diff --git a/cirq/circuits/circuit_operation.py b/cirq/circuits/circuit_operation.py
index 8e98d843497..724e579d4d8 100644
--- a/cirq/circuits/circuit_operation.py
+++ b/cirq/circuits/circuit_operation.py
@@ -592,10 +592,14 @@ def _with_measurement_key_mapping_(self, key_map: Dict[str, str]) -> 'cirq.Circu
         return self.with_measurement_key_mapping(key_map)
 
     def with_params(
-        self, param_values: 'cirq.ParamResolverOrSimilarType'
+        self, param_values: 'cirq.ParamResolverOrSimilarType', recursive: bool = False
     ) -> 'cirq.CircuitOperation':
         """Returns a copy of this operation with an updated ParamResolver.
 
+        Any existing parameter mappings will have their values updated given
+        the provided mapping, and any new parameters will be added to the
+        ParamResolver.
+
         Note that any resulting parameter mappings with no corresponding
         parameter in the base circuit will be omitted.
 
@@ -603,6 +607,11 @@ def with_params(
             param_values: A map or ParamResolver able to convert old param
                 values to new param values. This map will be composed with any
                 existing ParamResolver via single-step resolution.
+            recursive: If True, resolves parameter values recursively over the
+                resolver; otherwise performs a single resolution step. This
+                behavior applies only to the passed-in mapping, for the current
+                application. Existing parameters are never resolved recursively
+                because a->b and b->a needs to be a valid mapping.
 
         Returns:
             A copy of this operation with its ParamResolver updated as specified
@@ -611,18 +620,12 @@ def with_params(
         new_params = {}
         for k in protocols.parameter_symbols(self.circuit):
             v = self.param_resolver.value_of(k, recursive=False)
-            v = protocols.resolve_parameters(v, param_values, recursive=False)
+            v = protocols.resolve_parameters(v, param_values, recursive=recursive)
             if v != k:
                 new_params[k] = v
         return self.replace(param_resolver=new_params)
 
-    # TODO: handle recursive parameter resolution gracefully
     def _resolve_parameters_(
         self, resolver: 'cirq.ParamResolver', recursive: bool
     ) -> 'cirq.CircuitOperation':
-        if recursive:
-            raise ValueError(
-                'Recursive resolution of CircuitOperation parameters is prohibited. '
-                'Use "recursive=False" to prevent this error.'
-            )
-        return self.with_params(resolver.param_dict)
+        return self.with_params(resolver.param_dict, recursive)
diff --git a/cirq/circuits/circuit_operation_test.py b/cirq/circuits/circuit_operation_test.py
index b2846eae82a..6999bfbd8d3 100644
--- a/cirq/circuits/circuit_operation_test.py
+++ b/cirq/circuits/circuit_operation_test.py
@@ -20,7 +20,6 @@
 import cirq
 from cirq.circuits.circuit_operation import _full_join_string_lists
 
-
 ALL_SIMULATORS = (
     cirq.Simulator(),
     cirq.DensityMatrixSimulator(),
@@ -248,9 +247,40 @@ def test_with_params():
         == op_with_params
     )
 
-    # Recursive parameter resolution is rejected.
-    with pytest.raises(ValueError, match='Use "recursive=False"'):
-        _ = cirq.resolve_parameters(op_base, cirq.ParamResolver(param_dict))
+
+def test_recursive_params():
+    q = cirq.LineQubit(0)
+    a, a2, b, b2 = sympy.symbols('a a2 b b2')
+    circuitop = cirq.CircuitOperation(
+        cirq.FrozenCircuit(
+            cirq.X(q) ** a,
+            cirq.Z(q) ** b,
+        ),
+        # Not recursive, a and b are swapped.
+        param_resolver=cirq.ParamResolver({a: b, b: a}),
+    )
+    # Recursive, so a->a2->0 and b->b2->1.
+    outer_params = {a: a2, a2: 0, b: b2, b2: 1}
+    resolved = cirq.resolve_parameters(circuitop, outer_params)
+    # Combined, a->b->b2->1, and b->a->a2->0.
+    assert resolved.param_resolver.param_dict == {a: 1, b: 0}
+
+    # Non-recursive, so a->a2 and b->b2.
+    resolved = cirq.resolve_parameters(circuitop, outer_params, recursive=False)
+    # Combined, a->b->b2, and b->a->a2.
+    assert resolved.param_resolver.param_dict == {a: b2, b: a2}
+
+    with pytest.raises(RecursionError):
+        cirq.resolve_parameters(circuitop, {a: a2, a2: a})
+
+    # Non-recursive, so a->b and b->a.
+    resolved = cirq.resolve_parameters(circuitop, {a: b, b: a}, recursive=False)
+    # Combined, a->b->a, and b->a->b.
+    assert resolved.param_resolver.param_dict == {}
+
+    # First example should behave like an X when simulated
+    result = cirq.Simulator().simulate(cirq.Circuit(circuitop), param_resolver=outer_params)
+    assert np.allclose(result.state_vector(), [0, 1])
 
 
 @pytest.mark.parametrize('add_measurements', [True, False])