diff --git a/xarray/core/groupby.py b/xarray/core/groupby.py
index 54fe767b717..d4833d72c65 100644
--- a/xarray/core/groupby.py
+++ b/xarray/core/groupby.py
@@ -596,8 +596,19 @@ def __repr__(self) -> str:
 
     def _iter_grouped(self) -> Iterator[T_Xarray]:
         """Iterate over each element in this group"""
-        for indices in self._group_indices:
-            yield self._obj.isel({self._group_dim: indices})
+        print(self._group_indices)
+        if isinstance(self._group_indices[0], slice):
+            for indices in self._group_indices:
+                yield self._obj.isel({self._group_dim: indices})
+        else:
+            for code in np.sort(pd.unique(self._codes.data.reshape(-1))):
+                if code == -1:
+                    continue
+                subset = self._original_obj.where(self._codes == code, drop=True)
+                if self._squeeze:
+                    squeeze_dims = tuple(dim for dim in self._codes.dims if subset.sizes[dim] == 1)
+                    subset = subset.squeeze(squeeze_dims)
+                yield subset
 
     def _infer_concat_args(self, applied_example):
         if self._group_dim in applied_example.dims: