diff -r 1c38457da5a1 Lib/sqlite3/test/regression.py
--- a/Lib/sqlite3/test/regression.py	Thu Aug 25 21:12:16 2016 -0700
+++ b/Lib/sqlite3/test/regression.py	Fri Aug 26 22:33:40 2016 +0800
@@ -147,10 +147,23 @@
 
     def CheckSetIsolationLevel(self):
         """
-        See issue 3312.
+        See issue 27861.
         """
+        class CustomStr(str):
+            def __del__(self):
+                con.isolation_level = ""
+        levels = ["", "DEFERRED", "IMMEDIATE", "EXCLUSIVE"]
+
         con = sqlite.connect(":memory:")
-        setattr(con, "isolation_level", "\xe9")
+        setattr(con, "isolation_level", None)
+        for level in levels:
+            setattr(con, "isolation_level", level)
+            setattr(con, "isolation_level", level.lower())
+            setattr(con, "isolation_level", level.capitalize())
+            setattr(con, "isolation_level", CustomStr(level))
+        self.assertRaises(TypeError, setattr, con, "isolation_level", 1)
+        self.assertRaises(TypeError, setattr, con, "isolation_level", b'abc')
+        self.assertRaises(ValueError, setattr, con, "isolation_level", "abc")
 
     def CheckCursorConstructorCallCheck(self):
         """
diff -r 1c38457da5a1 Modules/_sqlite/connection.c
--- a/Modules/_sqlite/connection.c	Thu Aug 25 21:12:16 2016 -0700
+++ b/Modules/_sqlite/connection.c	Fri Aug 26 22:33:40 2016 +0800
@@ -43,6 +43,8 @@
 
 _Py_IDENTIFIER(cursor);
 
+static const char *isolation_levels[] = {"", "DEFERRED", "IMMEDIATE", "EXCLUSIVE", NULL};
+
 static int pysqlite_connection_set_isolation_level(pysqlite_Connection* self, PyObject* isolation_level);
 static void _pysqlite_drop_unused_cursor_references(pysqlite_Connection* self);
 
@@ -1171,7 +1173,7 @@
     PyObject* begin_statement;
     static PyObject* begin_word;
 
-    Py_XDECREF(self->isolation_level);
+    Py_CLEAR(self->isolation_level);
 
     if (self->begin_statement) {
         PyMem_Free(self->begin_statement);
@@ -1190,8 +1192,34 @@
 
         self->inTransaction = 0;
     } else {
-        const char *statement;
+        const char *statement, **candidate;
+        PyObject *uppercase_level;
         Py_ssize_t size;
+        _Py_IDENTIFIER(upper);
+
+        if (!PyUnicode_Check(isolation_level)) {
+            PyErr_Format(PyExc_TypeError,
+                         "isolation_level must be a string or None, not %s",
+                         Py_TYPE(isolation_level)->tp_name);
+            return -1;
+        }
+
+        uppercase_level = _PyObject_CallMethodId(isolation_level,
+                                                 &PyId_upper, "");
+        if (!uppercase_level) {
+            return -1;
+        }
+        for (candidate = isolation_levels; *candidate; candidate++) {
+            if (PyUnicode_CompareWithASCIIString(uppercase_level,
+                                                 *candidate) == 0)
+                break;
+        }
+        Py_DECREF(uppercase_level);
+        if (!*candidate) {
+            PyErr_SetString(PyExc_ValueError,
+                            "invalid value for isolation_level");
+            return -1;
+        }
 
         Py_INCREF(isolation_level);
         self->isolation_level = isolation_level;