diff --git a/Documentation/technical/rerere.txt b/Documentation/technical/rerere.txt
index 3d10dbfa67..e65ba9b0c6 100644
--- a/Documentation/technical/rerere.txt
+++ b/Documentation/technical/rerere.txt
@@ -138,3 +138,45 @@ SHA1('B<NUL>C<NUL>').
 If there are multiple conflicts in one file, the sha1 is calculated
 the same way with all hunks appended to each other, in the order in
 which they appear in the file, separated by a <NUL> character.
+
+Nested conflicts
+~~~~~~~~~~~~~~~~
+
+Nested conflicts are handled very similarly to "simple" conflicts.
+Similar to simple conflicts, the conflict is first normalized by
+stripping the labels from conflict markers, stripping the common ancestor
+version, and the sorting the conflict hunks, both for the outer and the
+inner conflict.  This is done recursively, so any number of nested
+conflicts can be handled.
+
+The only difference is in how the conflict ID is calculated.  For the
+inner conflict, the conflict markers themselves are not stripped out
+before calculating the sha1.
+
+Say we have the following conflict for example:
+
+    <<<<<<< HEAD
+    1
+    =======
+    <<<<<<< HEAD
+    3
+    =======
+    2
+    >>>>>>> branch-2
+    >>>>>>> branch-3~
+
+After stripping out the labels of the conflict markers, and sorting
+the hunks, the conflict would look as follows:
+
+    <<<<<<<
+    1
+    =======
+    <<<<<<<
+    2
+    =======
+    3
+    >>>>>>>
+    >>>>>>>
+
+and finally the conflict ID would be calculated as:
+`sha1('1<NUL><<<<<<<\n3\n=======\n2\n>>>>>>><NUL>')`
diff --git a/rerere.c b/rerere.c
index a35b88916c..f78bef80b1 100644
--- a/rerere.c
+++ b/rerere.c
@@ -365,12 +365,18 @@ static int handle_conflict(struct strbuf *out, struct rerere_io *io,
 		RR_SIDE_1 = 0, RR_SIDE_2, RR_ORIGINAL
 	} hunk = RR_SIDE_1;
 	struct strbuf one = STRBUF_INIT, two = STRBUF_INIT;
-	struct strbuf buf = STRBUF_INIT;
+	struct strbuf buf = STRBUF_INIT, conflict = STRBUF_INIT;
 	int has_conflicts = -1;
 
 	while (!io->getline(&buf, io)) {
 		if (is_cmarker(buf.buf, '<', marker_size)) {
-			break;
+			if (handle_conflict(&conflict, io, marker_size, NULL) < 0)
+				break;
+			if (hunk == RR_SIDE_1)
+				strbuf_addbuf(&one, &conflict);
+			else
+				strbuf_addbuf(&two, &conflict);
+			strbuf_release(&conflict);
 		} else if (is_cmarker(buf.buf, '|', marker_size)) {
 			if (hunk != RR_SIDE_1)
 				break;
diff --git a/t/t4200-rerere.sh b/t/t4200-rerere.sh
index 23f9c0ca45..afaf085e42 100755
--- a/t/t4200-rerere.sh
+++ b/t/t4200-rerere.sh
@@ -601,4 +601,41 @@ test_expect_success 'rerere with unexpected conflict markers does not crash' '
 	git rerere clear
 '
 
+test_expect_success 'rerere with inner conflict markers' '
+	git reset --hard &&
+
+	git checkout -b A master &&
+	echo "bar" >test &&
+	git add test &&
+	git commit -q -m two &&
+	echo "baz" >test &&
+	git add test &&
+	git commit -q -m three &&
+
+	git reset --hard &&
+	git checkout -b B master &&
+	echo "foo" >test &&
+	git add test &&
+	git commit -q -a -m one &&
+
+	test_must_fail git merge A~ &&
+	git add test &&
+	git commit -q -m "will solve conflicts later" &&
+	test_must_fail git merge A &&
+
+	echo "resolved" >test &&
+	git add test &&
+	git commit -q -m "solved conflict" &&
+
+	echo "resolved" >expect &&
+
+	git reset --hard HEAD~~ &&
+	test_must_fail git merge A~ &&
+	git add test &&
+	git commit -q -m "will solve conflicts later" &&
+	test_must_fail git merge A &&
+	cat test >actual &&
+	test_cmp expect actual
+'
+
 test_done