I'm wondering how memory management/reference counting works when a new value is set into an existing field within a PyDict (within a C extension).

For instance, assume a dictionary is created and populated in the following way:

myPyDict = PyDict_New();
tempPyObj = PyString_FromString("Original Value");
PyDict_SetItemString(myPyDict,"fieldname",tempPyObj);
Py_DECREF(tempPyObj);

From a memory and reference counting perspective, what happens when there is a subsequent

tempPyObj = PyString_FromString("New Value");
PyDict_SetItemString(myPyDict,"fieldname",tempPyObj);
Py_DECREF(tempPyObj);

Is the reference count for the original value automatically decremented (and the memory automatically released)?

The doc for PyList_SetItem specifically mentions what happens for lists: This function “steals” a reference to item and discards a reference to an item already in the list at the affected position.

But neither PyDic_SetItem nor PyDict_SetItemString say how the replacement is handled for dictionaries.

The ref count of the old value is decremented automatically by logic of PyList_SetItem function. You shouldn't be decrementing the old value by yourself.

If you want to know details, take a look at CPython source code, specifically at the Objects/dictobject.c file.

1) The PyDict_SetItemString()

https://github.com/python/cpython/blob/c8e7c5a/Objects/dictobject.c#L3250-L3262

It it's a thin wrapper around PyDict_SetItem()

2) The PyDict_SetItem()

https://github.com/python/cpython/blob/c8e7c5a/Objects/dictobject.c#L1537-L1565

Is still quite simple and it's obvious that all the heavy-lifting related to inserting/replacing values in a dict is actually done by insertdict().

3) The insertdict()

https://github.com/python/cpython/blob/c8e7c5a/Objects/dictobject.c#L1097-L1186

is the function which gives us the answer. In this function you can find the crucial code and especially the call:

 Py_XDECREF(old_value); /* which **CAN** re-enter (see issue #22653) */

which decrements the ref count of old value.