diff --git a/doc/source/whatsnew/v1.6.0.rst b/doc/source/whatsnew/v1.6.0.rst
index ee5085fd9ad89..1c2fa280465e8 100644
--- a/doc/source/whatsnew/v1.6.0.rst
+++ b/doc/source/whatsnew/v1.6.0.rst
@@ -168,6 +168,7 @@ Missing
 MultiIndex
 ^^^^^^^^^^
 - Bug in :meth:`MultiIndex.unique` losing extension array dtype (:issue:`48335`)
+- Bug in :meth:`MultiIndex.union` losing extension array (:issue:`48498`)
 - Bug in :meth:`MultiIndex.append` not checking names for equality (:issue:`48288`)
 -
 
diff --git a/pandas/conftest.py b/pandas/conftest.py
index 6f31e2a11486a..84a0fa7331c17 100644
--- a/pandas/conftest.py
+++ b/pandas/conftest.py
@@ -1569,6 +1569,31 @@ def any_real_numpy_dtype(request):
     return request.param
 
 
+@pytest.fixture(
+    params=tm.ALL_REAL_NUMPY_DTYPES + tm.ALL_INT_EA_DTYPES + tm.FLOAT_EA_DTYPES
+)
+def any_real_numeric_dtype(request):
+    """
+    Parameterized fixture for any (purely) real numeric dtype.
+
+    * int
+    * 'int8'
+    * 'uint8'
+    * 'int16'
+    * 'uint16'
+    * 'int32'
+    * 'uint32'
+    * 'int64'
+    * 'uint64'
+    * float
+    * 'float32'
+    * 'float64'
+
+    and associated ea dtypes.
+    """
+    return request.param
+
+
 @pytest.fixture(params=tm.ALL_NUMPY_DTYPES)
 def any_numpy_dtype(request):
     """
diff --git a/pandas/core/algorithms.py b/pandas/core/algorithms.py
index 77de1636a92eb..1054b839149dc 100644
--- a/pandas/core/algorithms.py
+++ b/pandas/core/algorithms.py
@@ -1830,6 +1830,7 @@ def safe_sort(
             "Only list-like objects are allowed to be passed to safe_sort as values"
         )
     original_values = values
+    is_mi = isinstance(original_values, ABCMultiIndex)
 
     if not isinstance(values, (np.ndarray, ABCExtensionArray)):
         # don't convert to string types
@@ -1851,7 +1852,11 @@ def safe_sort(
     else:
         try:
             sorter = values.argsort()
-            ordered = values.take(sorter)
+            if is_mi:
+                # Operate on original object instead of casted array (MultiIndex)
+                ordered = original_values.take(sorter)
+            else:
+                ordered = values.take(sorter)
         except TypeError:
             # Previous sorters failed or were not applicable, try `_sort_mixed`
             # which would work, but which fails for special case of 1d arrays
diff --git a/pandas/core/indexes/base.py b/pandas/core/indexes/base.py
index 78e1f713644dd..ee16857337df9 100644
--- a/pandas/core/indexes/base.py
+++ b/pandas/core/indexes/base.py
@@ -3398,8 +3398,8 @@ def _union(self, other: Index, sort):
 
         elif not other.is_unique:
             # other has duplicates
-            result = algos.union_with_duplicates(lvals, rvals)
-            return _maybe_try_sort(result, sort)
+            result_dups = algos.union_with_duplicates(lvals, rvals)
+            return _maybe_try_sort(result_dups, sort)
 
         # Self may have duplicates; other already checked as unique
         # find indexes of things in "other" that are not in "self"
@@ -3409,11 +3409,17 @@ def _union(self, other: Index, sort):
         else:
             missing = algos.unique1d(self.get_indexer_non_unique(other)[1])
 
-        if len(missing) > 0:
-            other_diff = rvals.take(missing)
-            result = concat_compat((lvals, other_diff))
+        result: Index | MultiIndex | ArrayLike
+        if self._is_multi:
+            # Preserve MultiIndex to avoid losing dtypes
+            result = self.append(other.take(missing))
+
         else:
-            result = lvals
+            if len(missing) > 0:
+                other_diff = rvals.take(missing)
+                result = concat_compat((lvals, other_diff))
+            else:
+                result = lvals
 
         if not self.is_monotonic_increasing or not other.is_monotonic_increasing:
             # if both are monotonic then result should already be sorted
diff --git a/pandas/core/indexes/multi.py b/pandas/core/indexes/multi.py
index 13c3b9200371f..1b35cc03f6fdd 100644
--- a/pandas/core/indexes/multi.py
+++ b/pandas/core/indexes/multi.py
@@ -3644,6 +3644,10 @@ def _union(self, other, sort) -> MultiIndex:
             # This is only necessary if both sides have nans or one has dups,
             # fast_unique_multiple is faster
             result = super()._union(other, sort)
+
+            if isinstance(result, MultiIndex):
+                return result
+
         else:
             rvals = other._values.astype(object, copy=False)
             result = lib.fast_unique_multiple([self._values, rvals], sort=sort)
diff --git a/pandas/tests/indexes/multi/test_setops.py b/pandas/tests/indexes/multi/test_setops.py
index e15809a751b73..7383d5a551e7b 100644
--- a/pandas/tests/indexes/multi/test_setops.py
+++ b/pandas/tests/indexes/multi/test_setops.py
@@ -549,6 +549,36 @@ def test_union_duplicates(index, request):
     tm.assert_index_equal(result, expected)
 
 
+def test_union_keep_dtype_precision(any_real_numeric_dtype):
+    # GH#48498
+    arr1 = Series([4, 1, 1], dtype=any_real_numeric_dtype)
+    arr2 = Series([1, 4], dtype=any_real_numeric_dtype)
+    midx = MultiIndex.from_arrays([arr1, [2, 1, 1]], names=["a", None])
+    midx2 = MultiIndex.from_arrays([arr2, [1, 2]], names=["a", None])
+
+    result = midx.union(midx2)
+    expected = MultiIndex.from_arrays(
+        ([Series([1, 1, 4], dtype=any_real_numeric_dtype), [1, 1, 2]]),
+        names=["a", None],
+    )
+    tm.assert_index_equal(result, expected)
+
+
+def test_union_keep_ea_dtype_with_na(any_numeric_ea_dtype):
+    # GH#48498
+
+    arr1 = Series([4, pd.NA], dtype=any_numeric_ea_dtype)
+    arr2 = Series([1, pd.NA], dtype=any_numeric_ea_dtype)
+    midx = MultiIndex.from_arrays([arr1, [2, 1]], names=["a", None])
+    midx2 = MultiIndex.from_arrays([arr2, [1, 2]])
+    result = midx.union(midx2)
+    # Expected is actually off and should contain (1, 1) too. See GH#37222
+    expected = MultiIndex.from_arrays(
+        [Series([4, pd.NA, pd.NA], dtype=any_numeric_ea_dtype), [2, 1, 2]]
+    )
+    tm.assert_index_equal(result, expected)
+
+
 @pytest.mark.parametrize(
     "levels1, levels2, codes1, codes2, names",
     [