diff --git a/kotest-framework/kotest-framework-api/api/kotest-framework-api.api b/kotest-framework/kotest-framework-api/api/kotest-framework-api.api
index 36864951684..1c7641efd51 100644
--- a/kotest-framework/kotest-framework-api/api/kotest-framework-api.api
+++ b/kotest-framework/kotest-framework-api/api/kotest-framework-api.api
@@ -87,6 +87,7 @@ public abstract class io/kotest/core/TestConfiguration {
 	public final fun setAssertSoftly (Ljava/lang/Boolean;)V
 	public final fun setAssertions (Lio/kotest/core/test/AssertionMode;)V
 	public final fun setDefaultTestConfig (Lio/kotest/core/test/config/TestCaseConfig;)V
+	public final fun setParentConfiguration (Lio/kotest/core/TestConfiguration;)V
 	public final fun tags ([Lio/kotest/core/Tag;)V
 }
 
@@ -1474,16 +1475,18 @@ public final class io/kotest/core/factory/FactoryId$Companion {
 }
 
 public final class io/kotest/core/factory/TestFactory {
-	public fun <init> (Lio/kotest/core/factory/FactoryId;Ljava/util/List;Ljava/util/Set;Lio/kotest/core/test/AssertionMode;Ljava/util/List;)V
+	public fun <init> (Lio/kotest/core/factory/FactoryId;Ljava/util/List;Ljava/util/Set;Lio/kotest/core/test/AssertionMode;Ljava/util/List;Lio/kotest/core/factory/TestFactoryConfiguration;)V
 	public final fun component1 ()Lio/kotest/core/factory/FactoryId;
 	public final fun component2 ()Ljava/util/List;
 	public final fun component3 ()Ljava/util/Set;
 	public final fun component4 ()Lio/kotest/core/test/AssertionMode;
 	public final fun component5 ()Ljava/util/List;
-	public final fun copy (Lio/kotest/core/factory/FactoryId;Ljava/util/List;Ljava/util/Set;Lio/kotest/core/test/AssertionMode;Ljava/util/List;)Lio/kotest/core/factory/TestFactory;
-	public static synthetic fun copy$default (Lio/kotest/core/factory/TestFactory;Lio/kotest/core/factory/FactoryId;Ljava/util/List;Ljava/util/Set;Lio/kotest/core/test/AssertionMode;Ljava/util/List;ILjava/lang/Object;)Lio/kotest/core/factory/TestFactory;
+	public final fun component6 ()Lio/kotest/core/factory/TestFactoryConfiguration;
+	public final fun copy (Lio/kotest/core/factory/FactoryId;Ljava/util/List;Ljava/util/Set;Lio/kotest/core/test/AssertionMode;Ljava/util/List;Lio/kotest/core/factory/TestFactoryConfiguration;)Lio/kotest/core/factory/TestFactory;
+	public static synthetic fun copy$default (Lio/kotest/core/factory/TestFactory;Lio/kotest/core/factory/FactoryId;Ljava/util/List;Ljava/util/Set;Lio/kotest/core/test/AssertionMode;Ljava/util/List;Lio/kotest/core/factory/TestFactoryConfiguration;ILjava/lang/Object;)Lio/kotest/core/factory/TestFactory;
 	public fun equals (Ljava/lang/Object;)Z
 	public final fun getAssertionMode ()Lio/kotest/core/test/AssertionMode;
+	public final fun getConfiguration ()Lio/kotest/core/factory/TestFactoryConfiguration;
 	public final fun getExtensions ()Ljava/util/List;
 	public final fun getFactoryId ()Lio/kotest/core/factory/FactoryId;
 	public final fun getTags ()Ljava/util/Set;
diff --git a/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/TestConfiguration.kt b/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/TestConfiguration.kt
index 14bba5a5d32..acaa4752b74 100644
--- a/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/TestConfiguration.kt
+++ b/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/TestConfiguration.kt
@@ -48,6 +48,8 @@ abstract class TestConfiguration {
 
    private var _autoCloseables = emptyList<Lazy<AutoCloseable>>()
 
+   private var _parentConfiguration: TestConfiguration? = null
+
    /**
     * Config applied to each test case if not overridden per test case.
     * If null, then defaults to the project level default.
@@ -165,6 +167,7 @@ abstract class TestConfiguration {
     * Registers a lazy [AutoCloseable] to be closed when the spec is completed.
     */
    fun <T : AutoCloseable> autoClose(closeable: Lazy<T>): Lazy<T> {
+      _parentConfiguration?.autoClose(closeable)
       _autoCloseables = listOf(closeable) + _autoCloseables
       return closeable
    }
@@ -370,4 +373,8 @@ abstract class TestConfiguration {
    fun registeredExtensions(): List<Extension> {
       return _extensions.toList()
    }
+
+   fun setParentConfiguration(configuration: TestConfiguration) {
+      _parentConfiguration = configuration
+   }
 }
diff --git a/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/TestFactory.kt b/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/TestFactory.kt
index 1e03f27be4b..17fdf1a06eb 100644
--- a/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/TestFactory.kt
+++ b/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/TestFactory.kt
@@ -20,4 +20,5 @@ data class TestFactory(
    val tags: Set<Tag>,
    val assertionMode: AssertionMode?,
    val extensions: List<Extension>,
+   val configuration: TestFactoryConfiguration
 )
diff --git a/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/TestFactoryConfiguration.kt b/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/TestFactoryConfiguration.kt
index 11c931435a0..b93cc38e376 100644
--- a/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/TestFactoryConfiguration.kt
+++ b/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/TestFactoryConfiguration.kt
@@ -34,5 +34,7 @@ abstract class TestFactoryConfiguration : TestConfiguration(), RootScope {
     */
    fun include(factory: TestFactory) {
       factory.tests.forEach { add(it) }
+      factory.configuration.setParentConfiguration(this)
+      register(factory.extensions)
    }
 }
diff --git a/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/build.kt b/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/build.kt
index 73e0c9ca0c5..8520bf503d5 100644
--- a/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/build.kt
+++ b/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/factory/build.kt
@@ -24,6 +24,7 @@ internal fun TestFactoryConfiguration.build(): TestFactory {
          }
       },
       assertionMode = assertions,
-      tests = tests
+      tests = tests,
+      configuration = this
    )
 }
diff --git a/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/spec/DslDrivenSpec.kt b/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/spec/DslDrivenSpec.kt
index 2cab0128606..6b880a84b09 100644
--- a/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/spec/DslDrivenSpec.kt
+++ b/kotest-framework/kotest-framework-api/src/commonMain/kotlin/io/kotest/core/spec/DslDrivenSpec.kt
@@ -53,6 +53,7 @@ abstract class DslDrivenSpec : Spec(), RootScope {
     */
    fun include(factory: TestFactory) {
       factory.tests.forEach { add(it.copy(factoryId = factory.factoryId)) }
+      factory.configuration.setParentConfiguration(this)
       register(factory.extensions)
    }
 
diff --git a/kotest-framework/kotest-framework-engine/src/jvmTest/kotlin/com/sksamuel/kotest/engine/factory/AutoCloseableTestFactoryTest.kt b/kotest-framework/kotest-framework-engine/src/jvmTest/kotlin/com/sksamuel/kotest/engine/factory/AutoCloseableTestFactoryTest.kt
new file mode 100644
index 00000000000..b433844aafd
--- /dev/null
+++ b/kotest-framework/kotest-framework-engine/src/jvmTest/kotlin/com/sksamuel/kotest/engine/factory/AutoCloseableTestFactoryTest.kt
@@ -0,0 +1,57 @@
+package com.sksamuel.kotest.engine.factory
+
+import io.kotest.core.spec.style.ShouldSpec
+import io.kotest.core.spec.style.shouldSpec
+import io.kotest.matchers.shouldBe
+import java.util.concurrent.atomic.AtomicInteger
+
+class AutoCloseableTestFactoryTest : ShouldSpec({
+   include(
+      shouldSpec {
+         include(
+            shouldSpec {
+               should("close is called in nested test factory") {
+                  autoClose(FirstAutoClose)
+               }
+            }
+         )
+         should("close is called in test factory") {
+            autoClose(SecondAutoClose)
+         }
+      }
+   )
+   should("close is called") {
+      autoClose(ThirdAutoClose)
+   }
+   afterSpec {
+      FirstAutoClose.closed shouldBe 3
+      SecondAutoClose.closed shouldBe 2
+      ThirdAutoClose.closed shouldBe 1
+   }
+})
+
+private object FirstAutoClose : AutoCloseable {
+   var closed = -1
+
+   override fun close() {
+      closed = closedNumber.incrementAndGet()
+   }
+}
+
+private object SecondAutoClose : AutoCloseable {
+   var closed = -1
+
+   override fun close() {
+      closed = closedNumber.incrementAndGet()
+   }
+}
+
+private object ThirdAutoClose : AutoCloseable {
+   var closed = -1
+
+   override fun close() {
+      closed = closedNumber.incrementAndGet()
+   }
+}
+
+private var closedNumber = AtomicInteger(0)