diff --git a/core/libs/prx/libkernel/CMakeLists.txt b/core/libs/prx/libkernel/CMakeLists.txt
index 2ceb0cfa1..b951f5d60 100644
--- a/core/libs/prx/libkernel/CMakeLists.txt
+++ b/core/libs/prx/libkernel/CMakeLists.txt
@@ -416,6 +416,13 @@ if(BUILD_TESTING)
         add_test(NAME guest_raise_exception COMMAND guest_raise_exception_tests)
         set_tests_properties(guest_raise_exception PROPERTIES TIMEOUT 30 ENVIRONMENT_MODIFICATION
             "PATH=path_list_prepend:$<TARGET_FILE_DIR:libkernel>")
+        add_test_executable(guest_raise_nested_sleep_tests ${LIBS_INCLUDE_DIR}/tests/GuestRaiseNestedSleep.cpp)
+        target_include_directories(guest_raise_nested_sleep_tests PRIVATE ${LIBS_INCLUDE_DIR})
+        target_link_libraries(guest_raise_nested_sleep_tests PRIVATE libkernel libc)
+        configure_windows_unwind(guest_raise_nested_sleep_tests)
+        add_test(NAME guest_raise_nested_sleep COMMAND guest_raise_nested_sleep_tests)
+        set_tests_properties(guest_raise_nested_sleep PROPERTIES TIMEOUT 30 ENVIRONMENT_MODIFICATION
+            "PATH=path_list_prepend:$<TARGET_FILE_DIR:libkernel>")
     endif()
     if(WIN32)
         add_library(guest_unwind_module_info_fixture SHARED ${LIBS_INCLUDE_DIR}/tests/GuestUnwindModuleInfoFixture.cpp)
diff --git a/core/libs/prx/libkernel/Time/TimedWait.cpp b/core/libs/prx/libkernel/Time/TimedWait.cpp
index f5949d6da..8a8f5759f 100644
--- a/core/libs/prx/libkernel/Time/TimedWait.cpp
+++ b/core/libs/prx/libkernel/Time/TimedWait.cpp
@@ -60,6 +60,16 @@ HANDLE CreateHighResolutionTimer() {
 }
 
 bool TimerWait(HANDLE timer, std::uint64_t nanos) {
+    thread_local int depth = 0;
+    struct Nesting {
+        HANDLE own;
+        explicit Nesting(bool nested) : own(nested ? CreateHighResolutionTimer() : nullptr) { ++depth; }
+        ~Nesting() {
+            --depth;
+            if (own) CloseHandle(own);
+        }
+    } nesting(depth != 0);
+    if (depth > 1) timer = nesting.own;
     if (!timer) return false;
     LARGE_INTEGER due{};
     due.QuadPart = -static_cast<LONGLONG>(nanos / 100ULL);
diff --git a/core/libs/tests/GuestRaiseNestedSleep.cpp b/core/libs/tests/GuestRaiseNestedSleep.cpp
new file mode 100644
index 000000000..839f831ec
--- /dev/null
+++ b/core/libs/tests/GuestRaiseNestedSleep.cpp
@@ -0,0 +1,70 @@
+#include "SceTypes.hpp"
+#include <atomic>
+#include <chrono>
+#include <cstdlib>
+#include <thread>
+
+extern "C" {
+int APS5_VABI sceKernelInstallExceptionHandler(int signum, void* handler);
+int APS5_VABI sceKernelRemoveExceptionHandler(int signum);
+int APS5_VABI sceKernelRaiseException(Pthread thread, int signum);
+int APS5_VABI scePthreadCreate(Pthread* thread, const PthreadAttr* attr, PthreadEntry entry, void* arg, const char* name);
+int APS5_VABI scePthreadJoin(Pthread thread, void** retval);
+int APS5_VABI sceKernelUsleep_nid_postfix(KernelUseconds microseconds);
+}
+
+static constexpr int SIGUSR1 = 30;
+static constexpr int SCE_OK = 0;
+static constexpr KernelUseconds OuterSleep = 1000000;
+static constexpr KernelUseconds HandlerSleep = 20000;
+
+using Clock = std::chrono::steady_clock;
+
+static void Require(bool value) { if (!value) std::abort(); }
+
+static std::atomic<int> handled{0};
+static std::atomic<bool> started{false};
+static std::atomic<bool> returned{false};
+static Clock::time_point sleepStart;
+static Clock::time_point sleepEnd;
+
+static void APS5_VABI Handler(int signum, void*) {
+    Require(signum == SIGUSR1);
+    Require(sceKernelUsleep_nid_postfix(HandlerSleep) == SCE_OK);
+    handled.fetch_add(1);
+}
+
+static void* APS5_VABI Sleeper(void*) {
+    sleepStart = Clock::now();
+    started.store(true);
+    Require(sceKernelUsleep_nid_postfix(OuterSleep) == SCE_OK);
+    sleepEnd = Clock::now();
+    returned.store(true);
+    return nullptr;
+}
+
+template <class TCondition>
+static bool WaitFor(TCondition condition, std::chrono::milliseconds limit) {
+    const auto deadline = Clock::now() + limit;
+    while (!condition()) {
+        if (Clock::now() >= deadline) return false;
+        std::this_thread::sleep_for(std::chrono::milliseconds(1));
+    }
+    return true;
+}
+
+int main() {
+    Require(sceKernelInstallExceptionHandler(SIGUSR1, reinterpret_cast<void*>(&Handler)) == 0);
+    Pthread thread = nullptr;
+    Require(scePthreadCreate(&thread, nullptr, Sleeper, nullptr, "sleeper") == 0);
+    Require(WaitFor([] { return started.load(); }, std::chrono::milliseconds(5000)));
+    std::this_thread::sleep_for(std::chrono::milliseconds(50));
+    Require(sceKernelRaiseException(thread, SIGUSR1) == 0);
+    Require(WaitFor([] { return handled.load() == 1; }, std::chrono::milliseconds(5000)));
+    Require(WaitFor([] { return returned.load(); }, std::chrono::milliseconds(5000)));
+    const auto slept = std::chrono::duration_cast<std::chrono::microseconds>(sleepEnd - sleepStart).count();
+    Require(slept >= OuterSleep && slept < OuterSleep + 1000000);
+    Require(scePthreadJoin(thread, nullptr) == 0);
+    Require(sceKernelRemoveExceptionHandler(SIGUSR1) == 0);
+    return 0;
+}