diff -r fe532dccf8f6 Lib/unittest/mock.py
--- a/Lib/unittest/mock.py	Mon Apr 14 10:30:43 2014 -0400
+++ b/Lib/unittest/mock.py	Tue Apr 15 00:06:55 2014 +0530
@@ -343,7 +343,14 @@
         value._mock_name = name
     return True
 
-
+# Internal class to identify if we wrapped an iterator object or not.
+class _MockIter(object):
+    def __init__(self, obj):
+        self.obj = iter(obj)
+    def __iter__(self):
+        return self
+    def __next__(self):
+        return next(self.obj)
 
 class Base(object):
     _mock_return_value = DEFAULT
@@ -495,7 +502,11 @@
         delegated = self._mock_delegate
         if delegated is None:
             return self._mock_side_effect
-        return delegated.side_effect
+        sf = delegated.side_effect
+        if sf is not None and not callable(sf) and not isinstance(sf, _MockIter):
+            sf = _MockIter(sf)
+            delegated.side_effect = sf
+        return sf
 
     def __set_side_effect(self, value):
         value = _try_iter(value)
diff -r fe532dccf8f6 Lib/unittest/test/testmock/testmock.py
--- a/Lib/unittest/test/testmock/testmock.py	Mon Apr 14 10:30:43 2014 -0400
+++ b/Lib/unittest/test/testmock/testmock.py	Tue Apr 15 00:06:55 2014 +0530
@@ -154,6 +154,18 @@
         mock = Mock(side_effect=side_effect, return_value=sentinel.RETURN)
         self.assertEqual(mock(), sentinel.RETURN)
 
+        # Test for issue17826
+        def f(): pass
+        mock = create_autospec(f)
+        mock.side_effect = [1, 2, 3]
+        self.assertEqual([mock(), mock(), mock()], [1, 2, 3],
+                          "side effect not used correctly in create_autospec")
+        # Test where side effect is a callable
+        results = [1, 2, 3]
+        mock = create_autospec(f)
+        mock.side_effect = effect
+        self.assertEqual([mock(), mock(), mock()], [3, 2, 1],
+                          "callable side effect not used correctly")
 
     @unittest.skipUnless('java' in sys.platform,
                           'This test only applies to Jython')