diff --git a/changelogs/fragments/fix_yaml_inv_nulls.yml b/changelogs/fragments/fix_yaml_inv_nulls.yml
new file mode 100644
index 0000000000..f9e831a367
--- /dev/null
+++ b/changelogs/fragments/fix_yaml_inv_nulls.yml
@@ -0,0 +1,2 @@
+bugfixes:
+    - correctly handle yaml inventory files when entries are null dicts https://github.com/ansible/ansible/issues/41692
diff --git a/lib/ansible/cli/inventory.py b/lib/ansible/cli/inventory.py
index 4c7d4dfd49..78e562c497 100644
--- a/lib/ansible/cli/inventory.py
+++ b/lib/ansible/cli/inventory.py
@@ -42,6 +42,7 @@ INTERNAL_VARS = frozenset(['ansible_diff_mode',
                            'ansible_playbook_python',
                            'ansible_run_tags',
                            'ansible_skip_tags',
+                           'ansible_verbosity',
                            'ansible_version',
                            'inventory_dir',
                            'inventory_file',
diff --git a/lib/ansible/plugins/inventory/yaml.py b/lib/ansible/plugins/inventory/yaml.py
index 38d24fe0ce..5983ce0674 100644
--- a/lib/ansible/plugins/inventory/yaml.py
+++ b/lib/ansible/plugins/inventory/yaml.py
@@ -59,6 +59,7 @@ all: # keys must be unique, i.e. only one 'hosts' per group
 '''
 
 import os
+
 from collections import MutableMapping
 
 from ansible.errors import AnsibleParserError
@@ -112,37 +113,38 @@ class InventoryModule(BaseFileInventoryPlugin):
 
     def _parse_group(self, group, group_data):
 
-        if isinstance(group_data, MutableMapping):
+        if isinstance(group_data, (MutableMapping, type(None))):
 
             self.inventory.add_group(group)
 
-            # make sure they are dicts
-            for section in ['vars', 'children', 'hosts']:
-                if section in group_data:
-                    # convert strings to dicts as these are allowed
-                    if isinstance(group_data[section], string_types):
-                        group_data[section] = {group_data[section]: None}
+            if group_data is not None:
+                # make sure they are dicts
+                for section in ['vars', 'children', 'hosts']:
+                    if section in group_data:
+                        # convert strings to dicts as these are allowed
+                        if isinstance(group_data[section], string_types):
+                            group_data[section] = {group_data[section]: None}
 
-                    if not isinstance(group_data[section], MutableMapping):
-                        raise AnsibleParserError('Invalid "%s" entry for "%s" group, requires a dictionary, found "%s" instead.' %
-                                                 (section, group, type(group_data[section])))
+                        if not isinstance(group_data[section], (MutableMapping, type(None))):
+                            raise AnsibleParserError('Invalid "%s" entry for "%s" group, requires a dictionary, found "%s" instead.' %
+                                                     (section, group, type(group_data[section])))
 
-            for key in group_data:
-                if key == 'vars':
-                    for var in group_data['vars']:
-                        self.inventory.set_variable(group, var, group_data['vars'][var])
+                for key in group_data:
+                    if key == 'vars':
+                        for var in group_data['vars']:
+                            self.inventory.set_variable(group, var, group_data['vars'][var])
 
-                elif key == 'children':
-                    for subgroup in group_data['children']:
-                        self._parse_group(subgroup, group_data['children'][subgroup])
-                        self.inventory.add_child(group, subgroup)
+                    elif key == 'children':
+                        for subgroup in group_data['children']:
+                            self._parse_group(subgroup, group_data['children'][subgroup])
+                            self.inventory.add_child(group, subgroup)
 
-                elif key == 'hosts':
-                    for host_pattern in group_data['hosts']:
-                        hosts, port = self._parse_host(host_pattern)
-                        self._populate_host_vars(hosts, group_data['hosts'][host_pattern] or {}, group, port)
-                else:
-                    self.display.warning('Skipping unexpected key (%s) in group (%s), only "vars", "children" and "hosts" are valid' % (key, group))
+                    elif key == 'hosts':
+                        for host_pattern in group_data['hosts']:
+                            hosts, port = self._parse_host(host_pattern)
+                            self._populate_host_vars(hosts, group_data['hosts'][host_pattern] or {}, group, port)
+                    else:
+                        self.display.warning('Skipping unexpected key (%s) in group (%s), only "vars", "children" and "hosts" are valid' % (key, group))
 
         else:
             self.display.warning("Skipping '%s' as this is not a valid group definition" % group)