diff --git a/lib/templatesimplifier.cpp b/lib/templatesimplifier.cpp
index baac0b051..d279be177 100644
--- a/lib/templatesimplifier.cpp
+++ b/lib/templatesimplifier.cpp
@@ -1014,7 +1014,7 @@ bool TemplateSimplifier::simplifyTemplateInstantions(
         std::string typeForNewNameStr;
         std::string templateMatchPattern(name + " < ");
         unsigned int indentlevel = 0;
-        for (const Token *tok3 = tok2->tokAt(2); tok3 && tok3->str() != ">"; tok3 = tok3->next()) {
+        for (const Token *tok3 = tok2->tokAt(2); tok3 && (indentlevel > 0 || tok3->str() != ">"); tok3 = tok3->next()) {
             // #2648 - unhandled parenthesis => bail out
             // #2721 - unhandled [ => bail out
             if (tok3->str() == "(" || tok3->str() == "[") {
@@ -1027,7 +1027,7 @@ bool TemplateSimplifier::simplifyTemplateInstantions(
             }
             if (tok3->str() == "<" && templateParameters(tok3) > 0)
                 ++indentlevel;
-            else if (indentlevel > 0 && Token::simpleMatch(tok3, "> ,"))
+            else if (indentlevel > 0 && Token::simpleMatch(tok3, "> [,>]"))
                 --indentlevel;
             templateMatchPattern += tok3->str();
             templateMatchPattern += " ";
diff --git a/test/testsimplifytokens.cpp b/test/testsimplifytokens.cpp
index 832d35c29..f1bf73bbb 100644
--- a/test/testsimplifytokens.cpp
+++ b/test/testsimplifytokens.cpp
@@ -126,6 +126,7 @@ private:
         TEST_CASE(template30);  // #3529 - template < template < ..
         TEST_CASE(template31);  // #4010 - reference type
         TEST_CASE(template32);  // #3818 - mismatching template not handled well
+        TEST_CASE(template33);  // #3818 - inner templates in template instantiation not handled well
         TEST_CASE(template_unhandled);
         TEST_CASE(template_default_parameter);
         TEST_CASE(template_default_type);
@@ -2171,6 +2172,18 @@ private:
                       "struct B<int> { public: A < int , Pair < int , int > , int > a ; }", tok(code));
     }
 
+    void template33() {
+        // #3818 - inner templates in template instantiation not handled well
+        const char code[] = "template<class T> struct A { };\n"
+                            "template<class T> struct B { };\n"
+                            "template<class T> struct C { A<B<X<T> > > ab; };\n"
+                            "C<int> c;";
+        ASSERT_EQUALS("template < class T > struct A { } ; "
+                      "template < class T > struct B { } ; "
+                      "C<int> c ; "
+                      "struct C<int> { A < B < X < int > > > ab ; }", tok(code));
+    }
+
     void template_unhandled() {
         // An unhandled template usage should be simplified..
         ASSERT_EQUALS("x<int> ( ) ;", tok("x<int>();"));