diff --git a/ociregistry/ociauth/auth.go b/ociregistry/ociauth/auth.go
index d30b1e59..955356c2 100644
--- a/ociregistry/ociauth/auth.go
+++ b/ociregistry/ociauth/auth.go
@@ -168,7 +168,7 @@ func (a *stdTransport) RoundTrip(req *http.Request) (*http.Response, error) {
 	if challenge == nil {
 		return resp, nil
 	}
-	authAdded, err := r.setAuthorizationFromChallenge(ctx, req, challenge, requiredScope, wantScope)
+	authAdded, tokenAcquired, err := r.setAuthorizationFromChallenge(ctx, req, challenge, requiredScope, wantScope)
 	if err != nil {
 		resp.Body.Close()
 		return nil, err
@@ -189,17 +189,16 @@ func (a *stdTransport) RoundTrip(req *http.Request) (*http.Response, error) {
 	if err != nil {
 		return nil, err
 	}
-	if resp.StatusCode != http.StatusUnauthorized {
+	if resp.StatusCode != http.StatusUnauthorized || !tokenAcquired {
 		return resp, nil
 	}
-	deniedErr := ociregistry.ErrDenied
 	// The server has responded with Unauthorized (401) even though we've just
 	// provided a token that it gave us. Treat it as Forbidden (403) instead.
 	// TODO include the original body/error as part of the message or message detail?
 	resp.Body.Close()
 	data, err := json.Marshal(&ociregistry.WireErrors{
 		Errors: []ociregistry.WireError{{
-			Code_:   deniedErr.Code(),
+			Code_:   ociregistry.ErrDenied.Code(),
 			Message: "unauthorized response with freshly acquired auth token",
 		}},
 	})
@@ -262,7 +261,7 @@ func (r *registry) setAuthorization(ctx context.Context, req *http.Request, requ
 	return nil
 }
 
-func (r *registry) setAuthorizationFromChallenge(ctx context.Context, req *http.Request, challenge *authHeader, requiredScope, wantScope Scope) (bool, error) {
+func (r *registry) setAuthorizationFromChallenge(ctx context.Context, req *http.Request, challenge *authHeader, requiredScope, wantScope Scope) (authAdded, tokenAcquired bool, _ error) {
 	r.mu.Lock()
 	defer r.mu.Unlock()
 	r.wwwAuthenticate = challenge
@@ -272,15 +271,15 @@ func (r *registry) setAuthorizationFromChallenge(ctx context.Context, req *http.
 		scope := ParseScope(r.wwwAuthenticate.params["scope"])
 		accessToken, err := r.acquireAccessToken(ctx, scope, wantScope.Union(requiredScope))
 		if err != nil {
-			return false, err
+			return false, false, err
 		}
 		req.Header.Set("Authorization", "Bearer "+accessToken)
-		return true, nil
+		return true, true, nil
 	case r.basic != nil:
 		req.SetBasicAuth(r.basic.username, r.basic.password)
-		return true, nil
+		return true, false, nil
 	}
-	return false, nil
+	return false, false, nil
 }
 
 // init initializes the registry instance by acquiring auth information from
diff --git a/ociregistry/ociauth/auth_test.go b/ociregistry/ociauth/auth_test.go
index 2a328455..f997399f 100644
--- a/ociregistry/ociauth/auth_test.go
+++ b/ociregistry/ociauth/auth_test.go
@@ -307,6 +307,52 @@ func Test401ResponseWithJustAcquiredToken(t *testing.T) {
 	qt.Assert(t, qt.Equals(resp.StatusCode, http.StatusForbidden))
 }
 
+func Test401ResponseWithNonAcquiredToken(t *testing.T) {
+	// This tests the scenario where a server returns a 401 response
+	// when the client has provided credentials already present in
+	// the configuration file.
+	//
+	// In this case, we don't want to trigger the fake-403-response
+	// behaviour test for in Test401ResponseWithJustAcquiredToken.
+
+	ts := newTargetServer(t, func(req *http.Request) *httpError {
+		if req.Header.Get("Authorization") == "" {
+			return &httpError{
+				statusCode: http.StatusUnauthorized,
+				header: http.Header{
+					"Www-Authenticate": []string{"Basic"},
+				},
+				body: "no auth creds provided",
+			}
+		}
+		return &httpError{
+			statusCode: http.StatusUnauthorized,
+			header: http.Header{
+				"Www-Authenticate": []string{"Basic"},
+			},
+			body: "password mismatch",
+		}
+	})
+	client := &http.Client{
+		Transport: NewStdTransport(StdTransportParams{
+			Config: configFunc(func(host string) (ConfigEntry, error) {
+				return ConfigEntry{
+					Username: "someuser",
+					Password: "somepassword",
+				}, nil
+			}),
+		}),
+	}
+	req, err := http.NewRequestWithContext(context.Background(), "GET", ts.String()+"/test", nil)
+	qt.Assert(t, qt.IsNil(err))
+	resp, err := client.Do(req)
+	qt.Assert(t, qt.IsNil(err))
+	defer resp.Body.Close()
+	data, _ := io.ReadAll(resp.Body)
+	qt.Assert(t, qt.Equals(resp.StatusCode, http.StatusUnauthorized))
+	qt.Assert(t, qt.Equals(string(data), "password mismatch"))
+}
+
 func TestConfigHasAccessToken(t *testing.T) {
 	accessToken := "somevalue"
 	ts := newTargetServer(t, func(req *http.Request) *httpError {