diff --git a/CHANGELOG.rst b/CHANGELOG.rst
index a0fc24ffa..9ba252fe2 100644
--- a/CHANGELOG.rst
+++ b/CHANGELOG.rst
@@ -275,6 +275,7 @@ Interactive improvements
 -  Just like new ``fish_indent``, the interactive reader will indent continuation lines that follow a line ending in a backslash, ``|``, ``&&`` or ``||`` (:issue:`7694`).
 -  Commands with a trailing escaped space are saved in history correctly (:issue:`7661`).
 -  ``fish_prompt`` no longer mangles Unicode characters in the private-use range U+F600-U+F700. (:issue:`7723`).
+- ``set -U`` now behaves correctly when ``fish_variables`` is a symbolic link instead of overwriting it with a regular file (:issue:`7466`)
 
 New or improved bindings
 ^^^^^^^^^^^^^^^^^^^^^^^^
diff --git a/src/env_universal_common.cpp b/src/env_universal_common.cpp
index 4278d18b9..87cbc6951 100644
--- a/src/env_universal_common.cpp
+++ b/src/env_universal_common.cpp
@@ -739,9 +739,16 @@ bool env_universal_t::save(const wcstring &directory, const wcstring &vars_path)
     }
 
     if (success) {
+        wcstring real_path;
+        if (auto maybe_real_path = wrealpath(vars_path)) {
+            real_path = *maybe_real_path;
+        } else {
+            real_path = vars_path;
+        }
+
         // Ensure we maintain ownership and permissions (#2176).
         struct stat sbuf;
-        if (wstat(vars_path, &sbuf) >= 0) {
+        if (wstat(real_path, &sbuf) >= 0) {
             if (fchown(private_fd.fd(), sbuf.st_uid, sbuf.st_gid) == -1)
                 FLOGF(uvar_file, L"universal log fchown() failed");
             if (fchmod(private_fd.fd(), sbuf.st_mode) == -1)
@@ -765,7 +772,7 @@ bool env_universal_t::save(const wcstring &directory, const wcstring &vars_path)
 #endif
 
         // Apply new file.
-        success = this->move_new_vars_file_into_place(private_file_path, vars_path);
+        success = this->move_new_vars_file_into_place(private_file_path, real_path);
         if (!success) FLOGF(uvar_file, L"universal log move_new_vars_file_into_place() failed");
     }
 
diff --git a/tests/checks/symlink-universal-variables.fish b/tests/checks/symlink-universal-variables.fish
new file mode 100644
index 000000000..d15389741
--- /dev/null
+++ b/tests/checks/symlink-universal-variables.fish
@@ -0,0 +1,18 @@
+#RUN: %fish -C 'set -g fish %fish' %s
+begin
+    set -gx XDG_CONFIG_HOME (mktemp -d)
+    mkdir -p $XDG_CONFIG_HOME/fish
+    set -l target_file $XDG_CONFIG_HOME/fish/target_fish_variables
+    set -l fish_variables $XDG_CONFIG_HOME/fish/fish_variables
+
+    echo > $target_file
+    ln -sf $target_file $fish_variables
+    $fish -c 'set -U variable value'
+
+    if test -L $fish_variables
+       echo fish_variables is still a symlink
+    else
+       echo fish_variables has been overwritten
+    end
+    # CHECK: fish_variables is still a symlink
+end