diff -r 304c61263ae6 Doc/c-api/exceptions.rst
--- a/Doc/c-api/exceptions.rst	Mon Jun 13 09:24:11 2016 +0300
+++ b/Doc/c-api/exceptions.rst	Mon Jun 13 23:14:23 2016 +0300
@@ -578,6 +578,10 @@ Exception Objects
    it.  There is no type check to make sure that *ctx* is an exception instance.
    This steals a reference to *ctx*.
 
+   .. versionchanged:: 3.5.2
+      If *ctx* is *ex*, the function has no any effect.  If *ex* is in the
+      context chain started from *ctx*, it is moved to the start of the chain. 
+
 
 .. c:function:: PyObject* PyException_GetCause(PyObject *ex)
 
diff -r 304c61263ae6 Doc/library/exceptions.rst
--- a/Doc/library/exceptions.rst	Mon Jun 13 09:24:11 2016 +0300
+++ b/Doc/library/exceptions.rst	Mon Jun 13 23:14:23 2016 +0300
@@ -66,6 +66,12 @@ In either case, the exception itself is 
 exceptions so that the final line of the traceback always shows the last
 exception that was raised.
 
+.. versionchanged:: 3.5.2
+
+   Setting :attr:`__context__` to self has no any effect.  If set
+   ``__context__`` to the chain contained original exception, it is moved to
+   the start of the context chain.
+
 
 Base classes
 ------------
diff -r 304c61263ae6 Lib/test/test_contextlib.py
--- a/Lib/test/test_contextlib.py	Mon Jun 13 09:24:11 2016 +0300
+++ b/Lib/test/test_contextlib.py	Mon Jun 13 23:14:23 2016 +0300
@@ -795,6 +795,40 @@ class TestExitStack(unittest.TestCase):
         stack.push(cm)
         self.assertIs(stack._exit_callbacks[-1], cm)
 
+    def test_dont_reraise_RuntimeError(self):
+        """https://bugs.python.org/issue27122"""
+        class UniqueException(Exception): pass
+
+        @contextmanager
+        def second():
+            try:
+                yield 1
+            except Exception as exc:
+                raise UniqueException("new exception") from exc
+
+        @contextmanager
+        def first():
+            try:
+                yield 1
+            except Exception as exc:
+                raise exc
+
+        # The RuntimeError should be caught by second()'s exception
+        # handler which chain raised a new UniqueException.
+        with self.assertRaises(UniqueException) as err_ctx:
+            with ExitStack() as es_ctx:
+                es_ctx.enter_context(second())
+                es_ctx.enter_context(first())
+                raise RuntimeError("please no infinite loop.")
+
+        self.assertEqual(err_ctx.exception.args[0], "new exception")
+        self.assertEqual(err_ctx.exception.__context__.args[0],
+                         "please no infinite loop.")
+        self.assertIs(err_ctx.exception.__context__,
+                      err_ctx.exception.__cause__)
+        self.assertIsNone(err_ctx.exception.__cause__.__context__)
+        self.assertIsNone(err_ctx.exception.__cause__.__cause__)
+
 
 class TestRedirectStream:
 
diff -r 304c61263ae6 Lib/test/test_exceptions.py
--- a/Lib/test/test_exceptions.py	Mon Jun 13 09:24:11 2016 +0300
+++ b/Lib/test/test_exceptions.py	Mon Jun 13 23:14:23 2016 +0300
@@ -629,6 +629,26 @@ class ExceptionTests(unittest.TestCase):
         obj = wr()
         self.assertTrue(obj is None, "%s" % obj)
 
+    def test_context_loop(self):
+        exc1 = Exception(1)
+        exc1.__context__ = exc1
+        self.assertIsNone(exc1.__context__)
+
+        exc2 = Exception(2)
+        exc2.__context__ = exc1
+        self.assertIs(exc2.__context__, exc1)
+        exc1.__context__ = exc2
+        self.assertIs(exc1.__context__, exc2)
+        self.assertIsNone(exc2.__context__)
+
+        exc3 = Exception(3)
+        exc3.__context__ = exc1
+        self.assertIs(exc3.__context__, exc1)
+        exc1.__context__ = exc3
+        self.assertIs(exc1.__context__, exc3)
+        self.assertIs(exc3.__context__, exc2)
+        self.assertIsNone(exc2.__context__)
+
     def test_exception_target_in_nested_scope(self):
         # issue 4617: This used to raise a SyntaxError
         # "can not delete variable 'e' referenced in nested scope"
diff -r 304c61263ae6 Objects/exceptions.c
--- a/Objects/exceptions.c	Mon Jun 13 09:24:11 2016 +0300
+++ b/Objects/exceptions.c	Mon Jun 13 23:14:23 2016 +0300
@@ -341,6 +341,26 @@ PyException_GetContext(PyObject *self) {
 void
 PyException_SetContext(PyObject *self, PyObject *context)
 {
+    PyObject *exc = context;
+    PyObject *prev_exc = NULL;
+
+    while (exc != NULL) {
+        if (exc == self) {
+            if (prev_exc != NULL) {
+                /* Move self to the start of the chain. */
+                ((PyBaseExceptionObject *)prev_exc)->context =
+                        ((PyBaseExceptionObject *)self)->context;
+                ((PyBaseExceptionObject *)self)->context = context;
+            }
+            assert(Py_REFCNT(self) > 1);
+            Py_DECREF(self);
+            return;
+        }
+        assert(PyExceptionInstance_Check(exc));
+        prev_exc = exc;
+        exc = ((PyBaseExceptionObject *)exc)->context;
+    }
+
     Py_XSETREF(((PyBaseExceptionObject *)self)->context, context);
 }