diff --git a/.github/workflows/common-test.yml b/.github/workflows/common-test.yml
index adf87e6b..a3feafa7 100644
--- a/.github/workflows/common-test.yml
+++ b/.github/workflows/common-test.yml
@@ -380,6 +380,56 @@ jobs:
       - name: Test - observability mode
         run: OBSERVABLE_MODE=true npx vitest --retry 2 test/osls-basic.test.ts
 
+  test-osls-nested:
+    runs-on: ubuntu-latest
+    concurrency:
+      group: test-osls-nested
+    steps:
+      - uses: actions/checkout@v4
+      - name: Use Node.js
+        uses: actions/setup-node@v4
+        with:
+          node-version: ${{ env.node_version }}
+          registry-url: 'https://registry.npmjs.org'
+      - name: Install dependencies
+        run: |
+          node prepareForTest.js osls-nested
+          npm i
+      - name: Download build artifact
+        uses: actions/download-artifact@v4
+        if: ${{ inputs.mode == 'build' }}
+        with:
+          name: dist
+          path: dist
+      - name: Install lambda-live-debugger globally
+        if: ${{ inputs.mode == 'global' }}
+        run: |
+          npm i lambda-live-debugger@${{ inputs.version || 'latest' }} -g
+          npm i osls -g
+        working-directory: test
+      - name: Install lambda-live-debugger locally
+        if: ${{ inputs.mode == 'local' }}
+        run: |
+          npm i lambda-live-debugger@${{ inputs.version || 'latest' }}
+        working-directory: test
+      - name: Configure AWS Credentials
+        uses: aws-actions/configure-aws-credentials@v4
+        with:
+          aws-region: eu-west-1
+          role-to-assume: ${{ secrets.AWS_ROLE }}
+          role-session-name: GitHubActions
+      - name: Destroy
+        run: npm run destroy
+        working-directory: test/osls-nested
+        continue-on-error: true
+      - name: Deploy
+        run: npm run deploy
+        working-directory: test/osls-nested
+      - name: Test
+        run: npx vitest --retry 2 test/osls-nested.test.ts
+      - name: Test - observability mode
+        run: OBSERVABLE_MODE=true npx vitest --retry 2 test/osls-nested.test.ts
+
   test-osls-esbuild-cjs:
     runs-on: ubuntu-latest
     concurrency:
diff --git a/.vscode/launch.json b/.vscode/launch.json
index 5841916a..67ac43de 100755
--- a/.vscode/launch.json
+++ b/.vscode/launch.json
@@ -170,6 +170,26 @@
       "type": "node",
       "cwd": "${workspaceRoot}/test/osls-basic"
     },
+    {
+      "name": "LLDebugger - OSLS nested",
+      "program": "${workspaceRoot}/node_modules/tsx/dist/cli.mjs",
+      "args": ["../../src/lldebugger.ts", "--stage=test"],
+      "request": "launch",
+      "skipFiles": ["<node_internals>/**"],
+      "console": "integratedTerminal",
+      "type": "node",
+      "cwd": "${workspaceRoot}/test/osls-nested"
+    },
+    {
+      "name": "LLDebugger - OSLS nested - observability",
+      "program": "${workspaceRoot}/node_modules/tsx/dist/cli.mjs",
+      "args": ["../../src/lldebugger.ts", "--stage=test", "-o"],
+      "request": "launch",
+      "skipFiles": ["<node_internals>/**"],
+      "console": "integratedTerminal",
+      "type": "node",
+      "cwd": "${workspaceRoot}/test/osls-nested"
+    },
     {
       "name": "LLDebugger - OSLS EsBuild CJS",
       "program": "${workspaceRoot}/node_modules/tsx/dist/cli.mjs",
diff --git a/package-lock.json b/package-lock.json
index 56cfc2ef..e25edabe 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -39,6 +39,7 @@
         "test/sls-esbuild",
         "test/sls-esbuild-cjs",
         "test/osls-basic",
+        "test/osls-nested",
         "test/osls-esbuild",
         "test/osls-esbuild-cjs",
         "test/sam-basic",
@@ -38902,6 +38903,10 @@
       "resolved": "test/osls-esbuild-cjs",
       "link": true
     },
+    "node_modules/osls-nested": {
+      "resolved": "test/osls-nested",
+      "link": true
+    },
     "node_modules/osls/node_modules/agent-base": {
       "version": "6.0.2",
       "resolved": "https://registry.npmjs.org/agent-base/-/agent-base-6.0.2.tgz",
@@ -41100,6 +41105,27 @@
         "node": ">=6"
       }
     },
+    "node_modules/serverless-nested-stack": {
+      "version": "0.0.7",
+      "resolved": "https://registry.npmjs.org/serverless-nested-stack/-/serverless-nested-stack-0.0.7.tgz",
+      "integrity": "sha512-H+faSrjHD3sL9xQI8LBJs6ZIlYClFKlBKlcln5CZ2ul0KkBfkabzeEplzE8ooNQSgBPoH7OxuvzaZBFWfCtkbA==",
+      "dev": true,
+      "license": "ISC",
+      "dependencies": {
+        "bluebird": "^3.5.0",
+        "filesize": "^3.5.10"
+      }
+    },
+    "node_modules/serverless-nested-stack/node_modules/filesize": {
+      "version": "3.6.1",
+      "resolved": "https://registry.npmjs.org/filesize/-/filesize-3.6.1.tgz",
+      "integrity": "sha512-7KjR1vv6qnicaPMi1iiTcI85CyYwRO/PSFCu6SvqL8jN2Wjt/NIYQTFtFs7fSDCYOstUkEWIQGFUg5YZQfjlcg==",
+      "dev": true,
+      "license": "BSD-3-Clause",
+      "engines": {
+        "node": ">= 0.4.0"
+      }
+    },
     "node_modules/serverless/node_modules/agent-base": {
       "version": "6.0.2",
       "resolved": "https://registry.npmjs.org/agent-base/-/agent-base-6.0.2.tgz",
@@ -46303,6 +46329,17 @@
         "serverless-esbuild": "^1.56.0"
       }
     },
+    "test/osls-nested": {
+      "version": "1.0.0",
+      "license": "ISC",
+      "dependencies": {
+        "@aws-sdk/client-sts": "^3.936.0"
+      },
+      "devDependencies": {
+        "osls": "^3.59.3",
+        "serverless-nested-stack": "^0.0.7"
+      }
+    },
     "test/sam-alt": {
       "version": "0.0.1",
       "dependencies": {
diff --git a/package.json b/package.json
index 7fe9752d..b0734d96 100755
--- a/package.json
+++ b/package.json
@@ -64,6 +64,8 @@
     "test-sls-esbuild-esm-observable": "npm run build && RUN_TEST_FROM_CLI=true OBSERVABLE_MODE=true vitest run test/sls-esbuild-esm.test.ts",
     "test-osls-basic": "npm run build && RUN_TEST_FROM_CLI=true vitest run test/osls-basic.test.ts",
     "test-osls-basic-observable": "npm run build && RUN_TEST_FROM_CLI=true OBSERVABLE_MODE=true vitest run test/osls-basic.test.ts",
+    "test-osls-nested": "npm run build && RUN_TEST_FROM_CLI=true vitest run test/osls-nested.test.ts",
+    "test-osls-nested-observable": "npm run build && RUN_TEST_FROM_CLI=true OBSERVABLE_MODE=true vitest run test/osls-nested.test.ts",
     "test-osls-esbuild-cjs": "npm run build && RUN_TEST_FROM_CLI=true vitest run test/osls-esbuild-cjs.test.ts",
     "test-osls-esbuild-cjs-observable": "npm run build && RUN_TEST_FROM_CLI=true OBSERVABLE_MODE=true vitest run test/osls-esbuild-cjs.test.ts",
     "test-osls-esbuild-esm": "npm run build && RUN_TEST_FROM_CLI=true vitest run test/osls-esbuild-esm.test.ts",
@@ -160,6 +162,7 @@
     "test/sls-esbuild",
     "test/sls-esbuild-cjs",
     "test/osls-basic",
+    "test/osls-nested",
     "test/osls-esbuild",
     "test/osls-esbuild-cjs",
     "test/sam-basic",
diff --git a/src/frameworks/slsFramework.ts b/src/frameworks/slsFramework.ts
index 1d559f77..0b9b751e 100755
--- a/src/frameworks/slsFramework.ts
+++ b/src/frameworks/slsFramework.ts
@@ -182,60 +182,173 @@ export class SlsFramework implements IFramework {
       config,
     );
 
+    // Get functions from main configuration
     const lambdas = serverless.service.functions;
 
     Logger.verbose(`[SLS] Found Lambdas:`, JSON.stringify(lambdas, null, 2));
 
+    // Process main stack functions
     for (const func in lambdas) {
-      const lambda = lambdas[func] as Serverless.FunctionDefinitionHandler;
-      const handlerFull = lambda.handler;
-      const handlerParts = handlerFull.split('.');
-      const handler = handlerParts[1];
-
-      const possibleCodePaths = [
-        `${handlerParts[0]}.ts`,
-        `${handlerParts[0]}.js`,
-        `${handlerParts[0]}.cjs`,
-        `${handlerParts[0]}.mjs`,
-      ];
-      let codePath: string | undefined;
-      for (const cp of possibleCodePaths) {
-        try {
-          await fs.access(cp, constants.F_OK);
-          codePath = cp;
-          break;
-        } catch {
-          // ignore, file not found
-        }
-      }
+      const lambdaResource = await this.processFunction(
+        func,
+        lambdas[func] as Serverless.FunctionDefinitionHandler,
+        esBuildOptions,
+      );
+      lambdasDiscovered.push(lambdaResource);
+    }
 
-      if (!codePath) {
-        throw new Error(`Code path not found for handler: ${handlerFull}`);
+    // Check for nested stacks (serverless-nested-stack plugin)
+    const nestedStacks = (serverless.service as any).nestedStacks;
+    if (nestedStacks) {
+      Logger.verbose(
+        `[SLS] Found nested stacks configuration:`,
+        JSON.stringify(nestedStacks, null, 2),
+      );
+
+      const nestedLambdas = await this.parseNestedStacks(
+        nestedStacks,
+        esBuildOptions,
+      );
+      lambdasDiscovered.push(...nestedLambdas);
+    }
+
+    return lambdasDiscovered;
+  }
+
+  /**
+   * Process a single Lambda function
+   */
+  private async processFunction(
+    funcName: string,
+    lambda: Serverless.FunctionDefinitionHandler,
+    esBuildOptions: EsBuildOptions | undefined,
+  ): Promise<LambdaResource> {
+    const handlerFull = lambda.handler;
+    const handlerParts = handlerFull.split('.');
+    const handler = handlerParts[1];
+
+    const possibleCodePaths = [
+      `${handlerParts[0]}.ts`,
+      `${handlerParts[0]}.js`,
+      `${handlerParts[0]}.cjs`,
+      `${handlerParts[0]}.mjs`,
+    ];
+    let codePath: string | undefined;
+    for (const cp of possibleCodePaths) {
+      try {
+        await fs.access(cp, constants.F_OK);
+        codePath = cp;
+        break;
+      } catch {
+        // ignore, file not found
       }
+    }
 
-      const functionName = lambda.name;
-      if (!functionName) {
-        throw new Error(`Function name not found for handler: ${handlerFull}`);
+    if (!codePath) {
+      throw new Error(`Code path not found for handler: ${handlerFull}`);
+    }
+
+    const functionName = lambda.name;
+    if (!functionName) {
+      throw new Error(`Function name not found for handler: ${handlerFull}`);
+    }
+
+    const packageJsonPath = await findPackageJson(codePath);
+    Logger.verbose(`[SLS] package.json path: ${packageJsonPath}`);
+
+    const lambdaResource: LambdaResource = {
+      functionName,
+      codePath,
+      handler,
+      packageJsonPath,
+      esBuildOptions,
+      metadata: {
+        framework: 'sls',
+      },
+    };
+
+    return lambdaResource;
+  }
+
+  /**
+   * Parse nested stacks recursively
+   */
+  private async parseNestedStacks(
+    nestedStacks: any,
+    esBuildOptions: EsBuildOptions | undefined,
+    currentDir: string = process.cwd(),
+  ): Promise<LambdaResource[]> {
+    const lambdas: LambdaResource[] = [];
+
+    for (const stackName in nestedStacks) {
+      const stackConfig = nestedStacks[stackName];
+      const templatePath = stackConfig.template;
+
+      if (!templatePath) {
+        Logger.verbose(
+          `[SLS] Nested stack ${stackName} has no template property`,
+        );
+        continue;
       }
 
-      const packageJsonPath = await findPackageJson(codePath);
-      Logger.verbose(`[SLS] package.json path: ${packageJsonPath}`);
+      const resolvedTemplatePath = path.resolve(currentDir, templatePath);
+      Logger.verbose(
+        `[SLS] Parsing nested stack ${stackName}: ${resolvedTemplatePath}`,
+      );
 
-      const lambdaResource: LambdaResource = {
-        functionName,
-        codePath,
-        handler,
-        packageJsonPath,
-        esBuildOptions,
-        metadata: {
-          framework: 'sls',
-        },
-      };
+      try {
+        const templateContent = await fs.readFile(
+          resolvedTemplatePath,
+          'utf-8',
+        );
+        const yaml = await import('yaml');
+        const nestedConfig = yaml.parse(templateContent);
+
+        // Process functions in nested stack
+        if (nestedConfig.functions) {
+          Logger.verbose(
+            `[SLS] Found functions in nested stack ${stackName}:`,
+            JSON.stringify(nestedConfig.functions, null, 2),
+          );
+
+          for (const funcName in nestedConfig.functions) {
+            const func = nestedConfig.functions[funcName];
+            const lambdaResource = await this.processFunction(
+              funcName,
+              func as Serverless.FunctionDefinitionHandler,
+              esBuildOptions,
+            );
+            lambdas.push(lambdaResource);
+          }
+        }
 
-      lambdasDiscovered.push(lambdaResource);
+        // Recursively process nested stacks within this stack
+        if (nestedConfig.nestedStacks) {
+          Logger.verbose(
+            `[SLS] Found nested stacks within ${stackName}:`,
+            JSON.stringify(nestedConfig.nestedStacks, null, 2),
+          );
+
+          const templateDir = path.dirname(resolvedTemplatePath);
+          const deeperNestedLambdas = await this.parseNestedStacks(
+            nestedConfig.nestedStacks,
+            esBuildOptions,
+            templateDir,
+          );
+          lambdas.push(...deeperNestedLambdas);
+        }
+      } catch (err: any) {
+        Logger.warn(
+          `[SLS] Could not parse nested stack at ${resolvedTemplatePath}: ${err.message}`,
+        );
+      }
     }
 
-    return lambdasDiscovered;
+    Logger.verbose(
+      `[SLS] Finished parsing nested stacks, found ${lambdas.length} Lambda function(s)${lambdas.length > 0 ? `:\n${lambdas.map((l) => `  - ${l.functionName}`).join('\n')}` : ''}`,
+    );
+
+    return lambdas;
   }
 
   // eslint-disable-next-line @typescript-eslint/no-unused-vars
diff --git a/test/osls-basic/nested-nested-stack.yml b/test/osls-basic/nested-nested-stack.yml
new file mode 100644
index 00000000..75ceb0be
--- /dev/null
+++ b/test/osls-basic/nested-nested-stack.yml
@@ -0,0 +1,14 @@
+service: lls-osls-basic-nested-nested
+frameworkVersion: '3'
+
+provider:
+  name: aws
+  runtime: nodejs22.x
+  region: eu-west-1
+
+functions:
+  testJsCommonJsNested:
+    handler: services/testJsCommonJs/lambda.lambdaHandler
+
+  testJsEsModuleNested:
+    handler: services/testJsEsModule/lambda.lambdaHandler
diff --git a/test/osls-basic/nested-stack-sam.yml b/test/osls-basic/nested-stack-sam.yml
new file mode 100644
index 00000000..e69de29b
diff --git a/test/osls-basic/nested-stack.yml b/test/osls-basic/nested-stack.yml
new file mode 100644
index 00000000..053300d3
--- /dev/null
+++ b/test/osls-basic/nested-stack.yml
@@ -0,0 +1,18 @@
+service: lls-osls-basic-nested
+frameworkVersion: '3'
+
+provider:
+  name: aws
+  runtime: nodejs22.x
+  region: eu-west-1
+
+functions:
+  testJsCommonJsFromNestedStack:
+    handler: services/testJsCommonJs/lambda.lambdaHandler
+
+  testJsEsModuleFromNestedStack:
+    handler: services/testJsEsModule/lambda.lambdaHandler
+
+nestedStacks:
+  NestedNestedStack:
+    template: nested-nested-stack.yml
diff --git a/test/osls-nested.test.ts b/test/osls-nested.test.ts
new file mode 100644
index 00000000..ec680e87
--- /dev/null
+++ b/test/osls-nested.test.ts
@@ -0,0 +1,123 @@
+import { expect, test, describe, beforeAll, afterAll } from 'vitest';
+import { ChildProcess } from 'child_process';
+import { startDebugger } from './utils/startDebugger.js';
+import { expectInfraRemoved } from './utils/expectInfraRemoved.js';
+import { expectInfraDeployed } from './utils/expectInfraDeployed.js';
+import { removeInfra } from './utils/removeInfra.js';
+import { exec } from 'child_process';
+import { promisify } from 'util';
+import { callLambda } from './utils/callLambda.js';
+import { getSamplePayload } from './utils/getSamplePayload.js';
+import { validateLocalResponse } from './utils/validateLocalResponse.js';
+import { getTestProjectFolder } from './utils/getTestProjectFolder.js';
+
+export const execAsync = promisify(exec);
+
+const observableMode = process.env.OBSERVABLE_MODE === 'true';
+
+describe('osls-nested', async () => {
+  const folder = await getTestProjectFolder('osls-nested');
+  let lldProcess: ChildProcess | undefined;
+
+  beforeAll(async () => {
+    if (process.env.CI === 'true' || process.env.RUN_TEST_FROM_CLI === 'true') {
+      lldProcess = await startDebugger(folder, ['--stage=test']);
+    }
+  });
+
+  afterAll(async () => {
+    // stop the debugger
+    lldProcess?.kill();
+  });
+
+  test('check infra', async () => {
+    const lambdaName = 'lls-osls-nested-test-testJsCommonJs';
+    await expectInfraDeployed(lambdaName);
+  });
+
+  test('call Lambda - testJsCommonJs', async () => {
+    const lambdaName = 'lls-osls-nested-test-testJsCommonJs';
+
+    const payload = getSamplePayload(lambdaName);
+    const response = await callLambda(lambdaName, payload);
+
+    expect(response.inputEvent).toEqual(payload);
+    expect(response.runningLocally).toEqual(!observableMode);
+    if (observableMode) {
+      await validateLocalResponse(lambdaName, payload);
+    }
+  });
+
+  test('call Lambda - testJsEsModule', async () => {
+    const lambdaName = 'lls-osls-nested-test-testJsEsModule';
+
+    const payload = getSamplePayload(lambdaName);
+    const response = await callLambda(lambdaName, payload);
+
+    expect(response.inputEvent).toEqual(payload);
+    expect(response.runningLocally).toEqual(!observableMode);
+    if (observableMode) {
+      await validateLocalResponse(lambdaName, payload);
+    }
+  });
+
+  test('call Lambda - testJsCommonJsFromNestedStack', async () => {
+    const lambdaName = 'lls-osls-nested-test-testJsCommonJsFromNestedStack';
+
+    const payload = getSamplePayload(lambdaName);
+    const response = await callLambda(lambdaName, payload);
+
+    expect(response.inputEvent).toEqual(payload);
+    expect(response.runningLocally).toEqual(!observableMode);
+    if (observableMode) {
+      await validateLocalResponse(lambdaName, payload);
+    }
+  });
+
+  test('call Lambda - testJsEsModuleFromNestedStack', async () => {
+    const lambdaName = 'lls-osls-nested-test-testJsEsModuleFromNestedStack';
+
+    const payload = getSamplePayload(lambdaName);
+    const response = await callLambda(lambdaName, payload);
+
+    expect(response.inputEvent).toEqual(payload);
+    expect(response.runningLocally).toEqual(!observableMode);
+    if (observableMode) {
+      await validateLocalResponse(lambdaName, payload);
+    }
+  });
+
+  test('call Lambda - testJsCommonJsNested', async () => {
+    const lambdaName = 'lls-osls-nested-test-testJsCommonJsNested';
+
+    const payload = getSamplePayload(lambdaName);
+    const response = await callLambda(lambdaName, payload);
+
+    expect(response.inputEvent).toEqual(payload);
+    expect(response.runningLocally).toEqual(!observableMode);
+    if (observableMode) {
+      await validateLocalResponse(lambdaName, payload);
+    }
+  });
+
+  test('call Lambda - testJsEsModuleNested', async () => {
+    const lambdaName = 'lls-osls-nested-test-testJsEsModuleNested';
+
+    const payload = getSamplePayload(lambdaName);
+    const response = await callLambda(lambdaName, payload);
+
+    expect(response.inputEvent).toEqual(payload);
+    expect(response.runningLocally).toEqual(!observableMode);
+    if (observableMode) {
+      await validateLocalResponse(lambdaName, payload);
+    }
+  });
+
+  test('remove infra', async () => {
+    if (process.env.CI === 'true' || process.env.RUN_TEST_FROM_CLI === 'true') {
+      await removeInfra(lldProcess, folder, ['--stage=test']);
+      const lambdaName = 'lls-osls-nested-test-testJsCommonJs';
+      await expectInfraRemoved(lambdaName);
+    }
+  });
+});
diff --git a/test/osls-nested/.gitignore b/test/osls-nested/.gitignore
new file mode 100644
index 00000000..2b48c8bd
--- /dev/null
+++ b/test/osls-nested/.gitignore
@@ -0,0 +1,6 @@
+# package directories
+node_modules
+jspm_packages
+
+# Serverless directories
+.serverless
\ No newline at end of file
diff --git a/test/osls-nested/functions1.yml b/test/osls-nested/functions1.yml
new file mode 100644
index 00000000..7226b5a0
--- /dev/null
+++ b/test/osls-nested/functions1.yml
@@ -0,0 +1,2 @@
+testJsEsModule:
+  handler: services/testJsEsModule/lambda.lambdaHandler
diff --git a/test/osls-nested/functions2.yml b/test/osls-nested/functions2.yml
new file mode 100644
index 00000000..52f57d79
--- /dev/null
+++ b/test/osls-nested/functions2.yml
@@ -0,0 +1,2 @@
+testJsCommonJs:
+  handler: services/testJsCommonJs/lambda.lambdaHandler
diff --git a/test/osls-nested/nested-nested-stack.yml b/test/osls-nested/nested-nested-stack.yml
new file mode 100644
index 00000000..10a372bf
--- /dev/null
+++ b/test/osls-nested/nested-nested-stack.yml
@@ -0,0 +1,14 @@
+service: lls-osls-nested-nested-nested
+frameworkVersion: '3'
+
+provider:
+  name: aws
+  runtime: nodejs22.x
+  region: eu-west-1
+
+functions:
+  testJsCommonJsNested:
+    handler: services/testJsCommonJs/lambda.lambdaHandler
+
+  testJsEsModuleNested:
+    handler: services/testJsEsModule/lambda.lambdaHandler
diff --git a/test/osls-nested/nested-stack.yml b/test/osls-nested/nested-stack.yml
new file mode 100644
index 00000000..db6dfec1
--- /dev/null
+++ b/test/osls-nested/nested-stack.yml
@@ -0,0 +1,18 @@
+service: lls-osls-nested-nested
+frameworkVersion: '3'
+
+provider:
+  name: aws
+  runtime: nodejs22.x
+  region: eu-west-1
+
+functions:
+  testJsCommonJsFromNestedStack:
+    handler: services/testJsCommonJs/lambda.lambdaHandler
+
+  testJsEsModuleFromNestedStack:
+    handler: services/testJsEsModule/lambda.lambdaHandler
+
+nestedStacks:
+  NestedNestedStack:
+    template: nested-nested-stack.yml
diff --git a/test/osls-nested/package.json b/test/osls-nested/package.json
new file mode 100644
index 00000000..5c3e4c11
--- /dev/null
+++ b/test/osls-nested/package.json
@@ -0,0 +1,20 @@
+{
+  "name": "osls-nested",
+  "version": "1.0.0",
+  "description": "",
+  "main": "index.js",
+  "scripts": {
+    "deploy": "serverless deploy --stage=test",
+    "destroy": "serverless remove --stage=test"
+  },
+  "keywords": [],
+  "author": "",
+  "license": "ISC",
+  "devDependencies": {
+    "osls": "^3.59.3",
+    "serverless-nested-stack": "^0.0.7"
+  },
+  "dependencies": {
+    "@aws-sdk/client-sts": "^3.936.0"
+  }
+}
diff --git a/test/osls-nested/serverless.yml b/test/osls-nested/serverless.yml
new file mode 100644
index 00000000..da6432ed
--- /dev/null
+++ b/test/osls-nested/serverless.yml
@@ -0,0 +1,18 @@
+service: lls-osls-nested
+frameworkVersion: '3'
+
+provider:
+  name: aws
+  runtime: nodejs22.x
+  region: eu-west-1
+
+plugins:
+  - serverless-nested-stack
+
+functions:
+  - ${file(./functions1.yml)}
+  - ${file(./functions2.yml)}
+
+nestedStacks:
+  NestedStack:
+    template: nested-stack.yml
diff --git a/test/osls-nested/services/testJsCommonJs/lambda.js b/test/osls-nested/services/testJsCommonJs/lambda.js
new file mode 100755
index 00000000..4e37462d
--- /dev/null
+++ b/test/osls-nested/services/testJsCommonJs/lambda.js
@@ -0,0 +1,40 @@
+const { STSClient, GetCallerIdentityCommand } = require('@aws-sdk/client-sts');
+
+const stsClient = new STSClient({});
+
+const lambdaHandler = async (event, context) => {
+  // Check context
+  const remainingTime = context.getRemainingTimeInMillis();
+  if (remainingTime === undefined) {
+    throw new Error('Remaining time is undefined');
+  }
+
+  // check if SDK works
+  const command = new GetCallerIdentityCommand({});
+  const identity = await stsClient.send(command);
+
+  const response = {
+    inputEvent: event,
+    accountId: identity.Account,
+    runningLocally: process.env.IS_LOCAL === 'true',
+  };
+
+  if (process.env.IS_LOCAL === 'true') {
+    const fs = require('fs');
+    const path = require('path');
+    const filePath = path.join(
+      '..',
+      'local_lambda_responses',
+      `${context.functionName}.json`,
+    );
+
+    fs.writeFileSync(filePath, JSON.stringify(response, null, 2));
+  }
+
+  return response;
+};
+
+// Export the lambda handler if needed, e.g., for unit testing
+module.exports = {
+  lambdaHandler,
+};
diff --git a/test/osls-nested/services/testJsCommonJs/package.json b/test/osls-nested/services/testJsCommonJs/package.json
new file mode 100644
index 00000000..65630a5e
--- /dev/null
+++ b/test/osls-nested/services/testJsCommonJs/package.json
@@ -0,0 +1,8 @@
+{
+  "name": "sls-basic-test-js-commonjs",
+  "version": "1.0.0",
+  "type": "commonjs",
+  "dependencies": {
+    "@aws-sdk/client-sts": "^3.936.0"
+  }
+}
diff --git a/test/osls-nested/services/testJsEsModule/lambda.js b/test/osls-nested/services/testJsEsModule/lambda.js
new file mode 100755
index 00000000..e3508208
--- /dev/null
+++ b/test/osls-nested/services/testJsEsModule/lambda.js
@@ -0,0 +1,35 @@
+import { STSClient, GetCallerIdentityCommand } from '@aws-sdk/client-sts';
+
+const stsClient = new STSClient({});
+
+export const lambdaHandler = async (event, context) => {
+  // check context
+  const remainingTime = context.getRemainingTimeInMillis();
+  if (remainingTime === undefined) {
+    throw new Error('Remaining time is undefined');
+  }
+
+  // check SDK works
+  const command = new GetCallerIdentityCommand({});
+  const identity = await stsClient.send(command);
+
+  const response = {
+    inputEvent: event,
+    accountId: identity.Account,
+    runningLocally: process.env.IS_LOCAL === 'true',
+  };
+
+  if (process.env.IS_LOCAL === 'true') {
+    const fs = await import('fs');
+    const path = await import('path');
+    const filePath = path.join(
+      '..',
+      'local_lambda_responses',
+      `${context.functionName}.json`,
+    );
+
+    fs.writeFileSync(filePath, JSON.stringify(response, null, 2));
+  }
+
+  return response;
+};
diff --git a/test/osls-nested/services/testJsEsModule/package.json b/test/osls-nested/services/testJsEsModule/package.json
new file mode 100644
index 00000000..fe50b411
--- /dev/null
+++ b/test/osls-nested/services/testJsEsModule/package.json
@@ -0,0 +1,8 @@
+{
+  "name": "sls-basic-test-js-esmodule",
+  "version": "1.0.0",
+  "type": "module",
+  "dependencies": {
+    "@aws-sdk/client-sts": "^3.936.0"
+  }
+}