diff --git a/newsfragments/+inplace-setup.bugfix.rst b/newsfragments/+inplace-setup.bugfix.rst
new file mode 100644
index 0000000..b7bcf9c
--- /dev/null
+++ b/newsfragments/+inplace-setup.bugfix.rst
@@ -0,0 +1 @@
+Restore the original file and close opened streams when ``Path.in_place()`` fails during setup.
diff --git a/path/__init__.py b/path/__init__.py
index 731e88e..2053802 100644
--- a/path/__init__.py
+++ b/path/__init__.py
@@ -1750,43 +1750,42 @@ def in_place(
         backup_fn = self + (backup_extension or os.extsep + 'bak')
         backup_fn.remove_p()
         self.rename(backup_fn)
-        # closed explicitly below, after the caller's block exits
-        readable = open(  # noqa: SIM115
-            backup_fn,
-            mode,
-            buffering=buffering,
-            encoding=encoding,
-            errors=errors,
-            newline=newline,
-        )
-
-        perm = os.stat(readable.fileno()).st_mode
-        os_mode = os.O_CREAT | os.O_WRONLY | os.O_TRUNC
-        os_mode |= getattr(os, 'O_BINARY', 0)
-        fd = os.open(self, os_mode, perm)
-        writable = open(  # noqa: SIM115
-            fd,
-            "w" + mode.replace('r', ''),
-            buffering=buffering,
-            encoding=encoding,
-            errors=errors,
-            newline=newline,
-        )
-        with contextlib.suppress(OSError, AttributeError):
-            self.chmod(perm)
-
         try:
-            yield readable, writable
+            with contextlib.ExitStack() as streams:
+                readable = streams.enter_context(
+                    open(
+                        backup_fn,
+                        mode,
+                        buffering=buffering,
+                        encoding=encoding,
+                        errors=errors,
+                        newline=newline,
+                    )
+                )
+                perm = os.stat(readable.fileno()).st_mode
+                os_mode = os.O_CREAT | os.O_WRONLY | os.O_TRUNC
+                os_mode |= getattr(os, 'O_BINARY', 0)
+                fd = os.open(self, os_mode, perm)
+                streams.callback(os.close, fd)
+                writable = streams.enter_context(
+                    open(
+                        fd,
+                        "w" + mode.replace('r', ''),
+                        buffering=buffering,
+                        encoding=encoding,
+                        errors=errors,
+                        newline=newline,
+                        closefd=False,
+                    )
+                )
+                with contextlib.suppress(OSError, AttributeError):
+                    self.chmod(perm)
+                yield readable, writable
         except Exception:
-            # move backup back
-            readable.close()
-            writable.close()
+            # move backup back after closing any streams opened during setup
             self.remove_p()
             backup_fn.rename(self)
             raise
-        else:
-            readable.close()
-            writable.close()
         finally:
             backup_fn.remove_p()
 
diff --git a/tests/test_path.py b/tests/test_path.py
index 55d733c..76f569f 100644
--- a/tests/test_path.py
+++ b/tests/test_path.py
@@ -1229,6 +1229,51 @@ def test_exception_in_context(self, tmpdir):
         assert 'Lorem' not in data
         assert 'lazy dog' in data
 
+    @pytest.mark.parametrize(
+        ('options', 'error'),
+        [({'encoding': 'missing-codec'}, LookupError), ({'mode': 'q'}, ValueError)],
+    )
+    def test_reader_setup_failure_restores_file(self, tmpdir, options, error):
+        doc = self.create_reference(tmpdir)
+        with pytest.raises(error), doc.in_place(**options):
+            pytest.fail('setup must fail before yielding')
+        assert doc.read_text(encoding='utf-8') == self.reference_content
+        assert not (doc + '.bak').exists()
+
+    def test_writer_setup_failure_restores_file(self, tmpdir, monkeypatch):
+        doc = self.create_reference(tmpdir)
+
+        def fail_open(*args, **kwargs):
+            raise PermissionError('cannot create replacement')
+
+        monkeypatch.setattr(os, 'open', fail_open)
+        with pytest.raises(PermissionError), doc.in_place(encoding='utf-8'):
+            pytest.fail('setup must fail before yielding')
+        assert doc.read_text(encoding='utf-8') == self.reference_content
+        assert not (doc + '.bak').exists()
+
+    def test_writer_wrapping_failure_closes_resources(self, tmpdir, monkeypatch):
+        doc = self.create_reference(tmpdir)
+        opened = []
+
+        def fail_writer(file, *args, **kwargs):
+            if isinstance(file, int):
+                opened.append(file)
+                raise OSError('cannot wrap replacement descriptor')
+            reader = open(file, *args, **kwargs)  # noqa: SIM115 - caller owns stream
+            opened.append(reader)
+            return reader
+
+        monkeypatch.setattr(path, 'open', fail_writer, raising=False)
+        with pytest.raises(OSError), doc.in_place(encoding='utf-8'):
+            pytest.fail('setup must fail before yielding')
+        reader, fd = opened
+        assert reader.closed
+        with pytest.raises(OSError):
+            os.fstat(fd)
+        assert doc.read_text(encoding='utf-8') == self.reference_content
+        assert not (doc + '.bak').exists()
+
     def test_write_mode_invalid(self, tmpdir):
         with (
             pytest.raises(ValueError),