diff --git a/doc/source/whatsnew/v1.1.0.rst b/doc/source/whatsnew/v1.1.0.rst
index 7449c62a5ad31..a4c991dcc166c 100644
--- a/doc/source/whatsnew/v1.1.0.rst
+++ b/doc/source/whatsnew/v1.1.0.rst
@@ -103,7 +103,7 @@ Bug fixes
 
 Categorical
 ^^^^^^^^^^^
-
+- Bug when passing categorical data to :class:`Index` constructor along with ``dtype=object`` incorrectly returning a :class:`CategoricalIndex` instead of object-dtype :class:`Index` (:issue:`32167`)
 -
 -
 
diff --git a/pandas/core/indexes/base.py b/pandas/core/indexes/base.py
index c896e68f7a188..53c4dfde2775b 100644
--- a/pandas/core/indexes/base.py
+++ b/pandas/core/indexes/base.py
@@ -304,7 +304,7 @@ def __new__(
             # Delay import for perf. https://github.com/pandas-dev/pandas/pull/31423
             from pandas.core.indexes.category import CategoricalIndex
 
-            return CategoricalIndex(data, dtype=dtype, copy=copy, name=name, **kwargs)
+            return _maybe_asobject(dtype, CategoricalIndex, data, copy, name, **kwargs)
 
         # interval
         elif is_interval_dtype(data) or is_interval_dtype(dtype):
diff --git a/pandas/tests/indexes/test_index_new.py b/pandas/tests/indexes/test_index_new.py
index e150df971da2d..33f61de6a4ebf 100644
--- a/pandas/tests/indexes/test_index_new.py
+++ b/pandas/tests/indexes/test_index_new.py
@@ -6,7 +6,7 @@
 
 from pandas.core.dtypes.common import is_unsigned_integer_dtype
 
-from pandas import Index, Int64Index, MultiIndex, UInt64Index
+from pandas import CategoricalIndex, Index, Int64Index, MultiIndex, UInt64Index
 import pandas._testing as tm
 
 
@@ -47,3 +47,9 @@ def test_constructor_dtypes_to_object(self, cast_index, vals):
 
         assert type(index) is Index
         assert index.dtype == object
+
+    def test_constructor_categorical_to_object(self):
+        # GH#32167 Categorical data and dtype=object should return object-dtype
+        ci = CategoricalIndex(range(5))
+        result = Index(ci, dtype=object)
+        assert not isinstance(result, CategoricalIndex)