diff --git a/clang/lib/Serialization/ASTReaderDecl.cpp b/clang/lib/Serialization/ASTReaderDecl.cpp
index 1aa94d5a22abe..8fbb0a8d3edd8 100644
--- a/clang/lib/Serialization/ASTReaderDecl.cpp
+++ b/clang/lib/Serialization/ASTReaderDecl.cpp
@@ -3751,6 +3751,13 @@ void ASTDeclReader::checkMultipleDefinitionInNamedModules(ASTReader &Reader,
   if (D->getFriendObjectKind() || Previous->getFriendObjectKind())
     return;
 
+  // Skip diagnosing in-class declarations.
+  if (!Previous->getLexicalDeclContext()
+           ->getNonTransparentContext()
+           ->isFileContext() ||
+      !D->getLexicalDeclContext()->getNonTransparentContext()->isFileContext())
+    return;
+
   Module *M = Previous->getOwningModule();
   if (!M)
     return;
diff --git a/clang/test/Modules/pr126373.cppm b/clang/test/Modules/pr126373.cppm
new file mode 100644
index 0000000000000..f176a587b51ce
--- /dev/null
+++ b/clang/test/Modules/pr126373.cppm
@@ -0,0 +1,34 @@
+// RUN: rm -rf %t
+// RUN: mkdir -p %t
+// RUN: split-file %s %t
+//
+// RUN: %clang_cc1 -std=c++20 %t/module1.cppm -emit-module-interface -o %t/module1.pcm
+// RUN: %clang_cc1 -std=c++20 -fmodule-file=module1=%t/module1.pcm  %t/module2.cppm \
+// RUN:     -emit-module-interface -o %t/module2.pcm
+// RUN: %clang_cc1 -std=c++20 %t/module2.pcm -fmodule-file=module1=%t/module1.pcm \
+// RUN:     -emit-llvm -o - | FileCheck %t/module2.cppm
+
+//--- test.h
+template<typename T>
+struct Test {
+  template<typename U>
+  friend class Test;
+};
+
+//--- module1.cppm
+module;
+#include "test.h"
+export module module1;
+export void f1(Test<int>) {}
+
+//--- module2.cppm
+module;
+#include "test.h"
+export module module2;
+import module1;
+export void f2(Test<float>) {}
+
+extern "C" void func() {}
+
+// Fine enough to check the IR is emitted correctly.
+// CHECK: define{{.*}}@func