diff --git a/csrc/scheduler/transpose.cpp b/csrc/scheduler/transpose.cpp
index f0bea85d3b8..134a372f74a 100644
--- a/csrc/scheduler/transpose.cpp
+++ b/csrc/scheduler/transpose.cpp
@@ -1219,23 +1219,30 @@ void scheduleTranspose(Fusion* fusion, TransposeParams params) {
   reference1->reorder({{inner_most_pos2_in_ref1 + 1, -1}});
   // [..., I1/tile1, .., I2/tile2, ..., tile1, tile2]
 
-  // Merge remaining dimensions
-  int64_t lhs_i = -1;
-  for (int64_t i = reference1->nDims() - 2; i > 0; i--) {
-    auto axis_i = i - 1;
-    if (lhs_i == -1) {
-      lhs_i = axis_i;
-    } else {
-      reference1->merge(axis_i, lhs_i);
-      lhs_i = axis_i;
+  // Merge remaining dimensions ignoring reduction axes (See Issue #2317)
+  // The reduction axes cannot be at any position.
+  // For example: [i0, r1, i1, r2, i2] after tiling is [i0, r1, i1/tile1, r2,
+  // i2/tile2, tile1, tile2] The following code merges all the outer iterdomains
+  // as: [i0 * i1/tile1 * i2/tile2, r1, r2, tile1, tile2]
+  int64_t rhs_i = reference1->nDims() - 3;
+  for (int64_t lhs_i = reference1->nDims() - 4; lhs_i >= 0; lhs_i--) {
+    if (reference1->axis(lhs_i)->isReduction()) {
+      continue;
+    }
+    if (reference1->axis(rhs_i)->isReduction()) {
+      rhs_i = lhs_i;
+      continue;
     }
+    reference1->merge(lhs_i, rhs_i);
+    rhs_i = lhs_i;
   }
-  reference1->split(0, 1);
-  // [merged_dim, 1, tile1, tile2]
+
+  reference1->split(rhs_i, 1);
+  // [r.., merged_dim, 1, tile1, tile2]
 
   // parallelize non-tile dimensions
-  reference1->axis(1)->parallelize(ParallelType::Unswitch);
-  reference1->axis(0)->parallelize(ParallelType::BIDx);
+  reference1->axis(rhs_i + 1)->parallelize(ParallelType::Unswitch);
+  reference1->axis(rhs_i)->parallelize(ParallelType::BIDx);
   // [BIDx, Unswitch, tile1, tile2]
 
   // Propagate transformations so far to the entire DAG
diff --git a/tests/python/test_python_frontend.py b/tests/python/test_python_frontend.py
index f6fe5204f79..45c0d112bed 100644
--- a/tests/python/test_python_frontend.py
+++ b/tests/python/test_python_frontend.py
@@ -4018,6 +4018,33 @@ def fusion_func(fd: FusionDefinition) -> None:
 
         nvf_out, _ = self.exec_nvfuser(fusion_func, inputs)
 
+    # See https://github.com/NVIDIA/Fuser/issues/2317
+    @unittest.skipIf(is_pre_ampere(), "Only supported on Ampere and newer devices.")
+    def test_reduction_transpose_sched_issue2317(self):
+        inputs = [
+            torch.randn((16, 25, 128, 64), dtype=torch.bfloat16, device="cuda:0"),
+            torch.randn((16, 128, 1600), dtype=torch.bfloat16, device="cuda:0"),
+            torch.randn((1600, 1600), dtype=torch.bfloat16, device="cuda:0"),
+        ]
+
+        def fusion_func(fd: FusionDefinition, inputs) -> None:
+            T0 = fd.from_pytorch(inputs[0])
+            T1 = fd.from_pytorch(inputs[1])
+            T2 = fd.from_pytorch(inputs[2])
+
+            T10 = fd.ops.permute(T0, dims=[0, 2, 1, 3])
+            T11 = fd.ops.stride_order(T10, stride_order=[3, 2, 1, 0])
+            T16 = fd.ops.reshape(T11, new_shape=T1.shape())
+            T17 = fd.ops.linear(T16, T2)
+            T33 = fd.ops.add(T17, T1)
+
+            T33 = fd.ops.cast(T33, dtype=DataType.BFloat16)
+            T34 = fd.ops.linear(T33, T2)
+            T35 = fd.ops.add(T34, T33)
+            fd.add_output(T35)
+
+        nvf_out, _ = self.exec_nvfuser(partial(fusion_func, inputs=inputs), inputs)
+
     def test_fusion_profiler(self):
         inputs = [
             torch.randn((2, 5), dtype=torch.float, device="cuda:0"),