diff --git a/kotlin-builder-example-usage/src/main/kotlin/com/thinkinglogic/example/InnerDataClass.kt b/kotlin-builder-example-usage/src/main/kotlin/com/thinkinglogic/example/InnerDataClass.kt
new file mode 100644
index 0000000..6b2d3e6
--- /dev/null
+++ b/kotlin-builder-example-usage/src/main/kotlin/com/thinkinglogic/example/InnerDataClass.kt
@@ -0,0 +1,18 @@
+package com.thinkinglogic.example
+
+import com.thinkinglogic.builder.annotation.Builder
+
+@Builder
+data class InnerDataClass(
+        val constructorString: String,
+        private val privateString: String
+) {
+    @Builder
+    data class DataClassInDataClass(val constructorString: String,
+                                    private val privateString: String)
+
+
+    data class DataClassInDataClassWithConstructor @Builder constructor(val constructorString: String,
+                                                                        private val privateString: String)
+
+}
diff --git a/kotlin-builder-example-usage/src/test/kotlin/com/thinkinglogic/example/InnerDataClassTest.kt b/kotlin-builder-example-usage/src/test/kotlin/com/thinkinglogic/example/InnerDataClassTest.kt
new file mode 100644
index 0000000..0cece4e
--- /dev/null
+++ b/kotlin-builder-example-usage/src/test/kotlin/com/thinkinglogic/example/InnerDataClassTest.kt
@@ -0,0 +1,52 @@
+package com.thinkinglogic.example
+
+import assertk.assertions.contains
+import assertk.assertions.isNotNull
+import assertk.assertions.message
+import assertk.catch
+import org.assertj.core.api.Assertions.assertThat
+import org.junit.jupiter.api.Test
+
+internal class InnerDataClassTest {
+
+    @Test
+    fun `builder should create sub object with correct properties`() {
+        // given
+        val privateString = "barfoo"
+        val expected = InnerDataClass.DataClassInDataClass(
+                constructorString = "foobar ",
+                privateString = privateString
+        )
+
+        // when
+        val actual = InnerDataClass_DataClassInDataClassBuilder()
+                .constructorString(expected.constructorString)
+                .privateString(privateString)
+                .build()
+
+        // then
+        assertThat(actual).isEqualTo(expected)
+    }
+
+
+    @Test
+    fun `builder should create sub object with correct properties from constructor`() {
+        // given
+        val privateString = "barfoo"
+        val expected = InnerDataClass.DataClassInDataClassWithConstructor(
+                constructorString = "foobar ",
+                privateString = privateString
+        )
+
+        // when
+        val actual = InnerDataClass_DataClassInDataClassWithConstructorBuilder()
+                .constructorString(expected.constructorString)
+                .privateString(privateString)
+                .build()
+
+        // then
+        assertThat(actual).isEqualTo(expected)
+    }
+
+
+}
diff --git a/kotlin-builder-processor/src/main/kotlin/com/thinkinglogic/builder/processor/BuilderProcessor.kt b/kotlin-builder-processor/src/main/kotlin/com/thinkinglogic/builder/processor/BuilderProcessor.kt
index 3937aef..cc3e53e 100644
--- a/kotlin-builder-processor/src/main/kotlin/com/thinkinglogic/builder/processor/BuilderProcessor.kt
+++ b/kotlin-builder-processor/src/main/kotlin/com/thinkinglogic/builder/processor/BuilderProcessor.kt
@@ -82,7 +82,8 @@ class BuilderProcessor : AbstractProcessor() {
     /** Writes the source code to create a builder for [classToBuild] within the [sourceRoot] directory. */
     private fun writeBuilder(classToBuild: TypeElement, fields: List<VariableElement>, sourceRoot: File) {
         val packageName = processingEnv.elementUtils.getPackageOf(classToBuild).toString()
-        val builderClassName = "${classToBuild.simpleName}Builder"
+
+        val builderClassName = "${buildClassName(classToBuild, "_")}Builder"
 
         processingEnv.noteMessage { "Writing $packageName.$builderClassName" }
 
@@ -106,6 +107,16 @@ class BuilderProcessor : AbstractProcessor() {
                 .writeTo(sourceRoot)
     }
 
+    private fun buildClassName(classToBuild: TypeElement, separator: String): String {
+        var className = classToBuild.simpleName.toString()
+        var clazz: Element = classToBuild.enclosingElement
+        while (clazz is TypeElement) {
+            className = clazz.simpleName.toString() + separator + className
+            clazz = clazz.enclosingElement
+        }
+        return className
+    }
+
     /** Returns all fields in this type that also appear as a constructor parameter. */
     private fun TypeElement.fieldsForBuilder(): List<VariableElement> {
         val allMembers = processingEnv.elementUtils.getAllMembers(this)
@@ -149,7 +160,7 @@ class BuilderProcessor : AbstractProcessor() {
     /** Creates a 'build()' function that will invoke a constructor for [returnType], passing [fields] as arguments and returning the new instance. */
     private fun createBuildFunction(fields: List<Element>, returnType: TypeElement): FunSpec {
         val code = StringBuilder("$CHECK_REQUIRED_FIELDS_FUNCTION_NAME()")
-        code.appendln().append("return·${returnType.simpleName}(")
+        code.appendln().append("return·${buildClassName(returnType, ".")}(")
         val iterator = fields.listIterator()
         while (iterator.hasNext()) {
             val field = iterator.next()