diff --git a/CHANGELOG.md b/CHANGELOG.md
index ab0d37627a..a47fda7270 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -36,6 +36,7 @@
 - Update python:3.11-slim Docker digest to a2eb07f ([#2847](https://github.com/nf-core/tools/pull/2847))
 - Strip out mention of "Nextflow Tower" and replace with "Seqera Platform" wherever possible
 - Update pre-commit hook astral-sh/ruff-pre-commit to v0.3.3 ([#2850](https://github.com/nf-core/tools/pull/2850))
+- Fix issue with config resolution that was causing nested configs to behave unexpectedly ([#2862](https://github.com/nf-core/tools/pull/2862))
 
 ## [v2.13.1 - Tin Puppy Patch](https://github.com/nf-core/tools/releases/tag/2.13) - [2024-02-29]
 
diff --git a/nf_core/utils.py b/nf_core/utils.py
index 84b653ffe2..3be4cc46ea 100644
--- a/nf_core/utils.py
+++ b/nf_core/utils.py
@@ -1047,12 +1047,13 @@ def load_tools_config(directory: Union[str, Path] = "."):
 
 def determine_base_dir(directory="."):
     base_dir = start_dir = Path(directory).absolute()
-    while base_dir != base_dir.parent:
+    # Only iterate up the tree if the start dir doesn't have a config
+    while not get_first_available_path(base_dir, CONFIG_PATHS) and base_dir != base_dir.parent:
         base_dir = base_dir.parent
         config_fn = get_first_available_path(base_dir, CONFIG_PATHS)
         if config_fn:
-            return directory if base_dir == start_dir else base_dir
-    return directory
+            break
+    return directory if base_dir == start_dir else base_dir
 
 
 def get_first_available_path(directory, paths):