diff --git a/doc/source/whatsnew/v0.21.0.txt b/doc/source/whatsnew/v0.21.0.txt
index 8c71681582063..015fdf1f45f47 100644
--- a/doc/source/whatsnew/v0.21.0.txt
+++ b/doc/source/whatsnew/v0.21.0.txt
@@ -192,7 +192,7 @@ Numeric
 
 Categorical
 ^^^^^^^^^^^
-
+- Bug in ``:func:Series.isin()`` when called with a categorical (:issue`16639`)
 
 
 Other
diff --git a/pandas/core/algorithms.py b/pandas/core/algorithms.py
index d74c5e66ea1a9..b490bf787a037 100644
--- a/pandas/core/algorithms.py
+++ b/pandas/core/algorithms.py
@@ -38,7 +38,6 @@
 # --------------- #
 # dtype access    #
 # --------------- #
-
 def _ensure_data(values, dtype=None):
     """
     routine to ensure that our data is of the correct
@@ -113,7 +112,8 @@ def _ensure_data(values, dtype=None):
 
         return values.asi8, dtype, 'int64'
 
-    elif is_categorical_dtype(values) or is_categorical_dtype(dtype):
+    elif (is_categorical_dtype(values) and
+          (is_categorical_dtype(dtype) or dtype is None)):
         values = getattr(values, 'values', values)
         values = values.codes
         dtype = 'category'
diff --git a/pandas/tests/test_algos.py b/pandas/tests/test_algos.py
index 063dcea5c76d6..9504d2a9426f0 100644
--- a/pandas/tests/test_algos.py
+++ b/pandas/tests/test_algos.py
@@ -586,6 +586,16 @@ def test_large(self):
         expected[1] = True
         tm.assert_numpy_array_equal(result, expected)
 
+    def test_categorical_from_codes(self):
+        # GH 16639
+        vals = np.array([0, 1, 2, 0])
+        cats = ['a', 'b', 'c']
+        Sd = pd.Series(pd.Categorical(1).from_codes(vals, cats))
+        St = pd.Series(pd.Categorical(1).from_codes(np.array([0, 1]), cats))
+        expected = np.array([True, True, False, True])
+        result = algos.isin(Sd, St)
+        tm.assert_numpy_array_equal(expected, result)
+
 
 class TestValueCounts(object):