diff --git a/pydantic_extra_types/domain.py b/pydantic_extra_types/domain.py
index b772979..19e6506 100644
--- a/pydantic_extra_types/domain.py
+++ b/pydantic_extra_types/domain.py
@@ -14,7 +14,9 @@
 class DomainStr(str):
     """A string subclass with custom validation for domain string format."""
 
-    _domain_re_pattern = r'(?=^.{1,253}$)(^((?!-)[a-zA-Z0-9-]{1,63}(?<!-)\.)+[a-zA-Z]{2,63}$)'
+    _domain_re_pattern = (
+        r'(?=^.{1,253}$)' r'(^((?!-)[a-zA-Z0-9-]{1,63}(?<!-)\.)+' r'([a-zA-Z]{2,63}|xn--[a-zA-Z0-9]{2,59})$)'
+    )
 
     @classmethod
     def validate(cls, __input_value: Any, _: Any) -> str:
diff --git a/tests/test_domain.py b/tests/test_domain.py
index 77e6e1a..50efe48 100644
--- a/tests/test_domain.py
+++ b/tests/test_domain.py
@@ -76,3 +76,23 @@ def test_very_long_domains(domain: str):
 def test_invalid_domain_types(domain: Any):
     with pytest.raises(ValidationError, match='Value must be a string'):
         MyModel(domain=domain)
+
+
+def test_domainstr_with_punycode():
+    class Model(BaseModel):
+        domain: DomainStr
+
+    valid = 'xn--7-7sbirhro.xn--80ahmohdapg.xn--80asehdb'
+    model = Model(domain=valid)
+    assert model.domain == valid
+
+
+def test_domainstr_invalid():
+    class Model(BaseModel):
+        domain: DomainStr
+
+    try:
+        Model(domain='invalid_domain')
+        assert False, 'Expected ValidationError'
+    except ValidationError:
+        pass