diff --git a/infer/src/nullsafe/NullsafeMode.ml b/infer/src/nullsafe/NullsafeMode.ml
index bbe946028..ade484d9e 100644
--- a/infer/src/nullsafe/NullsafeMode.ml
+++ b/infer/src/nullsafe/NullsafeMode.ml
@@ -68,6 +68,18 @@ module Trust = struct
         is_stricter_trust_list stricter_trust_list weaker_trust_list
 
 
+  let intersect trust1 trust2 =
+    match (trust1, trust2) with
+    | Only classes, All ->
+        Only classes
+    | All, Only classes ->
+        Only classes
+    | Only list1, Only list2 ->
+        Only (JavaClassName.Set.inter list1 list2)
+    | All, All ->
+        All
+
+
   let pp fmt t =
     match t with
     | All ->
@@ -116,9 +128,8 @@ let extract_user_defined_class_name java_class_name =
   |> Option.value ~default:java_class_name
 
 
-let of_class tenv class_name =
-  let user_defined_class = extract_user_defined_class_name class_name in
-  match PatternMatch.type_name_get_annotation tenv (Typ.JavaClass user_defined_class) with
+let extract_mode_from_explicit_class_annotation tenv classname =
+  match PatternMatch.type_name_get_annotation tenv (Typ.JavaClass classname) with
   | Some annots -> (
       if Annotations.ia_is_nullsafe_strict annots then Strict
       else
@@ -132,6 +143,33 @@ let of_class tenv class_name =
       Default
 
 
+(** Get the minimal mode that is stricter or equal than both of given modes *)
+let intersect mode1 mode2 =
+  match (mode1, mode2) with
+  | Strict, _ | _, Strict ->
+      Strict
+  | Local trust1, Local trust2 ->
+      Local (Trust.intersect trust1 trust2)
+  | Local trust, Default | Default, Local trust ->
+      Local trust
+  | Default, Default ->
+      Default
+
+
+let of_class tenv class_name =
+  (* The mode of the class is the strictest over this class's mode annotation and its outer classes *)
+  let rec of_class_and_outer_classes class_name =
+    let curr_class_mode = extract_mode_from_explicit_class_annotation tenv class_name in
+    match JavaClassName.get_outer_class_name class_name with
+    | Some outer_name ->
+        intersect curr_class_mode (of_class_and_outer_classes outer_name)
+    | None ->
+        curr_class_mode
+  in
+  let user_defined_class = extract_user_defined_class_name class_name in
+  of_class_and_outer_classes user_defined_class
+
+
 let of_procname tenv pname =
   let class_name =
     match pname with
diff --git a/infer/tests/codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java b/infer/tests/codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java
new file mode 100644
index 000000000..1662c45ea
--- /dev/null
+++ b/infer/tests/codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java
@@ -0,0 +1,112 @@
+/*
+ * Copyright (c) Facebook, Inc. and its affiliates.
+ *
+ * This source code is licensed under the MIT license found in the
+ * LICENSE file in the root directory of this source tree.
+ */
+
+package codetoanalyze.java.nullsafe_default;
+
+import com.facebook.infer.annotation.Nullsafe;
+
+/** Test to ensure we correctly evaluate mode for nested classes */
+@Nullsafe(Nullsafe.Mode.LOCAL)
+class NullsafeLocal {
+
+  public String shouldBeNullsafeModeError() {
+    return null;
+  }
+
+  // Mode should be inherited from the parent class
+  class Nested {
+    public String shouldBeNullsafeModeError() {
+      return null;
+    }
+
+    // Mode propagation should be transitive
+    class DeeplyNested {
+      public String shouldBeNullsafeModeError() {
+        return null;
+      }
+    }
+
+    // This is Local, but not Strict mode
+    public String returningDefaultNotNullIsOK() {
+      return Default.getString();
+    }
+  }
+
+  // It is OK to make nested classes more strict
+  @Nullsafe(Nullsafe.Mode.STRICT)
+  class NestedStrict {
+    public String returningDefaultNotNullIsError() {
+      return Default.getString();
+    }
+  }
+
+  // No need to repeat the mode - it is redundant
+  @Nullsafe(Nullsafe.Mode.LOCAL)
+  class NestedExplicitLocal {
+    public String shouldBeNullsafeModeError() {
+      return null;
+    }
+  }
+}
+
+@Nullsafe(Nullsafe.Mode.STRICT)
+class NullsafeStrict {
+  public String returningDefaultNotNullIsError() {
+    return Default.getString();
+  }
+
+  // STRICT mode is propagated to the nested class
+  class Nested {
+    public String returningDefaultNotNullIsError() {
+      return Default.getString();
+    }
+
+    // Impossible to downgrade the level of nested class, even if the nested mode
+    // is implicit
+    @Nullsafe(Nullsafe.Mode.LOCAL)
+    class DeeplyNestedLocalIsStillStrict {
+      public String returningDefaultNotNullIsError() {
+        return Default.getString();
+      }
+    }
+  }
+
+  // Impossible to downgrade the level of nested class
+  @Nullsafe(Nullsafe.Mode.LOCAL)
+  class NestedLocalIsStillStrict {
+    public String returningDefaultNotNullIsError() {
+      return Default.getString();
+    }
+  }
+}
+
+class Default {
+  public static String getString() {
+    return "";
+  }
+
+  // OK for nested to be @Nullsafe but the outer is not
+  @Nullsafe(Nullsafe.Mode.LOCAL)
+  class NestedLocal {
+    public String shouldBeNullsafeModeError() {
+      return null;
+    }
+
+    // This is Local, but not Strict mode
+    public String returningDefaultNotNullIsOK() {
+      return Default.getString();
+    }
+
+    // And we can increase strictness even more
+    @Nullsafe(Nullsafe.Mode.STRICT)
+    class DeeplyNestedStrict {
+      public String returningDefaultNotNullIsError() {
+        return Default.getString();
+      }
+    }
+  }
+}
diff --git a/infer/tests/codetoanalyze/java/nullsafe-default/issues.exp b/infer/tests/codetoanalyze/java/nullsafe-default/issues.exp
index cf9a1cac3..4273e23e8 100644
--- a/infer/tests/codetoanalyze/java/nullsafe-default/issues.exp
+++ b/infer/tests/codetoanalyze/java/nullsafe-default/issues.exp
@@ -262,6 +262,29 @@ codetoanalyze/java/nullsafe-default/NullsafeMode.java, codetoanalyze.java.nullsa
 codetoanalyze/java/nullsafe-default/NullsafeMode.java, codetoanalyze.java.nullsafe_default.NullsafeMode$TrustSomeNullsafe.BAD_returnNullFromNonNulsafe():java.lang.String, 0, ERADICATE_RETURN_NOT_NULLABLE, no_bucket, ERROR, [`BAD_returnNullFromNonNulsafe()`: return type is declared non-nullable but the method returns a nullable value: call to returnNull() at line 144.]
 codetoanalyze/java/nullsafe-default/NullsafeMode.java, codetoanalyze.java.nullsafe_default.NullsafeMode$TrustSomeNullsafe.FP_OK_accessFieldFromNonNullsafe():java.lang.String, 1, ERADICATE_UNCHECKED_USAGE_IN_NULLSAFE, no_bucket, ERROR, [`NullsafeMode$NonNullsafe.valField`: `@NullsafeLocal(trust=selected)` mode prohibits using values coming from non-nullsafe classes without a check. This field is used at line 147. Either add a local check for null or assertion, or make NullsafeMode$NonNullsafe nullsafe.]
 codetoanalyze/java/nullsafe-default/NullsafeMode.java, codetoanalyze.java.nullsafe_default.NullsafeMode$TrustSomeNullsafe.OK_returnFromUntrustedNonNullsafeAsNullable():java.lang.String, 0, ERADICATE_RETURN_OVER_ANNOTATED, no_bucket, ADVICE, [Method `OK_returnFromUntrustedNonNullsafeAsNullable()` is annotated with `@Nullable` but never returns null.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 14, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], NullsafeLocal, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "LocalTrustAll"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 21, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], NullsafeLocal$Nested, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "LocalTrustAll"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 27, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], NullsafeLocal$Nested$DeeplyNested, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "LocalTrustAll"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 41, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], NullsafeLocal$NestedStrict, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "Strict"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 49, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], NullsafeLocal$NestedExplicitLocal, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "LocalTrustAll"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 57, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], NullsafeStrict, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "Strict"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 63, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], NullsafeStrict$Nested, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "Strict"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 71, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], NullsafeStrict$Nested$DeeplyNestedLocalIsStillStrict, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "Strict"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 80, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], NullsafeStrict$NestedLocalIsStillStrict, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "Strict"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 87, ERADICATE_META_CLASS_CAN_BE_NULLSAFE, no_bucket, ADVICE, [Congrats! `Default` is free of nullability issues. Mark it `@Nullsafe(value = Nullsafe.Mode.LOCAL, trustOnly = @Nullsafe.TrustList({}))` to prevent regressions.], Default, codetoanalyze.java.nullsafe_default, issues: 0, curr_mode: "Default", promote_mode: "Strict"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 94, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], Default$NestedLocal, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "LocalTrustAll"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, Linters_dummy_method, 106, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], Default$NestedLocal$DeeplyNestedStrict, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "Strict"
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.Default$NestedLocal$DeeplyNestedStrict.returningDefaultNotNullIsError():java.lang.String, 1, ERADICATE_UNCHECKED_USAGE_IN_NULLSAFE, no_bucket, ERROR, [`Default.getString()`: `@NullsafeStrict` mode prohibits using values coming from non-strict classes without a check. Result of this call is used at line 107. Either add a local check for null or assertion, or make Default nullsafe strict.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.Default$NestedLocal.shouldBeNullsafeModeError():java.lang.String, 0, ERADICATE_RETURN_NOT_NULLABLE, no_bucket, ERROR, [`shouldBeNullsafeModeError()`: return type is declared non-nullable but the method returns `null`: null constant at line 96.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.NullsafeLocal$Nested$DeeplyNested.shouldBeNullsafeModeError():java.lang.String, 0, ERADICATE_RETURN_NOT_NULLABLE, no_bucket, ERROR, [`shouldBeNullsafeModeError()`: return type is declared non-nullable but the method returns `null`: null constant at line 29.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.NullsafeLocal$Nested.shouldBeNullsafeModeError():java.lang.String, 0, ERADICATE_RETURN_NOT_NULLABLE, no_bucket, ERROR, [`shouldBeNullsafeModeError()`: return type is declared non-nullable but the method returns `null`: null constant at line 23.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.NullsafeLocal$NestedExplicitLocal.shouldBeNullsafeModeError():java.lang.String, 0, ERADICATE_RETURN_NOT_NULLABLE, no_bucket, ERROR, [`shouldBeNullsafeModeError()`: return type is declared non-nullable but the method returns `null`: null constant at line 51.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.NullsafeLocal$NestedStrict.returningDefaultNotNullIsError():java.lang.String, 1, ERADICATE_UNCHECKED_USAGE_IN_NULLSAFE, no_bucket, ERROR, [`Default.getString()`: `@NullsafeStrict` mode prohibits using values coming from non-strict classes without a check. Result of this call is used at line 42. Either add a local check for null or assertion, or make Default nullsafe strict.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.NullsafeLocal.shouldBeNullsafeModeError():java.lang.String, 0, ERADICATE_RETURN_NOT_NULLABLE, no_bucket, ERROR, [`shouldBeNullsafeModeError()`: return type is declared non-nullable but the method returns `null`: null constant at line 17.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.NullsafeStrict$Nested$DeeplyNestedLocalIsStillStrict.returningDefaultNotNullIsError():java.lang.String, 1, ERADICATE_UNCHECKED_USAGE_IN_NULLSAFE, no_bucket, ERROR, [`Default.getString()`: `@NullsafeStrict` mode prohibits using values coming from non-strict classes without a check. Result of this call is used at line 72. Either add a local check for null or assertion, or make Default nullsafe strict.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.NullsafeStrict$Nested.returningDefaultNotNullIsError():java.lang.String, 1, ERADICATE_UNCHECKED_USAGE_IN_NULLSAFE, no_bucket, ERROR, [`Default.getString()`: `@NullsafeStrict` mode prohibits using values coming from non-strict classes without a check. Result of this call is used at line 64. Either add a local check for null or assertion, or make Default nullsafe strict.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.NullsafeStrict$NestedLocalIsStillStrict.returningDefaultNotNullIsError():java.lang.String, 1, ERADICATE_UNCHECKED_USAGE_IN_NULLSAFE, no_bucket, ERROR, [`Default.getString()`: `@NullsafeStrict` mode prohibits using values coming from non-strict classes without a check. Result of this call is used at line 81. Either add a local check for null or assertion, or make Default nullsafe strict.]
+codetoanalyze/java/nullsafe-default/NullsafeModeNestedClasses.java, codetoanalyze.java.nullsafe_default.NullsafeStrict.returningDefaultNotNullIsError():java.lang.String, 1, ERADICATE_UNCHECKED_USAGE_IN_NULLSAFE, no_bucket, ERROR, [`Default.getString()`: `@NullsafeStrict` mode prohibits using values coming from non-strict classes without a check. Result of this call is used at line 58. Either add a local check for null or assertion, or make Default nullsafe strict.]
 codetoanalyze/java/nullsafe-default/ParameterNotNullable.java, Linters_dummy_method, 20, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], ParameterNotNullable, codetoanalyze.java.nullsafe_default, issues: 37, curr_mode: "Default"
 codetoanalyze/java/nullsafe-default/ParameterNotNullable.java, Linters_dummy_method, 64, ERADICATE_META_CLASS_CAN_BE_NULLSAFE, no_bucket, ADVICE, [Congrats! `ParameterNotNullable$Builder` is free of nullability issues. Mark it `@Nullsafe(value = Nullsafe.Mode.LOCAL, trustOnly = @Nullsafe.TrustList({}))` to prevent regressions.], ParameterNotNullable$Builder, codetoanalyze.java.nullsafe_default, issues: 0, curr_mode: "Default", promote_mode: "Strict"
 codetoanalyze/java/nullsafe-default/ParameterNotNullable.java, Linters_dummy_method, 93, ERADICATE_META_CLASS_NEEDS_IMPROVEMENT, no_bucket, INFO, [], ParameterNotNullable$ConstructorCall, codetoanalyze.java.nullsafe_default, issues: 1, curr_mode: "Default"