diff --git a/package.json b/package.json
index e5743b3..749188d 100644
--- a/package.json
+++ b/package.json
@@ -15,7 +15,8 @@
     "postcss-modules-local-by-default": "^1.1.1",
     "postcss-modules-parser": "^1.1.0",
     "postcss-modules-scope": "^1.0.2",
-    "postcss-modules-values": "^1.2.2"
+    "postcss-modules-values": "^1.2.2",
+    "postcss-nested": "^1.0.0"
   },
   "description": "Transforms styleName to className using compile time CSS module resolution.",
   "devDependencies": {
diff --git a/src/requireCssModule.js b/src/requireCssModule.js
index 28e8703..b7ea0b7 100644
--- a/src/requireCssModule.js
+++ b/src/requireCssModule.js
@@ -11,6 +11,7 @@ import postcss from 'postcss';
 import genericNames from 'generic-names';
 import ExtractImports from 'postcss-modules-extract-imports';
 import LocalByDefault from 'postcss-modules-local-by-default';
+import Nested from 'postcss-nested';
 import Parser from 'postcss-modules-parser';
 import Scope from 'postcss-modules-scope';
 import Values from 'postcss-modules-values';
@@ -66,6 +67,7 @@ export default (cssSourceFilePath: string, options: OptionsType): StyleModuleMap
   };
 
   const plugins = [
+    Nested,
     Values,
     LocalByDefault,
     ExtractImports,
diff --git a/test/fixtures/react-css-modules/resolves nested styles/actual.js b/test/fixtures/react-css-modules/resolves nested styles/actual.js
new file mode 100644
index 0000000..c0e8179
--- /dev/null
+++ b/test/fixtures/react-css-modules/resolves nested styles/actual.js	
@@ -0,0 +1,3 @@
+import './bar.css';
+
+<div styleName="a-b"></div>;
diff --git a/test/fixtures/react-css-modules/resolves nested styles/bar.css b/test/fixtures/react-css-modules/resolves nested styles/bar.css
new file mode 100644
index 0000000..bba2d85
--- /dev/null
+++ b/test/fixtures/react-css-modules/resolves nested styles/bar.css	
@@ -0,0 +1,3 @@
+.a {
+  &-b: {}
+}
diff --git a/test/fixtures/react-css-modules/resolves nested styles/expected.js b/test/fixtures/react-css-modules/resolves nested styles/expected.js
new file mode 100644
index 0000000..2c0128c
--- /dev/null
+++ b/test/fixtures/react-css-modules/resolves nested styles/expected.js	
@@ -0,0 +1,3 @@
+import './bar.css';
+
+<div className="bar__a-b"></div>;
diff --git a/test/fixtures/react-css-modules/resolves nested styles/options.json b/test/fixtures/react-css-modules/resolves nested styles/options.json
new file mode 100644
index 0000000..6f54db7
--- /dev/null
+++ b/test/fixtures/react-css-modules/resolves nested styles/options.json	
@@ -0,0 +1,10 @@
+{
+  "plugins": [
+    [
+      "../../../../src",
+      {
+        "generateScopedName": "[name]__[local]"
+      }
+    ]
+  ]
+}