diff --git a/docs/spec/exceptions.rst b/docs/spec/exceptions.rst
new file mode 100644
index 000000000..aae3fe2c1
--- /dev/null
+++ b/docs/spec/exceptions.rst
@@ -0,0 +1,63 @@
+Exceptions
+==========
+
+Some type checking behaviors, such as type narrowing and reachability analysis,
+require a type checker to understand code flow. Code flow normally proceeds
+from one statement to the next, but some statements such as ``for``, ``while``
+and ``return`` can change the code flow. Similarly, ``try``/``except``/``finally``
+statements affect code flow and therefore can affect type evaluation. For example::
+
+    x = None
+    try:
+        some_function()
+        x = 1
+    except NotImplementedError:
+        pass
+
+    # The type of `x` at this point could be None if `some_function` raises
+    # an exception or `Literal[1]` if it doesn't, so a type checker may
+    # choose to narrow its type based on this analysis.
+    reveal_type(x)  # Literal[1] | None
+
+
+Context Managers
+----------------
+
+A context manager may optionally "suppress" exceptions by returning ``True``
+(or some other truthy value) from its ``__exit__`` method. When such a context
+manager is used, any exceptions that are raised and otherwise uncaught within
+the ``with`` block are caught by the context manager, and control continues
+immediately after the ``with`` block. If a context manager does not suppress
+exceptions (as is typically the case), any exceptions that are raised and
+otherwise uncaught within the ``with`` block propagate beyond the ``with``
+block.
+
+Type checkers that employ code flow analysis must be able to distinguish
+between these two cases. This is done by examining the return type
+annotation of the ``__exit__`` method of the context manager.
+
+If the return type of the ``__exit__`` method is specifically ``bool`` or
+``Literal[True]``, a type checker should assume that exceptions *can be*
+suppressed. For any other return type, a type checker should assume that
+exceptions *are not* suppressed. Examples include: ``Any``, ``Literal[False]``,
+``None``, and ``bool | None``.
+
+This convention was chosen because most context managers do not suppress
+exceptions, and it is common for their ``__exit__`` method to be annotated as
+returning ``bool | None``. Context managers that suppress exceptions are
+relatively rare, so they are considered a special case.
+
+For example, the following context manager suppresses exceptions::
+
+    class Suppress:
+        def __enter__(self) -> None:
+            pass
+
+        def __exit__(self, exc_type, exc_value, traceback) -> bool:
+            return True
+
+    with Suppress():
+        raise ValueError("This exception is suppressed")
+
+    # The exception is suppressed, so this line is reachable.
+    print("Code is reachable")
diff --git a/docs/spec/index.rst b/docs/spec/index.rst
index 3e77898ce..6e5e5c00b 100644
--- a/docs/spec/index.rst
+++ b/docs/spec/index.rst
@@ -19,6 +19,7 @@ Specification for the Python type system
    callables
    constructors
    overload
+   exceptions
    dataclasses
    typeddict
    tuples