diff --git a/mysql-test/main/alter_table_failed_rename_index.result b/mysql-test/main/alter_table_failed_rename_index.result
new file mode 100644
index 0000000000000..d315b6a5d5c09
--- /dev/null
+++ b/mysql-test/main/alter_table_failed_rename_index.result
@@ -0,0 +1,20 @@
+#
+# Scenario A: WITH a prior failed ALTER ... RENAME INDEX
+#
+CREATE TABLE t1 (f1 INT, f2 INT, KEY(f1), KEY(f2)) ENGINE=InnoDB;
+CREATE TABLE t2 (pk INT PRIMARY KEY, a INT, b INT, KEY ind1(a),
+FOREIGN KEY fk1 (b) REFERENCES t1 (f1)) ENGINE=InnoDB;
+ALTER TABLE t2 RENAME INDEX fk1 TO fk, ALGORITHM=INSTANT, ORDER BY a;
+ERROR 0A000: ALGORITHM=INSTANT is not supported for this operation. Try ALGORITHM=COPY
+ALTER TABLE t2 ADD FOREIGN KEY ind1 (b) REFERENCES t1 (f2);
+ERROR 42000: Duplicate key name 'ind1'
+DROP TABLE t2, t1;
+#
+# Scenario B: WITHOUT a prior failed ALTER ... RENAME INDEX (baseline)
+#
+CREATE TABLE t1 (f1 INT, f2 INT, KEY(f1), KEY(f2)) ENGINE=InnoDB;
+CREATE TABLE t2 (pk INT PRIMARY KEY, a INT, b INT, KEY ind1(a),
+FOREIGN KEY fk1 (b) REFERENCES t1 (f1)) ENGINE=InnoDB;
+ALTER TABLE t2 ADD FOREIGN KEY ind1 (b) REFERENCES t1 (f2);
+ERROR 42000: Duplicate key name 'ind1'
+DROP TABLE t2, t1;
diff --git a/mysql-test/main/alter_table_failed_rename_index.test b/mysql-test/main/alter_table_failed_rename_index.test
new file mode 100644
index 0000000000000..11d543e2b791f
--- /dev/null
+++ b/mysql-test/main/alter_table_failed_rename_index.test
@@ -0,0 +1,30 @@
+--source include/have_innodb.inc
+
+# MDEV-35732: Failed ALTER TABLE causes inconsistency, changes behavior of the next statement
+
+--echo #
+--echo # Scenario A: WITH a prior failed ALTER ... RENAME INDEX
+--echo #
+CREATE TABLE t1 (f1 INT, f2 INT, KEY(f1), KEY(f2)) ENGINE=InnoDB;
+CREATE TABLE t2 (pk INT PRIMARY KEY, a INT, b INT, KEY ind1(a),
+                 FOREIGN KEY fk1 (b) REFERENCES t1 (f1)) ENGINE=InnoDB;
+
+--error ER_ALTER_OPERATION_NOT_SUPPORTED
+ALTER TABLE t2 RENAME INDEX fk1 TO fk, ALGORITHM=INSTANT, ORDER BY a;
+
+--error ER_DUP_KEYNAME
+ALTER TABLE t2 ADD FOREIGN KEY ind1 (b) REFERENCES t1 (f2);
+
+DROP TABLE t2, t1;
+
+--echo #
+--echo # Scenario B: WITHOUT a prior failed ALTER ... RENAME INDEX (baseline)
+--echo #
+CREATE TABLE t1 (f1 INT, f2 INT, KEY(f1), KEY(f2)) ENGINE=InnoDB;
+CREATE TABLE t2 (pk INT PRIMARY KEY, a INT, b INT, KEY ind1(a),
+                 FOREIGN KEY fk1 (b) REFERENCES t1 (f1)) ENGINE=InnoDB;
+
+--error ER_DUP_KEYNAME
+ALTER TABLE t2 ADD FOREIGN KEY ind1 (b) REFERENCES t1 (f2);
+
+DROP TABLE t2, t1;
diff --git a/sql/sql_table.cc b/sql/sql_table.cc
index 5ae123c528bab..19d5c5ed6bd5c 100644
--- a/sql/sql_table.cc
+++ b/sql/sql_table.cc
@@ -8941,6 +8941,7 @@ mysql_prepare_alter_table(THD *thd, TABLE *table,
     bool long_hash_key= false;
     if (key_info->flags & HA_INVISIBLE_KEY)
       continue;
+    bool generated_key= key_info->flags & HA_GENERATED_KEY;
     const char *key_name= key_info->name.str;
     const bool primary_key= table->s->primary_key == i;
     const bool explicit_pk= primary_key &&
@@ -9029,7 +9030,7 @@ mysql_prepare_alter_table(THD *thd, TABLE *table,
           dropped by mysql_prepare_create_table() and this will confuse
           code in fill_alter_inplace_info().
         */
-        key_info->flags&= ~HA_GENERATED_KEY;
+        generated_key= false;
         break;
       }
     }
@@ -9229,7 +9230,7 @@ mysql_prepare_alter_table(THD *thd, TABLE *table,
       tmp_name.length= strlen(key_name);
       /* We dont need LONG_UNIQUE_HASH_FIELD flag because it will be autogenerated */
       key= new (thd->mem_root) Key(key_type, &tmp_name, &key_create_info,
-                   key_info->flags & HA_GENERATED_KEY,
+                   generated_key,
                    &key_parts, key_info->option_list, DDL_options());
       key->without_overlaps= key_info->without_overlaps;
       key->period= table->s->period.name;