diff --git a/CHANGELOG.md b/CHANGELOG.md
index e5149de6..92bde526 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -6,6 +6,7 @@
 - Added `missingConfigFiles` to `options.disabledValidations` to optionally skip checking for the existence of config files.
 - Added ability to automatically include Carthage related dependencies via `includeRelated: true` [#506](https://github.com/yonaskolb/XcodeGen/pull/506) @rpassis
 - Added ability to define a per-platform `deploymentTarget` for Multi-Platform targets. [#510](https://github.com/yonaskolb/XcodeGen/pull/510) @ainopara
+- Added support for nested target templates [#534](https://github.com/yonaskolb/XcodeGen/pull/534) @tomquist
 
 #### Fixed
 - Sources outside a project spec's directory will be correctly referenced as relative paths in the project file. [#524](https://github.com/yonaskolb/XcodeGen/pull/524)
diff --git a/Sources/ProjectSpec/Target.swift b/Sources/ProjectSpec/Target.swift
index 5beb82b2..67b578ff 100644
--- a/Sources/ProjectSpec/Target.swift
+++ b/Sources/ProjectSpec/Target.swift
@@ -139,9 +139,28 @@ extension Target {
 
         let targetTemplatesDictionary: [String: JSONDictionary] = jsonDictionary["targetTemplates"] as? [String: JSONDictionary] ?? [:]
 
-        for (targetName, var target) in targetsDictionary {
+        // Recursively collects all nested template names of a given dictionary.
+        func collectTemplates(of jsonDictionary: JSONDictionary,
+                              into allTemplates: inout [String],
+                              insertAt insertionIndex: inout Int) {
+            guard let templates = jsonDictionary["templates"] as? [String] else {
+                return
+            }
+            for template in templates where !allTemplates.contains(template) {
+                guard let templateDictionary = targetTemplatesDictionary[template] else {
+                    continue
+                }
+                allTemplates.insert(template, at: insertionIndex)
+                collectTemplates(of: templateDictionary, into: &allTemplates, insertAt: &insertionIndex)
+                insertionIndex += 1
+            }
+        }
 
-            if let templates = target["templates"] as? [String] {
+        for (targetName, var target) in targetsDictionary {
+            var templates: [String] = []
+            var index: Int = 0
+            collectTemplates(of: target, into: &templates, insertAt: &index)
+            if !templates.isEmpty {
                 var mergedDictionary: JSONDictionary = [:]
                 for template in templates {
                     if let templateDictionary = targetTemplatesDictionary[template] {
diff --git a/Tests/XcodeGenKitTests/SpecLoadingTests.swift b/Tests/XcodeGenKitTests/SpecLoadingTests.swift
index 607f3ce6..72b95452 100644
--- a/Tests/XcodeGenKitTests/SpecLoadingTests.swift
+++ b/Tests/XcodeGenKitTests/SpecLoadingTests.swift
@@ -363,6 +363,127 @@ class SpecLoadingTests: XCTestCase {
                 try expect(target.configFiles["debug"]) == "Configs/Framework/debug.xcconfig" // replaces $target_name
             }
 
+            $0.it("parses nested target templates") {
+
+                let targetDictionary: [String: Any] = [
+                    "deploymentTarget": "1.2.0",
+                    "sources": ["targetSource"],
+                    "templates": ["temp2"],
+                ]
+
+                let project = try getProjectSpec([
+                    "targets": ["Framework": targetDictionary],
+                    "targetTemplates": [
+                        "temp": [
+                            "type": "framework",
+                            "platform": "iOS",
+                            "sources": ["nestedTemplateSource1"],
+                        ],
+                        "temp1": [
+                            "type": "application",
+                            "sources": ["nestedTemplateSource2"],
+                        ],
+                        "temp2": [
+                            "platform": "tvOS",
+                            "deploymentTarget": "1.1.0",
+                            "configFiles": ["debug": "Configs/$target_name/debug.xcconfig"],
+                            "templates": ["temp", "temp1"],
+                            "sources": ["templateSource"],
+                        ]
+                    ],
+                ])
+
+                let target = project.targets.first!
+                try expect(target.type) == .application // uses value of last nested template
+                try expect(target.platform) == .tvOS // uses latest value
+                try expect(target.deploymentTarget) == Version("1.2.0") // keeps value
+                try expect(target.sources) == ["nestedTemplateSource1", "nestedTemplateSource2", "templateSource", "targetSource"] // merges array in order
+                try expect(target.configFiles["debug"]) == "Configs/Framework/debug.xcconfig" // replaces $target_name
+            }
+
+            $0.it("parses complex nested target templates") {
+
+                let targetDictionary: [String: Any] = [
+                    "type": "framework",
+                    "platform": "iOS",
+                    "templates": ["temp"],
+                    "sources": ["target"],
+                ]
+
+                let project = try getProjectSpec([
+                    "targets": ["Framework": targetDictionary],
+                    "targetTemplates": [
+                        "temp": [
+                            "templates": ["a", "d"],
+                            "sources": ["temp"],
+                        ],
+                        "a": [
+                            "templates": ["b", "c"],
+                            "sources": ["a"],
+                        ],
+                        "b": [
+                            "sources": ["b"],
+                        ],
+                        "c": [
+                            "sources": ["c"],
+                        ],
+                        "d": [
+                            "sources": ["d"],
+                            "templates": ["e"],
+                        ],
+                        "e": [
+                            "sources": ["e"],
+                        ],
+
+                    ],
+                    ])
+
+                let target = project.targets.first!
+                try expect(target.type) == .framework // uses value of last nested template
+                try expect(target.platform) == .iOS // uses latest value
+                try expect(target.sources) == ["b", "c", "a", "e", "d", "temp", "target"] // merges array in order
+            }
+
+            $0.it("parses nested target templates with cycle") {
+
+                let targetDictionary: [String: Any] = [
+                    "deploymentTarget": "1.2.0",
+                    "sources": ["targetSource"],
+                    "templates": ["temp2"],
+                ]
+
+                let project = try getProjectSpec([
+                    "targets": ["Framework": targetDictionary],
+                    "targetTemplates": [
+                        "temp": [
+                            "type": "framework",
+                            "platform": "iOS",
+                            "templates": ["temp1"],
+                            "sources": ["nestedTemplateSource1"],
+                        ],
+                        "temp1": [
+                            "platform": "macOS",
+                            "templates": ["temp2"],
+                            "sources": ["nestedTemplateSource2"],
+                        ],
+                        "temp2": [
+                            "platform": "tvOS",
+                            "deploymentTarget": "1.1.0",
+                            "configFiles": ["debug": "Configs/$target_name/debug.xcconfig"],
+                            "templates": ["temp", "temp1"],
+                            "sources": ["templateSource"],
+                        ]
+                    ],
+                ])
+
+                let target = project.targets.first!
+                try expect(target.type) == .framework // uses value
+                try expect(target.platform) == .tvOS // uses latest value
+                try expect(target.deploymentTarget) == Version("1.2.0") // keeps value
+                try expect(target.sources) == ["nestedTemplateSource2", "nestedTemplateSource1", "templateSource", "targetSource"] // merges array in order
+                try expect(target.configFiles["debug"]) == "Configs/Framework/debug.xcconfig" // replaces $target_name
+            }
+
             $0.it("parses aggregate targets") {
                 let dictionary: [String: Any] = [
                     "targets": ["target_1", "target_2"],