diff --git a/fairscale/nn/data_parallel/fully_sharded_data_parallel.py b/fairscale/nn/data_parallel/fully_sharded_data_parallel.py
index fa569e6e6..5e952b1f2 100644
--- a/fairscale/nn/data_parallel/fully_sharded_data_parallel.py
+++ b/fairscale/nn/data_parallel/fully_sharded_data_parallel.py
@@ -857,16 +857,19 @@ def _set_is_root(self) -> None:
         for n, m in self.named_modules():
             # `n != ""` excludes self.
             if n != "" and isinstance(m, FullyShardedDataParallel):
-                assert m._is_root is None
-                m._is_root = False
-                # When root instance doesn't have params, allow children instances
-                # to queue the post_backward hook.
-                #
-                # TODO (Min): we should think if we can have a empty param at the root
-                #             so that root always have a callback on the backward graph.
-                if not self._has_params:
-                    assert m._queue_wait_for_post_backward_closure is None
-                    m._queue_wait_for_post_backward_closure = self._queue_wait_for_post_backward
+                # We relax the assert for non-root instance, when the nested inialized module is wrapped
+                # again in FSDP later, for example after training to run inference.
+                assert m._is_root is None or not m._is_root
+                if m._is_root is None:
+                    m._is_root = False
+                    # When root instance doesn't have params, allow children instances
+                    # to queue the post_backward hook.
+                    #
+                    # TODO (Min): we should think if we can have a empty param at the root
+                    #             so that root always have a callback on the backward graph.
+                    if not self._has_params:
+                        assert m._queue_wait_for_post_backward_closure is None
+                        m._queue_wait_for_post_backward_closure = self._queue_wait_for_post_backward
                 if m.process_group != self.process_group:
                     self.children_share_process_group = False
 
diff --git a/tests/ci_test_list_1.txt b/tests/ci_test_list_1.txt
index efbd5210a..0370eb200 100644
--- a/tests/ci_test_list_1.txt
+++ b/tests/ci_test_list_1.txt
@@ -1,3 +1,4 @@
 tests/nn/misc/test_flatten_params_wrapper.py
 tests/nn/data_parallel/test_fsdp.py
 tests/nn/data_parallel/test_fsdp_freezing_weights.py
+tests/nn/data_parallel/test_fsdp_multiple_wrapping.py
diff --git a/tests/nn/data_parallel/test_fsdp_multiple_wrapping.py b/tests/nn/data_parallel/test_fsdp_multiple_wrapping.py
new file mode 100644
index 000000000..3e035da4d
--- /dev/null
+++ b/tests/nn/data_parallel/test_fsdp_multiple_wrapping.py
@@ -0,0 +1,88 @@
+# Copyright (c) Facebook, Inc. and its affiliates. All rights reserved.
+#
+# This source code is licensed under the BSD license found in the
+# LICENSE file in the root directory of this source tree.
+
+# pylint: disable=missing-module-docstring
+# pylint: disable=missing-class-docstring
+# pylint: disable=missing-function-docstring
+
+""" Test FSDP with nested wrapping multiple times. """
+
+import tempfile
+
+import pytest
+import torch
+import torch.multiprocessing as mp
+from torch.nn import Linear, Module, Sequential
+from torch.optim import SGD
+
+from fairscale.nn.data_parallel import FullyShardedDataParallel as FSDP
+from fairscale.nn.data_parallel import TrainingState
+from fairscale.utils.testing import dist_init, skip_if_no_cuda, teardown, torch_version
+
+
+def _test_func(rank, world_size, fsdp_config, tempfile_name, unused):
+    result = dist_init(rank, world_size, tempfile_name, unused)
+    assert result, "Dist init failed"
+
+    assert isinstance(fsdp_config, dict), str(fsdp_config)
+
+    class InnerModel(Module):
+        def __init__(self):
+            super().__init__()
+            self.layers = Sequential(FSDP(Linear(5, 5), **fsdp_config),)
+
+        def forward(self, x):
+            return self.layers(x)
+
+    inner_model = InnerModel()
+    model = FSDP(inner_model, **fsdp_config).cuda()
+    optim = SGD(model.parameters(), lr=0.1)
+
+    for i in range(3):
+        input = torch.rand((1, 5), dtype=torch.float).cuda()
+        input.requires_grad = True
+        output = model(input)
+        output.sum().backward()
+        optim.step()
+        optim.zero_grad()
+    input = torch.rand((1, 5), dtype=torch.float).cuda()
+    output = model(input)
+
+    model.assert_state(TrainingState.IDLE)
+
+    # second time to rewrap the inner model
+    rewrapped_model = FSDP(inner_model, **fsdp_config).cuda()
+    rewrapped_output = rewrapped_model(input)
+
+    assert torch.allclose(output, rewrapped_output)
+    teardown()
+
+
+# We use strings for precision and flatten instead of bool to
+# make the pytest output more readable.
+@skip_if_no_cuda
+@pytest.mark.parametrize("world_size", [1, 2])
+@pytest.mark.parametrize("precision", ["full", "mixed"])
+@pytest.mark.parametrize("flatten", ["flatten", "no_flatten"])
+def test(world_size, precision, flatten):
+    """
+    This test simulates wrapping the module after training to run inference.
+    This is required in cases where later in a session, the model is wrapped again in FSDP but
+    contains nested FSDP wrappers within the module.
+    """
+    if torch_version() < (1, 6, 0):
+        pytest.skip("older pytorch doesn't support reduce_scatter")
+
+    temp_file_name = tempfile.mkstemp()[1]
+    unused = tempfile.mkstemp()[1]
+
+    fsdp_config = {
+        "mixed_precision": precision == "mixed",
+        "flatten_parameters": flatten == "flatten",
+    }
+
+    mp.spawn(
+        _test_func, args=(world_size, fsdp_config, temp_file_name, unused), nprocs=world_size, join=True,
+    )