diff --git a/features/steps/tdd_indentation_library_try_except_steps.py b/features/steps/tdd_indentation_library_try_except_steps.py
new file mode 100644
index 000000000..af6830e00
--- /dev/null
+++ b/features/steps/tdd_indentation_library_try_except_steps.py
@@ -0,0 +1,283 @@
+"""Step definitions for TDD Issue #2845 — fix_python_indentation try...except...finally.
+
+These steps verify that ``fix_python_indentation`` in
+``robot/indentation_library.py`` correctly reconstructs indentation for
+``try...except...finally`` blocks, producing syntactically valid Python in
+all cases.
+
+Root cause
+~~~~~~~~~~
+The original implementation had two bugs:
+
+1. When ``finally:`` was encountered, the code popped the ``try`` from the
+   ``block_stack``.  This meant subsequent ``except:`` clauses (for an outer
+   ``try``) could not find their matching ``try`` in the stack, resulting in
+   incorrect indentation and syntactically invalid Python.
+
+2. After an ``except`` block body, subsequent code at the same level was
+   incorrectly indented inside the except block because the ``block_stack``
+   was not properly cleaned up after ``try...except`` blocks completed.
+"""
+
+from __future__ import annotations
+
+import sys
+from pathlib import Path
+
+from behave import given, then, when
+from behave.runner import Context
+
+# Add robot directory to path so we can import indentation_library
+_ROBOT_DIR = str(Path(__file__).parent.parent.parent / "robot")
+if _ROBOT_DIR not in sys.path:
+    sys.path.insert(0, _ROBOT_DIR)
+
+from indentation_library import fix_python_indentation  # noqa: E402
+
+# ---------------------------------------------------------------------------
+# Given steps
+# ---------------------------------------------------------------------------
+
+
+@given("the fix_python_indentation function is available")
+def step_function_available(context: Context) -> None:
+    """Verify the function is importable and callable."""
+    assert callable(fix_python_indentation)
+
+
+# ---------------------------------------------------------------------------
+# When steps
+# ---------------------------------------------------------------------------
+
+
+@when("I fix indentation for a try block with a single except clause")
+def step_single_except(context: Context) -> None:
+    """Fix indentation for a try block with one except clause."""
+    script = 'try:\nx = 1\nexcept ValueError:\nprint("error")'
+    context.result = fix_python_indentation(script)
+    context.script_lines = context.result.split("\n")
+
+
+@when("I fix indentation for a try block with multiple except clauses")
+def step_multiple_except(context: Context) -> None:
+    """Fix indentation for a try block with multiple except clauses."""
+    script = (
+        "try:\n"
+        "x = 1\n"
+        "except ValueError:\n"
+        'print("value error")\n'
+        "except TypeError:\n"
+        'print("type error")'
+    )
+    context.result = fix_python_indentation(script)
+    context.script_lines = context.result.split("\n")
+
+
+@when("I fix indentation for a try block with except and finally")
+def step_except_finally(context: Context) -> None:
+    """Fix indentation for a try...except...finally block."""
+    script = 'try:\nx = 1\nexcept ValueError:\nprint("error")\nfinally:\nprint("done")'
+    context.result = fix_python_indentation(script)
+    context.script_lines = context.result.split("\n")
+
+
+@when("I fix indentation for nested try blocks")
+def step_nested_try(context: Context) -> None:
+    """Fix indentation for nested try blocks."""
+    script = (
+        "try:\n"
+        "try:\n"
+        "x = 1\n"
+        "except ValueError:\n"
+        'print("inner error")\n'
+        "except TypeError:\n"
+        'print("outer error")'
+    )
+    context.result = fix_python_indentation(script)
+    context.script_lines = context.result.split("\n")
+
+
+@when("I fix indentation for nested try with inner finally and outer except")
+def step_nested_try_finally_outer_except(context: Context) -> None:
+    """Fix indentation for nested try with inner finally and outer except.
+
+    This is the critical regression case: the inner ``finally`` must NOT
+    consume the outer ``try`` from the block stack.
+    """
+    script = (
+        "try:\n"
+        "try:\n"
+        "x = 1\n"
+        "except ValueError:\n"
+        'print("inner")\n'
+        "finally:\n"
+        'print("inner finally")\n'
+        "except TypeError:\n"
+        'print("outer")'
+    )
+    context.result = fix_python_indentation(script)
+    context.script_lines = context.result.split("\n")
+
+
+@when("I fix indentation for code that follows a try block")
+def step_code_after_try(context: Context) -> None:
+    """Fix indentation for code that follows a complete try...except block."""
+    script = 'x = 1\ntry:\ny = 2\nexcept ValueError:\nprint("error")\nz = 3'
+    context.result = fix_python_indentation(script)
+    context.script_lines = context.result.split("\n")
+
+
+# ---------------------------------------------------------------------------
+# Then steps
+# ---------------------------------------------------------------------------
+
+
+@then("the indentation result should be syntactically valid Python")
+def step_indentation_valid_python(context: Context) -> None:
+    """Verify the result compiles as valid Python."""
+    try:
+        compile(context.result, "<fix_python_indentation>", "exec")
+    except SyntaxError as exc:
+        raise AssertionError(
+            f"fix_python_indentation produced invalid Python:\n"
+            f"{context.result}\n\nSyntaxError: {exc}"
+        ) from exc
+
+
+@then("the try body should be indented one level")
+def step_try_body_indented(context: Context) -> None:
+    """Verify the try body is indented by 4 spaces."""
+    lines = context.script_lines
+    try_idx = next(i for i, ln in enumerate(lines) if ln.strip() == "try:")
+    body_line = lines[try_idx + 1]
+    assert body_line.startswith("    ") and not body_line.startswith("        "), (
+        f"Expected try body indented 4 spaces, got: {body_line!r}"
+    )
+
+
+@then("the except clause should be at the same level as try")
+def step_except_same_level_as_try(context: Context) -> None:
+    """Verify except is at the same indentation level as try."""
+    lines = context.script_lines
+    try_indent = next(
+        len(ln) - len(ln.lstrip()) for ln in lines if ln.strip() == "try:"
+    )
+    except_lines = [ln for ln in lines if ln.strip().startswith("except")]
+    for exc_line in except_lines:
+        exc_indent = len(exc_line) - len(exc_line.lstrip())
+        assert exc_indent == try_indent, (
+            f"except indent ({exc_indent}) != try indent ({try_indent}): {exc_line!r}"
+        )
+
+
+@then("the except body should be indented one level")
+def step_except_body_indented(context: Context) -> None:
+    """Verify the except body is indented one level deeper than except."""
+    lines = context.script_lines
+    for i, line in enumerate(lines):
+        if line.strip().startswith("except") and i + 1 < len(lines):
+            except_indent = len(line) - len(line.lstrip())
+            body_line = lines[i + 1]
+            if body_line.strip():
+                body_indent = len(body_line) - len(body_line.lstrip())
+                assert body_indent == except_indent + 4, (
+                    f"except body indent ({body_indent}) should be "
+                    f"except indent ({except_indent}) + 4: {body_line!r}"
+                )
+
+
+@then("all except clauses should be at the same level as try")
+def step_all_excepts_same_level(context: Context) -> None:
+    """Verify all except clauses are at the same indentation level as try."""
+    step_except_same_level_as_try(context)
+
+
+@then("each except body should be indented one level")
+def step_each_except_body_indented(context: Context) -> None:
+    """Verify each except body is indented one level deeper than its except."""
+    step_except_body_indented(context)
+
+
+@then("the finally clause should be at the same level as try")
+def step_finally_same_level_as_try(context: Context) -> None:
+    """Verify finally is at the same indentation level as try."""
+    lines = context.script_lines
+    try_indent = next(
+        len(ln) - len(ln.lstrip()) for ln in lines if ln.strip() == "try:"
+    )
+    finally_lines = [ln for ln in lines if ln.strip() == "finally:"]
+    assert finally_lines, "No finally clause found in result"
+    for fin_line in finally_lines:
+        fin_indent = len(fin_line) - len(fin_line.lstrip())
+        assert fin_indent == try_indent, (
+            f"finally indent ({fin_indent}) != try indent ({try_indent}): {fin_line!r}"
+        )
+
+
+@then("the finally body should be indented one level")
+def step_finally_body_indented(context: Context) -> None:
+    """Verify the finally body is indented one level deeper than finally."""
+    lines = context.script_lines
+    for i, line in enumerate(lines):
+        if line.strip() == "finally:" and i + 1 < len(lines):
+            finally_indent = len(line) - len(line.lstrip())
+            body_line = lines[i + 1]
+            if body_line.strip():
+                body_indent = len(body_line) - len(body_line.lstrip())
+                assert body_indent == finally_indent + 4, (
+                    f"finally body indent ({body_indent}) should be "
+                    f"finally indent ({finally_indent}) + 4: {body_line!r}"
+                )
+
+
+@then("the inner try should be indented one level inside the outer try")
+def step_inner_try_indented(context: Context) -> None:
+    """Verify the inner try is indented one level inside the outer try."""
+    lines = context.script_lines
+    try_lines = [ln for ln in lines if ln.strip() == "try:"]
+    assert len(try_lines) >= 2, f"Expected at least 2 try lines, got: {try_lines}"
+    outer_indent = len(try_lines[0]) - len(try_lines[0].lstrip())
+    inner_indent = len(try_lines[1]) - len(try_lines[1].lstrip())
+    assert inner_indent == outer_indent + 4, (
+        f"Inner try indent ({inner_indent}) should be outer try indent "
+        f"({outer_indent}) + 4"
+    )
+
+
+@then("the outer except should be at the same level as the outer try")
+def step_outer_except_same_level(context: Context) -> None:
+    """Verify the last except clause is at the same level as the outer try."""
+    lines = context.script_lines
+    try_lines = [ln for ln in lines if ln.strip() == "try:"]
+    assert try_lines, "No try lines found"
+    outer_try_line = try_lines[0]
+    outer_try_indent = len(outer_try_line) - len(outer_try_line.lstrip())
+
+    # Find the last except clause (should be the outer one)
+    except_lines = [ln for ln in lines if ln.strip().startswith("except")]
+    assert except_lines, "No except lines found"
+    last_except_line = except_lines[-1]
+    last_except_indent = len(last_except_line) - len(last_except_line.lstrip())
+
+    assert last_except_indent == outer_try_indent, (
+        f"Outer except indent ({last_except_indent}) != outer try indent "
+        f"({outer_try_indent}): {last_except_line!r}\n\n"
+        f"Full result:\n{chr(10).join(lines)}"
+    )
+
+
+@then("the code after the try block should be at the same level as the try statement")
+def step_code_after_try_same_level(context: Context) -> None:
+    """Verify code after a try block is at the same indentation as the try."""
+    lines = context.script_lines
+    try_indent = next(
+        len(ln) - len(ln.lstrip()) for ln in lines if ln.strip() == "try:"
+    )
+    # The last non-empty line should be at the same level as try
+    non_empty = [ln for ln in lines if ln.strip()]
+    last_line = non_empty[-1]
+    last_indent = len(last_line) - len(last_line.lstrip())
+    assert last_indent == try_indent, (
+        f"Code after try block indent ({last_indent}) != try indent "
+        f"({try_indent}): {last_line!r}\n\nFull result:\n{chr(10).join(lines)}"
+    )
diff --git a/features/tdd_indentation_library_try_except.feature b/features/tdd_indentation_library_try_except.feature
new file mode 100644
index 000000000..057109069
--- /dev/null
+++ b/features/tdd_indentation_library_try_except.feature
@@ -0,0 +1,42 @@
+@tdd_issue @tdd_issue_2845
+Feature: TDD Issue #2845 — fix_python_indentation handles try...except...finally correctly
+  As a Robot Framework user
+  I want fix_python_indentation to correctly reconstruct indentation for try...except...finally blocks
+  So that inline Python scripts with exception handling produce syntactically valid code
+
+  Background:
+    Given the fix_python_indentation function is available
+
+  Scenario: Single except clause produces valid Python
+    When I fix indentation for a try block with a single except clause
+    Then the indentation result should be syntactically valid Python
+    And the try body should be indented one level
+    And the except clause should be at the same level as try
+    And the except body should be indented one level
+
+  Scenario: Multiple except clauses produce valid Python
+    When I fix indentation for a try block with multiple except clauses
+    Then the indentation result should be syntactically valid Python
+    And all except clauses should be at the same level as try
+    And each except body should be indented one level
+
+  Scenario: try...except...finally produces valid Python
+    When I fix indentation for a try block with except and finally
+    Then the indentation result should be syntactically valid Python
+    And the finally clause should be at the same level as try
+    And the finally body should be indented one level
+
+  Scenario: Nested try blocks produce valid Python
+    When I fix indentation for nested try blocks
+    Then the indentation result should be syntactically valid Python
+    And the inner try should be indented one level inside the outer try
+    And the outer except should be at the same level as the outer try
+
+  Scenario: Nested try with finally then outer except produces valid Python
+    When I fix indentation for nested try with inner finally and outer except
+    Then the indentation result should be syntactically valid Python
+    And the outer except should be at the same level as the outer try
+
+  Scenario: Code after try block produces valid Python
+    When I fix indentation for code that follows a try block
+    Then the indentation result should be syntactically valid Python
diff --git a/robot/indentation_library.py b/robot/indentation_library.py
index e229a2086..a6815a6af 100644
--- a/robot/indentation_library.py
+++ b/robot/indentation_library.py
@@ -15,7 +15,13 @@ def fix_python_indentation(script: str) -> str:
     lines = script.split("\n")
     result: list[str] = []
     indent_level = 0
-    block_stack: list[str] = []
+    # Each entry is a tuple (keyword, base_indent, has_seen_except_finally) where:
+    #   keyword   — "try", "class", or "other"
+    #   base_indent — the indent level at which the block keyword was written
+    #   has_seen_except_finally — True once an except/finally clause has been seen
+    #                             for this try block (used to detect when the inner
+    #                             try is done and an outer try's except/finally follows)
+    block_stack: list[tuple[str, int, bool]] = []
 
     for line in lines:
         stripped = line.strip()
@@ -38,21 +44,60 @@ def fix_python_indentation(script: str) -> str:
             and block_stack
             and (
                 stripped.startswith(("import ", "from "))
-                or (stripped.startswith("class ") and block_stack[-1] == "class")
+                or (stripped.startswith("class ") and block_stack[-1][0] == "class")
             )
         ):
             is_module_level_statement = True
 
         if is_dedenting and block_stack:
-            if stripped.startswith(("except:", "except ", "finally:")):
-                dedent_levels = 0
-                for block in reversed(block_stack):
-                    dedent_levels += 1
-                    if block == "try":
-                        break
-                indent_level = max(0, indent_level - dedent_levels)
+            if stripped.startswith("finally:"):
+                # ``finally`` always belongs to the innermost ``try`` on the stack.
+                # Pop non-try entries above it, set indent to the try's level,
+                # then pop the try itself (``finally`` closes the try block).
+                while block_stack and block_stack[-1][0] != "try":
+                    block_stack.pop()
+                if block_stack and block_stack[-1][0] == "try":
+                    indent_level = block_stack[-1][1]
+                    block_stack.pop()
+                else:
+                    indent_level = max(0, indent_level - 1)
+
+            elif stripped.startswith(("except:", "except ")):
+                # ``except`` belongs to the innermost ``try``.  However, if the
+                # innermost ``try`` has already seen an ``except``/``finally``
+                # clause AND there is an outer ``try`` on the stack, this
+                # ``except`` belongs to the outer ``try`` (the inner try block
+                # is complete).
+                while block_stack and block_stack[-1][0] != "try":
+                    block_stack.pop()
+
+                if block_stack and block_stack[-1][0] == "try":
+                    innermost_try = block_stack[-1]
+                    has_outer_try = any(b[0] == "try" for b in block_stack[:-1])
+
+                    if innermost_try[2] and has_outer_try:
+                        # Inner try is done — pop it and find the outer try.
+                        block_stack.pop()
+                        while block_stack and block_stack[-1][0] != "try":
+                            block_stack.pop()
+
+                    if block_stack and block_stack[-1][0] == "try":
+                        indent_level = block_stack[-1][1]
+                        # Mark this try as having seen an except/finally clause.
+                        block_stack[-1] = (
+                            block_stack[-1][0],
+                            block_stack[-1][1],
+                            True,
+                        )
+                    else:
+                        indent_level = max(0, indent_level - 1)
+                else:
+                    indent_level = max(0, indent_level - 1)
+
             else:
+                # ``else`` / ``elif`` — dedent one level from the preceding body.
                 indent_level = max(0, indent_level - 1)
+
         elif is_module_level_statement:
             # Dedent back to module level
             indent_level = 0
@@ -61,24 +106,21 @@ def fix_python_indentation(script: str) -> str:
         current_indent = indent_level
         result.append("    " * current_indent + stripped)
 
+        # Update the stack and indent level for the *next* line.
         if stripped.startswith("try:"):
-            block_stack.append("try")
+            block_stack.append(("try", current_indent, False))
             indent_level += 1
-        elif stripped.startswith(("except:", "except ", "finally:")):
-            while block_stack and block_stack[-1] != "try":
-                block_stack.pop()
-            if (
-                stripped.startswith("finally:")
-                and block_stack
-                and block_stack[-1] == "try"
-            ):
-                block_stack.pop()
+        elif stripped.startswith("finally:"):
+            # The matching ``try`` was already popped during the dedent phase above.
+            indent_level += 1
+        elif stripped.startswith(("except:", "except ")):
+            # The try remains on the stack (more except/finally may follow).
             indent_level += 1
         elif stripped.endswith(":") and not is_dedenting:
             if stripped.startswith("class "):
-                block_stack.append("class")
+                block_stack.append(("class", current_indent, False))
             else:
-                block_stack.append("other")
+                block_stack.append(("other", current_indent, False))
             indent_level += 1
         elif is_dedenting and stripped.endswith(":"):
             indent_level += 1