diff --git a/examples/parallelism-nested-dag.yaml b/examples/parallelism-nested-dag.yaml
new file mode 100644
index 000000000000..bcc7bd6ca064
--- /dev/null
+++ b/examples/parallelism-nested-dag.yaml
@@ -0,0 +1,87 @@
+# Example on specifying parallelism on the outer DAG and limiting the number of its
+# children DAGs to be run at the same time.
+# 
+# As the parallelism of A is 2, only two of the three DAGs (b2, b3, b4) will start 
+# running after b1 is finished, and the left DAG will run after either one is finished.
+
+apiVersion: argoproj.io/v1alpha1
+kind: Workflow
+metadata:
+  generateName: parallelism-nested-dag-
+spec:
+  entrypoint: A
+  templates:
+  - name: A
+    parallelism: 2
+    dag:
+      tasks:
+      - name: b1
+        template: B
+        arguments:
+          parameters:
+          - name: msg
+            value: "1"
+      - name: b2
+        template: B
+        dependencies: [b1]
+        arguments:
+          parameters:
+          - name: msg
+            value: "2"
+      - name: b3
+        template: B
+        dependencies: [b1]
+        arguments:
+          parameters:
+          - name: msg
+            value: "3"
+      - name: b4
+        template: B
+        dependencies: [b1]
+        arguments:
+          parameters:
+          - name: msg
+            value: "4"
+      - name: b5
+        template: B
+        dependencies: [b2, b3, b4]
+        arguments:
+          parameters:
+          - name: msg
+            value: "5"
+
+  - name: B
+    inputs:
+      parameters:
+      - name: msg
+    dag:
+      tasks:
+      - name: c1
+        template: one-job
+        arguments:
+          parameters:
+          - name: msg
+            value: "{{inputs.parameters.msg}} c1"
+      - name: c2
+        template: one-job
+        dependencies: [c1]
+        arguments:
+          parameters:
+          - name: msg
+            value: "{{inputs.parameters.msg}} c2"
+      - name: c3
+        template: one-job
+        dependencies: [c1]
+        arguments:
+          parameters:
+          - name: msg
+            value: "{{inputs.parameters.msg}} c3"
+
+  - name: one-job
+    inputs:
+      parameters:
+      - name: msg
+    container:
+      image: alpine
+      command: ['/bin/sh', '-c']
+      args: ["echo {{inputs.parameters.msg}}; sleep 10"]
diff --git a/examples/parallelism-nested-workflow.yaml b/examples/parallelism-nested-workflow.yaml
new file mode 100644
index 000000000000..5cba4de3391b
--- /dev/null
+++ b/examples/parallelism-nested-workflow.yaml
@@ -0,0 +1,52 @@
+# Example on specifying parallelism on the outer workflow and limiting the number of its
+# children workflowss to be run at the same time.
+# 
+# As the parallelism of A is 1, the four steps of seq-step will run sequentially.
+
+apiVersion: argoproj.io/v1alpha1
+kind: Workflow
+metadata:
+  generateName: parallelism-nested-workflow-
+spec:
+  arguments:
+    parameters:
+    - name: seq-list
+      value: |
+        ["a","b","c","d"]
+  entrypoint: A
+  templates:
+  - name: A
+    parallelism: 1
+    inputs:
+      parameters:
+      - name: seq-list
+    steps:
+    - - name: seq-step
+        template: B
+        arguments:
+          parameters:
+          - name: seq-id
+            value: "{{item}}"
+        withParam: "{{inputs.parameters.seq-list}}"
+
+  - name: B
+    inputs:
+      parameters:
+      - name: seq-id
+    steps:
+    - - name: jobs
+        template: one-job
+        arguments:
+          parameters:
+          - name: seq-id
+            value: "{{inputs.parameters.seq-id}}"
+        withParam: "[1, 2]"
+
+  - name: one-job
+    inputs:
+      parameters:
+      - name: seq-id
+    container:
+      image: alpine
+      command: ['/bin/sh', '-c']
+      args: ["echo {{inputs.parameters.seq-id}}; sleep 30"]
diff --git a/workflow/controller/operator.go b/workflow/controller/operator.go
index ad7379cc34b9..9480c9923c3f 100644
--- a/workflow/controller/operator.go
+++ b/workflow/controller/operator.go
@@ -495,6 +495,31 @@ func (woc *wfOperationCtx) countActivePods(boundaryIDs ...string) int64 {
 	return activePods
 }
 
+// countActiveChildren counts the number of active (Pending/Running) children nodes of parent parentName
+func (woc *wfOperationCtx) countActiveChildren(boundaryIDs ...string) int64 {
+	var boundaryID = ""
+	if len(boundaryIDs) > 0 {
+		boundaryID = boundaryIDs[0]
+	}
+	var activeChildren int64
+	// if we care about parallelism, count the active pods at the template level
+	for _, node := range woc.wf.Status.Nodes {
+		if boundaryID != "" && node.BoundaryID != boundaryID {
+			continue
+		}
+		switch node.Type {
+		case wfv1.NodeTypePod, wfv1.NodeTypeSteps, wfv1.NodeTypeDAG:
+		default:
+			continue
+		}
+		switch node.Phase {
+		case wfv1.NodePending, wfv1.NodeRunning:
+			activeChildren++
+		}
+	}
+	return activeChildren
+}
+
 // getAllWorkflowPods returns all pods related to the current workflow
 func (woc *wfOperationCtx) getAllWorkflowPods() (*apiv1.PodList, error) {
 	options := metav1.ListOptions{
@@ -867,7 +892,8 @@ func (woc *wfOperationCtx) getLastChildNode(node *wfv1.NodeStatus) (*wfv1.NodeSt
 // nodeName is the name to be used as the name of the node, and boundaryID indicates which template
 // boundary this node belongs to.
 func (woc *wfOperationCtx) executeTemplate(templateName string, args wfv1.Arguments, nodeName string, boundaryID string) (*wfv1.NodeStatus, error) {
-	woc.log.Debugf("Evaluating node %s: template: %s", nodeName, templateName)
+	woc.log.Debugf("Evaluating node %s: template: %s, boundaryID: %s", nodeName, templateName, boundaryID)
+
 	node := woc.getNodeByName(nodeName)
 	if node != nil && node.Completed() {
 		woc.log.Debugf("Node %s already completed", nodeName)
@@ -1112,16 +1138,17 @@ func (woc *wfOperationCtx) checkParallelism(tmpl *wfv1.Template, node *wfv1.Node
 				return ErrParallelismReached
 			}
 		}
+		fallthrough
 	default:
 		// if we are about to execute a pod, make our parent hasn't reached it's limit
-		if boundaryID != "" {
+		if boundaryID != "" && (node == nil || (node.Phase != wfv1.NodePending && node.Phase != wfv1.NodeRunning)) {
 			boundaryNode := woc.wf.Status.Nodes[boundaryID]
 			boundaryTemplate := woc.wf.GetTemplate(boundaryNode.TemplateName)
 			if boundaryTemplate.Parallelism != nil {
-				templateActivePods := woc.countActivePods(boundaryID)
-				woc.log.Debugf("counted %d/%d active pods in boundary %s", templateActivePods, *boundaryTemplate.Parallelism, boundaryID)
-				if templateActivePods >= *boundaryTemplate.Parallelism {
-					woc.log.Infof("template (node %s) active pod parallelism reached %d/%d", boundaryID, templateActivePods, *boundaryTemplate.Parallelism)
+				activeSiblings := woc.countActiveChildren(boundaryID)
+				woc.log.Debugf("counted %d/%d active children in boundary %s", activeSiblings, *boundaryTemplate.Parallelism, boundaryID)
+				if activeSiblings >= *boundaryTemplate.Parallelism {
+					woc.log.Infof("template (node %s) active children parallelism reached %d/%d", boundaryID, activeSiblings, *boundaryTemplate.Parallelism)
 					return ErrParallelismReached
 				}
 			}