diff --git a/ChangeLog b/ChangeLog
index 231c203269..44c7c3a64b 100644
--- a/ChangeLog
+++ b/ChangeLog
@@ -10,7 +10,6 @@ Release date: TBA
   Put new features here and also in 'doc/whatsnew/2.14.rst'
 
 
-
 ..
   Insert your changelog randomly, it will reduce merge conflicts
   (Ie. not necessarily at the end)
@@ -30,6 +29,12 @@ Release date: TBA
 
   Closes #2793
 
+* Fixed false positive for ``unused-argument`` when a ``nonlocal`` name is used
+  in a nested function that is returned without being called by its parent.
+
+  Closes #5187
+
+
 What's New in Pylint 2.13.0?
 ============================
 Release date: 2022-03-24
diff --git a/doc/whatsnew/2.13.rst b/doc/whatsnew/2.13.rst
index 8565539838..b0bfd13210 100644
--- a/doc/whatsnew/2.13.rst
+++ b/doc/whatsnew/2.13.rst
@@ -548,7 +548,12 @@ Other Changes
 
   Closes #5950
 
+* Fixed false positive for ``unused-argument`` when a ``nonlocal`` name is used
+  in a nested function that is returned without being called by its parent.
+
+  Closes #5187
+
 * Avoid emitting ``raising-bad-type`` when there is inference ambiguity on
   the variable being raised.
 
-  Closes #2793
\ No newline at end of file
+  Closes #2793
diff --git a/pylint/checkers/variables.py b/pylint/checkers/variables.py
index ac4e02c5ef..49f1284fb5 100644
--- a/pylint/checkers/variables.py
+++ b/pylint/checkers/variables.py
@@ -16,6 +16,8 @@
     Any,
     DefaultDict,
     Dict,
+    Iterable,
+    Iterator,
     List,
     NamedTuple,
     Optional,
@@ -343,7 +345,9 @@ def _import_name_is_global(stmt, global_names):
     return False
 
 
-def _flattened_scope_names(iterator):
+def _flattened_scope_names(
+    iterator: Iterator[Union[nodes.Global, nodes.Nonlocal]]
+) -> Set[str]:
     values = (set(stmt.names) for stmt in iterator)
     return set(itertools.chain.from_iterable(values))
 
@@ -2265,7 +2269,9 @@ def _loopvar_name(self, node: astroid.Name) -> None:
             if not elements:
                 self.add_message("undefined-loop-variable", args=node.name, node=node)
 
-    def _check_is_unused(self, name, node, stmt, global_names, nonlocal_names):
+    def _check_is_unused(
+        self, name, node, stmt, global_names, nonlocal_names: Iterable[str]
+    ):
         # Ignore some special names specified by user configuration.
         if self._is_name_ignored(stmt, name):
             return
@@ -2287,7 +2293,7 @@ def _check_is_unused(self, name, node, stmt, global_names, nonlocal_names):
         argnames = node.argnames()
         # Care about functions with unknown argument (builtins)
         if name in argnames:
-            self._check_unused_arguments(name, node, stmt, argnames)
+            self._check_unused_arguments(name, node, stmt, argnames, nonlocal_names)
         else:
             if stmt.parent and isinstance(
                 stmt.parent, (nodes.Assign, nodes.AnnAssign, nodes.Tuple)
@@ -2354,7 +2360,9 @@ def _is_name_ignored(self, stmt, name):
             regex = authorized_rgx
         return regex and regex.match(name)
 
-    def _check_unused_arguments(self, name, node, stmt, argnames):
+    def _check_unused_arguments(
+        self, name, node, stmt, argnames, nonlocal_names: Iterable[str]
+    ):
         is_method = node.is_method()
         klass = node.parent.frame(future=True)
         if is_method and isinstance(klass, nodes.ClassDef):
@@ -2395,6 +2403,9 @@ def _check_unused_arguments(self, name, node, stmt, argnames):
         if utils.is_protocol_class(klass):
             return
 
+        if name in nonlocal_names:
+            return
+
         self.add_message("unused-argument", args=name, node=stmt, confidence=confidence)
 
     def _check_late_binding_closure(self, node: nodes.Name) -> None:
diff --git a/tests/functional/u/unused/unused_argument_py3.py b/tests/functional/u/unused/unused_argument_py3.py
index 4d0fd9adc0..2529e6caa2 100644
--- a/tests/functional/u/unused/unused_argument_py3.py
+++ b/tests/functional/u/unused/unused_argument_py3.py
@@ -7,3 +7,12 @@ def func(first, *, second): # [unused-argument, unused-argument]
 def only_raises(first, second=42): # [unused-argument]
     if first == 24:
         raise ValueError
+
+
+def increment_factory(initial):
+
+    def increment():
+        nonlocal initial
+        initial += 1
+
+    return increment
diff --git a/tests/functional/u/unused/unused_name_from_wilcard_import.py b/tests/functional/u/unused/unused_name_from_wildcard_import.py
similarity index 100%
rename from tests/functional/u/unused/unused_name_from_wilcard_import.py
rename to tests/functional/u/unused/unused_name_from_wildcard_import.py
diff --git a/tests/functional/u/unused/unused_name_from_wilcard_import.txt b/tests/functional/u/unused/unused_name_from_wildcard_import.txt
similarity index 77%
rename from tests/functional/u/unused/unused_name_from_wilcard_import.txt
rename to tests/functional/u/unused/unused_name_from_wildcard_import.txt
index c939b8260c..0289a13fb1 100644
--- a/tests/functional/u/unused/unused_name_from_wilcard_import.txt
+++ b/tests/functional/u/unused/unused_name_from_wildcard_import.txt
@@ -1,4 +1,4 @@
-unused-wildcard-import:3:0:3:34::Unused import(s) func and only_raises from wildcard import of unused_argument_py3:UNDEFINED
+unused-wildcard-import:3:0:3:34::Unused import(s) func, only_raises and increment_factory from wildcard import of unused_argument_py3:UNDEFINED
 wildcard-import:3:0:3:34::Wildcard import unused_argument_py3:UNDEFINED
 unused-wildcard-import:4:0:4:38::Unused import(s) VAR from wildcard import of unused_global_variable1:UNDEFINED
 wildcard-import:4:0:4:38::Wildcard import unused_global_variable1:UNDEFINED