diff --git a/org.springframework.context/src/main/java/org/springframework/context/annotation/Configuration.java b/org.springframework.context/src/main/java/org/springframework/context/annotation/Configuration.java
index a730a96c477..58091101fad 100644
--- a/org.springframework.context/src/main/java/org/springframework/context/annotation/Configuration.java
+++ b/org.springframework.context/src/main/java/org/springframework/context/annotation/Configuration.java
@@ -232,6 +232,37 @@ import org.springframework.stereotype.Component;
  *     }
  * }</pre>
  *
+ * <h3>With nested {@code @Configuration} classes</h3>
+ * {@code @Configuration} classes may be nested within one another as follows:
+ * <pre class="code">
+ * &#064;Configuration
+ * public class AppConfig {
+ *     &#064;Inject DataSource dataSource;
+ *
+ *     &#064;Bean
+ *     public MyBean myBean() {
+ *         return new MyBean(dataSource);
+ *     }
+ *
+ *     &#064;Configuration
+ *     static class DatabaseConfig {
+ *         &#064;Bean
+ *         DataSource dataSource() {
+ *             return new EmbeddedDatabaseBuilder().build();
+ *         }
+ *     }
+ * }</pre>
+ *
+ * When bootstrapping such an arrangement, only {@code AppConfig} need be registered
+ * against the application context. By virtue of being a nested {@code @Configuration}
+ * class, {@code DatabaseConfig} <em>will be registered automatically</em>. This avoids
+ * the need to use an {@code @Import} annotation when the relationship between
+ * {@code AppConfig} {@code DatabaseConfig} is already implicitly clear.
+ *
+ * <p>Note also that nested {@code @Configuration} classes can be used to good effect
+ * with the {@code @Profile} annotation to provide two options of the same bean to the
+ * enclosing {@code @Configuration} class.
+ *
  * <h2>Configuring lazy initialization</h2>
  * <p>By default, {@code @Bean} methods will be <em>eagerly instantiated</em> at container
  * bootstrap time.  To avoid this, {@code @Configuration} may be used in conjunction with
diff --git a/org.springframework.context/src/main/java/org/springframework/context/annotation/ConfigurationClassParser.java b/org.springframework.context/src/main/java/org/springframework/context/annotation/ConfigurationClassParser.java
index 43d567a57bb..e00c6b24859 100644
--- a/org.springframework.context/src/main/java/org/springframework/context/annotation/ConfigurationClassParser.java
+++ b/org.springframework.context/src/main/java/org/springframework/context/annotation/ConfigurationClassParser.java
@@ -16,6 +16,8 @@
 
 package org.springframework.context.annotation;
 
+import static org.springframework.context.annotation.ConfigurationClassUtils.isConfigurationCandidate;
+
 import java.io.IOException;
 import java.util.Collections;
 import java.util.Comparator;
@@ -157,6 +159,17 @@ class ConfigurationClassParser {
 	}
 
 	protected void doProcessConfigurationClass(ConfigurationClass configClass, AnnotationMetadata metadata) throws IOException {
+
+		// recursively process any member (nested) classes first
+		for (String memberClassName : metadata.getMemberClassNames()) {
+			MetadataReader reader = this.metadataReaderFactory.getMetadataReader(memberClassName);
+			AnnotationMetadata memberClassMetadata = reader.getAnnotationMetadata();
+			if (isConfigurationCandidate(memberClassMetadata)) {
+				processConfigurationClass(new ConfigurationClass(reader, null));
+			}
+		}
+
+		// process any @PropertySource annotations
 		Map<String, Object> propertySourceAttributes =
 			metadata.getAnnotationAttributes(org.springframework.context.annotation.PropertySource.class.getName());
 		if (propertySourceAttributes != null) {
@@ -169,6 +182,7 @@ class ConfigurationClassParser {
 			this.propertySources.push(ps);
 		}
 
+		// process any @ComponentScan annotions
 		Map<String, Object> componentScanAttributes = metadata.getAnnotationAttributes(ComponentScan.class.getName());
 		if (componentScanAttributes != null) {
 			// the config class is annotated with @ComponentScan -> perform the scan immediately
@@ -188,12 +202,14 @@ class ConfigurationClassParser {
 			}
 		}
 
+		// process any @Import annotations
 		List<Map<String, Object>> allImportAttribs =
 			AnnotationUtils.findAllAnnotationAttributes(Import.class, metadata.getClassName(), true);
 		for (Map<String, Object> importAttribs : allImportAttribs) {
 			processImport(configClass, (String[]) importAttribs.get("value"), true);
 		}
 
+		// process any @ImportResource annotations
 		if (metadata.isAnnotated(ImportResource.class.getName())) {
 			String[] resources = (String[]) metadata.getAnnotationAttributes(ImportResource.class.getName()).get("value");
 			Class<?> readerClass = (Class<?>) metadata.getAnnotationAttributes(ImportResource.class.getName()).get("reader");
@@ -205,6 +221,8 @@ class ConfigurationClassParser {
 				configClass.addImportedResource(resource, readerClass);
 			}
 		}
+
+		// process individual @Bean methods
 		Set<MethodMetadata> beanMethods = metadata.getAnnotatedMethods(Bean.class.getName());
 		for (MethodMetadata methodMetadata : beanMethods) {
 			configClass.addBeanMethod(new BeanMethod(methodMetadata, configClass));
diff --git a/org.springframework.context/src/main/java/org/springframework/context/annotation/ConfigurationClassUtils.java b/org.springframework.context/src/main/java/org/springframework/context/annotation/ConfigurationClassUtils.java
index c3906bb56bc..2d192a809c9 100644
--- a/org.springframework.context/src/main/java/org/springframework/context/annotation/ConfigurationClassUtils.java
+++ b/org.springframework.context/src/main/java/org/springframework/context/annotation/ConfigurationClassUtils.java
@@ -79,12 +79,11 @@ abstract class ConfigurationClassUtils {
 		}
 
 		if (metadata != null) {
-			if (metadata.isAnnotated(Configuration.class.getName())) {
+			if (isFullConfigurationCandidate(metadata)) {
 				beanDef.setAttribute(CONFIGURATION_CLASS_ATTRIBUTE, CONFIGURATION_CLASS_FULL);
 				return true;
 			}
-			else if (metadata.isAnnotated(Component.class.getName()) ||
-					metadata.hasAnnotatedMethods(Bean.class.getName())) {
+			else if (isLiteConfigurationCandidate(metadata)) {
 				beanDef.setAttribute(CONFIGURATION_CLASS_ATTRIBUTE, CONFIGURATION_CLASS_LITE);
 				return true;
 			}
@@ -92,6 +91,20 @@ abstract class ConfigurationClassUtils {
 		return false;
 	}
 
+	public static boolean isConfigurationCandidate(AnnotationMetadata metadata) {
+		return isFullConfigurationCandidate(metadata) || isLiteConfigurationCandidate(metadata);
+	}
+
+	public static boolean isFullConfigurationCandidate(AnnotationMetadata metadata) {
+		return metadata.isAnnotated(Configuration.class.getName());
+	}
+
+	public static boolean isLiteConfigurationCandidate(AnnotationMetadata metadata) {
+		return metadata.isAnnotated(Component.class.getName()) ||
+				metadata.hasAnnotatedMethods(Bean.class.getName());
+	}
+
+
 	/**
 	 * Determine whether the given bean definition indicates a full @Configuration class.
 	 */
diff --git a/org.springframework.context/src/test/java/org/springframework/context/annotation/NestedConfigurationClassTests.java b/org.springframework.context/src/test/java/org/springframework/context/annotation/NestedConfigurationClassTests.java
new file mode 100644
index 00000000000..fd0adecba09
--- /dev/null
+++ b/org.springframework.context/src/test/java/org/springframework/context/annotation/NestedConfigurationClassTests.java
@@ -0,0 +1,141 @@
+/*
+ * Copyright 2002-2011 the original author or authors.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *      http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+package org.springframework.context.annotation;
+
+import static org.hamcrest.CoreMatchers.is;
+import static org.junit.Assert.assertFalse;
+import static org.junit.Assert.assertThat;
+
+import org.junit.Test;
+
+import test.beans.TestBean;
+
+/**
+ * Tests ensuring that nested static @Configuration classes are automatically detected
+ * and registered without the need for explicit registration or @Import. See SPR-8186.
+ *
+ * @author Chris Beams
+ * @since 3.1
+ */
+public class NestedConfigurationClassTests {
+
+	@Test
+	public void oneLevelDeep() {
+		AnnotationConfigApplicationContext ctx = new AnnotationConfigApplicationContext();
+		ctx.register(L0Config.L1Config.class);
+		ctx.refresh();
+
+		assertFalse(ctx.containsBean("l0Bean"));
+
+		ctx.getBean(L0Config.L1Config.class);
+		ctx.getBean("l1Bean");
+
+		ctx.getBean(L0Config.L1Config.L2Config.class);
+		ctx.getBean("l2Bean");
+
+		// ensure that override order is correct
+		assertThat(ctx.getBean("overrideBean", TestBean.class).getName(), is("override-l1"));
+	}
+
+	@Test
+	public void twoLevelsDeep() {
+		AnnotationConfigApplicationContext ctx = new AnnotationConfigApplicationContext();
+		ctx.register(L0Config.class);
+		ctx.refresh();
+
+		ctx.getBean(L0Config.class);
+		ctx.getBean("l0Bean");
+
+		ctx.getBean(L0Config.L1Config.class);
+		ctx.getBean("l1Bean");
+
+		ctx.getBean(L0Config.L1Config.L2Config.class);
+		ctx.getBean("l2Bean");
+
+		// ensure that override order is correct
+		assertThat(ctx.getBean("overrideBean", TestBean.class).getName(), is("override-l0"));
+	}
+
+	@Test
+	public void twoLevelsDeepWithInheritance() {
+		AnnotationConfigApplicationContext ctx = new AnnotationConfigApplicationContext();
+		ctx.register(S1Config.class);
+		ctx.refresh();
+
+		ctx.getBean(S1Config.class);
+		ctx.getBean("l0Bean");
+
+		ctx.getBean(L0Config.L1Config.class);
+		ctx.getBean("l1Bean");
+
+		ctx.getBean(L0Config.L1Config.L2Config.class);
+		ctx.getBean("l2Bean");
+
+		// ensure that override order is correct
+		assertThat(ctx.getBean("overrideBean", TestBean.class).getName(), is("override-s1"));
+	}
+
+
+	@Configuration
+	static class L0Config {
+		@Bean
+		public TestBean l0Bean() {
+			return new TestBean("l0");
+		}
+
+		@Bean
+		public TestBean overrideBean() {
+			return new TestBean("override-l0");
+		}
+
+		@Configuration
+		static class L1Config {
+			@Bean
+			public TestBean l1Bean() {
+				return new TestBean("l1");
+			}
+
+			@Bean
+			public TestBean overrideBean() {
+				return new TestBean("override-l1");
+			}
+
+			@Configuration
+			protected static class L2Config {
+				@Bean
+				public TestBean l2Bean() {
+					return new TestBean("l2");
+				}
+
+				@Bean
+				public TestBean overrideBean() {
+					return new TestBean("override-l2");
+				}
+			}
+		}
+	}
+
+
+	@Configuration
+	static class S1Config extends L0Config {
+		@Bean
+		public TestBean overrideBean() {
+			return new TestBean("override-s1");
+		}
+	}
+
+}
\ No newline at end of file