN Invalid_operation