diff --git a/lib/handlebars/runtime.js b/lib/handlebars/runtime.js
index 55eb1c1b0..7426f1f5e 100644
--- a/lib/handlebars/runtime.js
+++ b/lib/handlebars/runtime.js
@@ -197,7 +197,12 @@ export function wrapProgram(container, i, fn, data, declaredBlockParams, blockPa
 export function resolvePartial(partial, context, options) {
   if (!partial) {
     if (options.name === '@partial-block') {
-      partial = options.data['partial-block'];
+      let data = options.data;
+      while (data['partial-block'] === noop) {
+        data = data._parent;
+      }
+      partial = data['partial-block'];
+      data['partial-block'] = noop;
     } else {
       partial = options.partials[options.name];
     }
diff --git a/spec/partials.js b/spec/partials.js
index d3ead7458..d6baba504 100644
--- a/spec/partials.js
+++ b/spec/partials.js
@@ -270,6 +270,20 @@ describe('partials', function() {
         true,
         'success');
     });
+    it('should render nested partial blocks', function() {
+      shouldCompileToWithPartials(
+        '<template>{{#> outer}}{{value}}{{/outer}}</template>',
+        [
+          {value: 'success'},
+          {},
+          {
+            outer: '<outer>{{#> nested}}<outer-block>{{> @partial-block}}</outer-block>{{/nested}}</outer>',
+            nested: '<nested>{{> @partial-block}}</nested>'
+          }
+        ],
+        true,
+        '<template><outer><nested><outer-block>success</outer-block></nested></outer></template>');
+    });
   });
 
   describe('inline partials', function() {
@@ -309,6 +323,15 @@ describe('partials', function() {
         true,
         'success');
     });
+    it('should render nested inline partials', function() {
+      shouldCompileToWithPartials(
+        '{{#*inline "outer"}}{{#>inner}}<outer-block>{{>@partial-block}}</outer-block>{{/inner}}{{/inline}}' +
+        '{{#*inline "inner"}}<inner>{{>@partial-block}}</inner>{{/inline}}' +
+        '{{#>outer}}{{value}}{{/outer}}',
+        [{value: 'success'}, {}, {}],
+        true,
+        '<inner><outer-block>success</outer-block></inner>');
+    });
   });
 
   it('should pass compiler flags', function() {