diff --git a/CHANGELOG.rst b/CHANGELOG.rst
index 35a54de4b97..e88eb5b09e2 100644
--- a/CHANGELOG.rst
+++ b/CHANGELOG.rst
@@ -12,7 +12,10 @@
 * When loading plugins, import errors which contain non-ascii messages are now properly handled in Python 2 (`#1998`_).
   Thanks `@nicoddemus`_ for the PR.
 
-* Fixed memory leak in the RaisesContext (pytest.raises) (`#1965`_).
+* Fixed cyclic reference when ``pytest.raises`` is used in context-manager form (`#1965`_). Also as a
+  result of this fix, ``sys.exc_info()`` is left empty in both context-manager and function call usages.
+  Previously, ``sys.exc_info`` would contain the exception caught by the context manager,
+  even when the expected exception occurred.
   Thanks `@MSeifert04`_ for the report and the PR.
 
 * Fixed false-positives warnings from assertion rewrite hook for modules that were rewritten but
diff --git a/_pytest/python.py b/_pytest/python.py
index a42e7185e6e..18432c1e7f8 100644
--- a/_pytest/python.py
+++ b/_pytest/python.py
@@ -1237,7 +1237,11 @@ def __exit__(self, *tp):
                 exc_type, value, traceback = tp
                 tp = exc_type, exc_type(value), traceback
         self.excinfo.__init__(tp)
-        return issubclass(self.excinfo.type, self.expected_exception)
+        suppress_exception = issubclass(self.excinfo.type, self.expected_exception)
+        if sys.version_info[0] == 2 and suppress_exception:
+            sys.exc_clear()
+        return suppress_exception
+
 
 # builtin pytest.approx helper
 
diff --git a/testing/python/raises.py b/testing/python/raises.py
index 80c3df2abe3..8f141cfa1a9 100644
--- a/testing/python/raises.py
+++ b/testing/python/raises.py
@@ -1,4 +1,6 @@
 import pytest
+import sys
+
 
 class TestRaises:
     def test_raises(self):
@@ -98,10 +100,13 @@ def test_custom_raise_message(self):
             assert False, "Expected pytest.raises.Exception"
 
     @pytest.mark.parametrize('method', ['function', 'with'])
-    def test_raises_memoryleak(self, method):
-        import weakref
+    def test_raises_cyclic_reference(self, method):
+        """
+        Ensure pytest.raises does not leave a reference cycle (#1965).
+        """
+        import gc
 
-        class T:
+        class T(object):
             def __call__(self):
                 raise ValueError
 
@@ -112,5 +117,12 @@ def __call__(self):
             with pytest.raises(ValueError):
                 t()
 
-        t = weakref.ref(t)
-        assert t() is None
+        # ensure both forms of pytest.raises don't leave exceptions in sys.exc_info()
+        assert sys.exc_info() == (None, None, None)
+
+        del t
+
+        # ensure the t instance is not stuck in a cyclic reference
+        for o in gc.get_objects():
+            assert type(o) is not T
+