diff --git a/.changeset/fix-nested-droppable-target-state.md b/.changeset/fix-nested-droppable-target-state.md
new file mode 100644
index 000000000..e39d70a2e
--- /dev/null
+++ b/.changeset/fix-nested-droppable-target-state.md
@@ -0,0 +1,5 @@
+---
+'@dnd-kit/dom': patch
+---
+
+Mark DOM droppable ancestors as drop targets when a nested droppable is the active target.
diff --git a/packages/dom/src/core/entities/droppable/droppable.ts b/packages/dom/src/core/entities/droppable/droppable.ts
index 450776734..61d1db50d 100644
--- a/packages/dom/src/core/entities/droppable/droppable.ts
+++ b/packages/dom/src/core/entities/droppable/droppable.ts
@@ -5,7 +5,7 @@ import type {
 } from '@dnd-kit/abstract';
 import {defaultCollisionDetection} from '@dnd-kit/collision';
 import type {CollisionDetector} from '@dnd-kit/collision';
-import {reactive, signal, untracked} from '@dnd-kit/state';
+import {derived, reactive, signal, untracked} from '@dnd-kit/state';
 import type {BoundingRectangle, Shape} from '@dnd-kit/geometry';
 import {DOMRectangle, PositionObserver} from '@dnd-kit/dom/utilities';
 
@@ -118,5 +118,27 @@ export class Droppable<T extends Data = Data> extends AbstractDroppable<
     return this.proxy ?? this.#element;
   }
 
+  @derived
+  public override get isDropTarget() {
+    if (super.isDropTarget) {
+      return true;
+    }
+
+    const {element, manager} = this;
+    const {source, target} = manager?.dragOperation ?? {};
+
+    if (!element) return false;
+    if (this.disabled) return false;
+    if (!source) return false;
+    if (!this.accepts(source)) return false;
+    if (!(target instanceof Droppable)) return false;
+
+    const targetElement = target.element;
+
+    if (!targetElement) return false;
+
+    return element !== targetElement && element.contains(targetElement);
+  }
+
   public refreshShape: () => Shape | undefined;
 }
diff --git a/packages/dom/tests/drop-target-state.test.ts b/packages/dom/tests/drop-target-state.test.ts
new file mode 100644
index 000000000..f191c840f
--- /dev/null
+++ b/packages/dom/tests/drop-target-state.test.ts
@@ -0,0 +1,101 @@
+import {describe, expect, it} from 'bun:test';
+import {
+  CollisionPriority,
+  CollisionType,
+  DragDropManager,
+  Draggable,
+} from '@dnd-kit/abstract';
+
+import {Droppable} from '../src/core/entities/droppable/droppable.ts';
+
+function createElement(contains: (node: Node | null) => boolean = () => false) {
+  return {contains} as Element;
+}
+
+describe('Drop target state', () => {
+  it('marks ancestor droppables as drop targets when a descendant is targeted', () => {
+    const manager = new DragDropManager();
+    const source = new Draggable(
+      {id: 'source', register: false, type: 'item'},
+      manager
+    );
+    const childElement = createElement();
+    const parentElement = createElement((node) => node === childElement);
+    const siblingElement = createElement();
+    const parent = new Droppable(
+      {
+        id: 'parent',
+        accept: 'item',
+        element: parentElement,
+        register: false,
+      },
+      manager
+    );
+    const child = new Droppable(
+      {id: 'child', accept: 'item', element: childElement, register: false},
+      manager
+    );
+    const sibling = new Droppable(
+      {id: 'sibling', element: siblingElement, register: false},
+      manager
+    );
+    const rejectedParent = new Droppable(
+      {
+        id: 'rejected-parent',
+        accept: 'other',
+        element: parentElement,
+        register: false,
+      },
+      manager
+    );
+    const disabledParent = new Droppable(
+      {
+        id: 'disabled-parent',
+        disabled: true,
+        element: parentElement,
+        register: false,
+      },
+      manager
+    );
+
+    source.register();
+    parent.register();
+    child.register();
+    sibling.register();
+    rejectedParent.register();
+    disabledParent.register();
+
+    manager.dragOperation.sourceIdentifier = 'source';
+    manager.dragOperation.targetIdentifier = 'child';
+    Object.defineProperty(manager.collisionObserver, 'collisions', {
+      configurable: true,
+      value: [
+        {
+          id: 'sibling',
+          priority: CollisionPriority.Normal,
+          type: CollisionType.PointerIntersection,
+          value: 1,
+        },
+      ],
+    });
+
+    expect(child.isDropTarget).toBe(true);
+    expect(parent.isDropTarget).toBe(true);
+    expect(sibling.isDropTarget).toBe(false);
+    expect(rejectedParent.isDropTarget).toBe(false);
+    expect(disabledParent.isDropTarget).toBe(false);
+
+    manager.dragOperation.targetIdentifier = null;
+
+    expect(child.isDropTarget).toBe(false);
+    expect(parent.isDropTarget).toBe(false);
+
+    source.destroy();
+    parent.destroy();
+    child.destroy();
+    sibling.destroy();
+    rejectedParent.destroy();
+    disabledParent.destroy();
+    manager.destroy();
+  });
+});