diff --git a/src/lib/components/dialog/_NestedDialog.svelte b/src/lib/components/dialog/_NestedDialog.svelte
new file mode 100644
index 0000000..398f2a8
--- /dev/null
+++ b/src/lib/components/dialog/_NestedDialog.svelte
@@ -0,0 +1,21 @@
+<script lang="ts">
+  import Dialog from "./Dialog.svelte";
+  import DialogOverlay from "./DialogOverlay.svelte";
+
+  export let level = 1;
+  let showChild = false;
+</script>
+
+<Dialog open={true} on:close>
+  <DialogOverlay />
+
+  <div>
+    <p>Level: {level}</p>
+    <button on:click={() => (showChild = true)}>Open {level + 1} a</button>
+    <button on:click={() => (showChild = true)}>Open {level + 1} b</button>
+    <button on:click={() => (showChild = true)}>Open {level + 1} c</button>
+  </div>
+  {#if showChild}
+    <svelte:self on:close={() => (showChild = false)} level={level + 1} />}
+  {/if}
+</Dialog>
diff --git a/src/lib/components/dialog/_NestedTestComponent.svelte b/src/lib/components/dialog/_NestedTestComponent.svelte
new file mode 100644
index 0000000..8d20307
--- /dev/null
+++ b/src/lib/components/dialog/_NestedTestComponent.svelte
@@ -0,0 +1,9 @@
+<script lang="ts">
+  import NestedDialog from "./_NestedDialog.svelte";
+  let open = false;
+</script>
+
+<button on:click={() => (open = true)}>Open 1</button>
+{#if open}
+  <NestedDialog on:close={() => (open = false)} />
+{/if}
diff --git a/src/lib/components/dialog/dialog.test.ts b/src/lib/components/dialog/dialog.test.ts
index 2d25916..d014349 100644
--- a/src/lib/components/dialog/dialog.test.ts
+++ b/src/lib/components/dialog/dialog.test.ts
@@ -1,6 +1,7 @@
 import { Dialog, DialogDescription, DialogOverlay, DialogTitle } from "."
 import TestTabSentinel from "./_TestTabSentinel.svelte";
 import ManagedDialog from "./_ManagedDialog.svelte";
+import NestedTestComponent from "./_NestedTestComponent.svelte";
 import { suppressConsoleLogs } from "$lib/test-utils/suppress-console-logs";
 import { render } from "@testing-library/svelte";
 import TestRenderer from "$lib/test-utils/TestRenderer.svelte";
@@ -9,7 +10,7 @@ import Div from "$lib/internal/elements/Div.svelte";
 import Form from "$lib/internal/elements/Form.svelte";
 import P from "$lib/internal/elements/P.svelte";
 import Input from "$lib/internal/elements/Input.svelte";
-import { assertActiveElement, assertDialog, assertDialogDescription, DialogState, getByText, getDialog, getDialogOverlay } from "$lib/test-utils/accessibility-assertions";
+import { assertActiveElement, assertDialog, assertDialogDescription, DialogState, getByText, getDialog, getDialogOverlay, getDialogOverlays, getDialogs } from "$lib/test-utils/accessibility-assertions";
 import { click, Keys, press } from "$lib/test-utils/interactions";
 import Transition from "$lib/components/transitions/TransitionRoot.svelte";
 import { tick } from "svelte";
@@ -677,3 +678,176 @@ describe('Mouse interactions', () => {
   )
 })
 
+describe('Nesting', () => {
+  it.each`
+    strategy                            | action
+    ${'with `Escape`'}                  | ${() => press(Keys.Escape)}
+    ${'with `Outside Click`'}           | ${() => click(document.body)}
+    ${'with `Click on Dialog.Overlay`'} | ${() => click(getDialogOverlays().pop()!)}
+  `(
+    'should be possible to open nested Dialog components and close them $strategy',
+    async ({ action }) => {
+      render(NestedTestComponent)
+
+      // Verify we have no open dialogs
+      expect(getDialogs()).toHaveLength(0)
+
+      // Open Dialog 1
+      await click(getByText('Open 1'))
+
+      // Verify that we have 1 open dialog
+      expect(getDialogs()).toHaveLength(1)
+
+      // Verify that the `Open 2 a` has focus
+      assertActiveElement(getByText('Open 2 a'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 2 b'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 2 c'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 2 a'))
+
+      // Open Dialog 2 via the second button
+      await click(getByText('Open 2 b'))
+
+      // Verify that we have 2 open dialogs
+      expect(getDialogs()).toHaveLength(2)
+
+      // Verify that the `Open 3 a` has focus
+      assertActiveElement(getByText('Open 3 a'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 3 b'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 3 c'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 3 a'))
+
+      // Close the top most Dialog
+      await action()
+
+      // Verify that we have 1 open dialog
+      expect(getDialogs()).toHaveLength(1)
+
+      // Verify that the `Open 2 b` button got focused again
+      assertActiveElement(getByText('Open 2 b'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 2 c'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 2 a'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 2 b'))
+
+      // Open Dialog 2 via button b
+      await click(getByText('Open 2 b'))
+
+      // Verify that the `Open 3 a` has focus
+      assertActiveElement(getByText('Open 3 a'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 3 b'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 3 c'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 3 a'))
+
+      // Verify that we have 2 open dialogs
+      expect(getDialogs()).toHaveLength(2)
+
+      // Open Dialog 3 via button c
+      await click(getByText('Open 3 c'))
+
+      // Verify that the `Open 4 a` has focus
+      assertActiveElement(getByText('Open 4 a'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 4 b'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 4 c'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 4 a'))
+
+      // Verify that we have 3 open dialogs
+      expect(getDialogs()).toHaveLength(3)
+
+      // Close the top most Dialog
+      await action()
+
+      // Verify that the `Open 3 c` button got focused again
+      assertActiveElement(getByText('Open 3 c'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 3 a'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 3 b'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 3 c'))
+
+      // Verify that we have 2 open dialogs
+      expect(getDialogs()).toHaveLength(2)
+
+      // Close the top most Dialog
+      await action()
+
+      // Verify that we have 1 open dialog
+      expect(getDialogs()).toHaveLength(1)
+
+      // Verify that the `Open 2 b` button got focused again
+      assertActiveElement(getByText('Open 2 b'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 2 c'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 2 a'))
+
+      // Verify that we can tab around
+      await press(Keys.Tab)
+      assertActiveElement(getByText('Open 2 b'))
+
+      // Close the top most Dialog
+      await action()
+
+      // Verify that we have 0 open dialogs
+      expect(getDialogs()).toHaveLength(0)
+
+      // Verify that the `Open 1` button got focused again
+      assertActiveElement(getByText('Open 1'))
+    }
+  )
+})
+