diff --git a/test/dynamo/test_ctx_manager.py b/test/dynamo/test_ctx_manager.py
index 316855adabc..cf6da178d27 100644
--- a/test/dynamo/test_ctx_manager.py
+++ b/test/dynamo/test_ctx_manager.py
@@ -1072,10 +1072,9 @@ class GraphModule(torch.nn.Module):
 
                             inner_func = torch.set_grad_enabled(mode)(inner_func)
 
-                        # decorator will mutate global state even if it wraps a function
-                        # This behaviour is not desirable and may change in the future
-                        # https://github.com/pytorch/pytorch/issues/113298
-                        assert torch.is_grad_enabled() == mode
+                        # Consuming set_grad_enabled by calling it on a function
+                        # should not mutate global state
+                        assert torch.is_grad_enabled() == mode_inverse
 
                     with torch.set_grad_enabled(mode_inverse):
                         return inner_func(x)
diff --git a/test/test_autograd.py b/test/test_autograd.py
index 57aab2ca386..671ebc449de 100644
--- a/test/test_autograd.py
+++ b/test/test_autograd.py
@@ -3735,6 +3735,36 @@ class TestAutograd(TestCase):
             y = x * 2
         self.assertTrue(y.requires_grad)
 
+    def test_set_grad_enabled_wraps(self):
+        for decorator in [True, False]:
+            with torch.enable_grad():
+                self.assertTrue(torch.is_grad_enabled())
+
+                if decorator:
+                    # This should not mutate the global grad mode!
+                    @torch.set_grad_enabled(False)
+                    def inner_func(x):
+                        return x.sin()
+                else:
+                    def inner_func(x):
+                        return x.sin()
+
+                    # This is non-idiomatic usage!
+                    # More idiomatic usage: torch.set_grad_enabled(False)(inner_func)
+                    obj = torch.set_grad_enabled(False)
+                    self.assertTrue(not torch.is_grad_enabled())
+
+                    # this will consume the set_grad_enabled global mutation!
+                    inner_func = obj(inner_func)
+                    self.assertTrue(torch.is_grad_enabled())
+
+                self.assertTrue(torch.is_grad_enabled())
+
+                x = torch.zeros(1, requires_grad=True)
+                self.assertTrue(
+                    not inner_func(x).requires_grad
+                )
+
     def test_simple_reentrant(self):
         y_data = torch.randn(2, 2)
 
diff --git a/torch/_dynamo/variables/ctx_manager.py b/torch/_dynamo/variables/ctx_manager.py
index 7567a6e01ee..d8dd581d938 100644
--- a/torch/_dynamo/variables/ctx_manager.py
+++ b/torch/_dynamo/variables/ctx_manager.py
@@ -181,8 +181,7 @@ class GradModeVariable(ContextWrappingVariable):
     def call_function(
         self, tx, args: "List[VariableTracker]", kwargs: "Dict[str, VariableTracker]"
     ):
-        # TODO(jon-chuang): uncomment once https://github.com/pytorch/pytorch/issues/113298 is fixed
-        # self._call_func(tx, self.initial_values)  # undo eager initialization
+        self._call_func(tx, self.initial_values)  # undo eager initialization
         return super().call_function(tx, args, kwargs)
 
     def _call_func(self, tx, values):
diff --git a/torch/autograd/grad_mode.py b/torch/autograd/grad_mode.py
index fcd5d9ff414..9c23dded1ad 100644
--- a/torch/autograd/grad_mode.py
+++ b/torch/autograd/grad_mode.py
@@ -5,6 +5,7 @@ import torch
 from torch.utils._contextlib import (
     _DecoratorContextManager,
     _NoParamDecoratorContextManager,
+    F,
 )
 
 __all__ = [
@@ -181,11 +182,15 @@ class set_grad_enabled(_DecoratorContextManager):
 
     def __init__(self, mode: bool) -> None:
         self.prev = torch.is_grad_enabled()
-        torch._C._set_grad_enabled(mode)
         self.mode = mode
+        torch._C._set_grad_enabled(mode)
+
+    def __call__(self, orig_func: F) -> F:
+        torch._C._set_grad_enabled(self.prev)
+        return super().__call__(orig_func)
 
     def __enter__(self) -> None:
-        pass
+        torch._C._set_grad_enabled(self.mode)
 
     def __exit__(self, exc_type: Any, exc_value: Any, traceback: Any) -> None:
         torch._C._set_grad_enabled(self.prev)