diff --git a/CHANGELOG.md b/CHANGELOG.md
index da918d5d8..fa8cf5f16 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -5,6 +5,14 @@ Changelog
 
 ## 2.7.x
 
+### 2.7.31
+
+- Fixes #167 - Nested tags only work one level deep
+
+### 2.7.30
+
+- docs: don't exclude docs in .npmignore
+
 ### 2.7.29
 
 - Fixes #161 - Nested tags with no body content are not handled correctly
diff --git a/compiler/taglib-lookup/TaglibLookup.js b/compiler/taglib-lookup/TaglibLookup.js
index 94794f952..1cb79683b 100644
--- a/compiler/taglib-lookup/TaglibLookup.js
+++ b/compiler/taglib-lookup/TaglibLookup.js
@@ -99,24 +99,24 @@ class TaglibLookup {
 
         var merged = this.merged;
 
-        function handleNestedTag(nestedTag, parentTagName) {
-            var fullyQualifiedName = parentTagName + '.' + nestedTag.name;
-
-            // Create a clone of the nested tag since we need to add some new
-            // properties
-            var clonedNestedTag = new Tag();
-            extend(clonedNestedTag ,nestedTag);
-            // Record the fully qualified name of the parent tag that this
-            // custom tag is associated with.
-            clonedNestedTag.parentTagName = parentTagName;
-            clonedNestedTag.name = fullyQualifiedName;
-            merged.tags[fullyQualifiedName] = clonedNestedTag;
+        function handleNestedTags(tag, parentTagName) {
+            tag.forEachNestedTag(function(nestedTag) {
+                var fullyQualifiedName = parentTagName + '.' + nestedTag.name;
+                // Create a clone of the nested tag since we need to add some new
+                // properties
+                var clonedNestedTag = new Tag();
+                extend(clonedNestedTag, nestedTag);
+                // Record the fully qualified name of the parent tag that this
+                // custom tag is associated with.
+                clonedNestedTag.parentTagName = parentTagName;
+                clonedNestedTag.name = fullyQualifiedName;
+                merged.tags[fullyQualifiedName] = clonedNestedTag;
+                handleNestedTags(clonedNestedTag, fullyQualifiedName);
+            });
         }
 
         taglib.forEachTag(function(tag) {
-            tag.forEachNestedTag(function(nestedTag) {
-                handleNestedTag(nestedTag, tag.name);
-            });
+            handleNestedTags(tag, tag.name);
         });
     }
 
diff --git a/test/fixtures/marko-taglib.json b/test/fixtures/marko-taglib.json
index 0ab8cddce..4e91a238c 100644
--- a/test/fixtures/marko-taglib.json
+++ b/test/fixtures/marko-taglib.json
@@ -17,4 +17,4 @@
             "required": true
         }
     }
-}
\ No newline at end of file
+}
diff --git a/test/fixtures/render/autotest-pending/nested-tags-deep/expected.html b/test/fixtures/render/autotest-pending/nested-tags-deep/expected.html
new file mode 100644
index 000000000..a841d19bb
--- /dev/null
+++ b/test/fixtures/render/autotest-pending/nested-tags-deep/expected.html
@@ -0,0 +1 @@
+<div>Foo: bar Body: <b>Deeply nested!</b></div><div>Foo: baz Body: <b>Another deeply nested!</b></div>
\ No newline at end of file
diff --git a/test/fixtures/render/autotest-pending/nested-tags-deep/template.marko b/test/fixtures/render/autotest-pending/nested-tags-deep/template.marko
new file mode 100644
index 000000000..c166228ee
--- /dev/null
+++ b/test/fixtures/render/autotest-pending/nested-tags-deep/template.marko
@@ -0,0 +1,12 @@
+<test-nested-tags-deep class="nested-tags-deep">
+    <test-nested-tags-deep.item foo="bar">
+        <test-nested-tags-deep.item.body>
+            <b>Deeply nested!</b>
+        </test-nested-tags-deep.item.body>
+    </test-nested-tags-deep.item>
+    <test-nested-tags-deep.item foo="baz">
+        <test-nested-tags-deep.item.body>
+            <b>Another deeply nested!</b>
+        </test-nested-tags-deep.item.body>
+    </test-nested-tags-deep.item>
+</test-nested-tags-deep>
\ No newline at end of file
diff --git a/test/fixtures/render/autotest-pending/nested-tags-deep/test.js b/test/fixtures/render/autotest-pending/nested-tags-deep/test.js
new file mode 100644
index 000000000..c4013b344
--- /dev/null
+++ b/test/fixtures/render/autotest-pending/nested-tags-deep/test.js
@@ -0,0 +1 @@
+exports.templateData = {};
diff --git a/test/fixtures/taglib/test-nested-tags-deep/marko-tag.json b/test/fixtures/taglib/test-nested-tags-deep/marko-tag.json
new file mode 100644
index 000000000..e78045946
--- /dev/null
+++ b/test/fixtures/taglib/test-nested-tags-deep/marko-tag.json
@@ -0,0 +1,10 @@
+{
+    "renderer": "./renderer",
+    "@class": "string",
+    "@items <item>[]": {
+        "@foo": "string",
+        "@body <body>": {
+
+        }
+    }
+}
\ No newline at end of file
diff --git a/test/fixtures/taglib/test-nested-tags-deep/renderer.js b/test/fixtures/taglib/test-nested-tags-deep/renderer.js
new file mode 100644
index 000000000..edb0a26ca
--- /dev/null
+++ b/test/fixtures/taglib/test-nested-tags-deep/renderer.js
@@ -0,0 +1,5 @@
+var template = require('./template.marko');
+
+module.exports = function(input, out) {
+    template.render(input, out);
+};
\ No newline at end of file
diff --git a/test/fixtures/taglib/test-nested-tags-deep/template.marko b/test/fixtures/taglib/test-nested-tags-deep/template.marko
new file mode 100644
index 000000000..ab58c75be
--- /dev/null
+++ b/test/fixtures/taglib/test-nested-tags-deep/template.marko
@@ -0,0 +1,4 @@
+<div for="item in data.items">
+    Foo: ${item.foo}
+    Body: <invoke function="item.body.renderBody(out)" if="item.body"/>
+</div>
\ No newline at end of file