diff --git a/newsfragments/4308.changed.md b/newsfragments/4308.changed.md
new file mode 100644
index 00000000000..6b5310cdd36
--- /dev/null
+++ b/newsfragments/4308.changed.md
@@ -0,0 +1 @@
+Nested declarative `#[pymodule]` are automatically treated as submodules (no `PyInit_` entrypoint is created)
diff --git a/pyo3-macros-backend/src/module.rs b/pyo3-macros-backend/src/module.rs
index faa7032de80..810028c3fd7 100644
--- a/pyo3-macros-backend/src/module.rs
+++ b/pyo3-macros-backend/src/module.rs
@@ -237,6 +237,7 @@ pub fn pymodule_module_impl(
                     )? {
                         set_module_attribute(&mut item_mod.attrs, &full_name);
                     }
+                    item_mod.attrs.push(parse_quote!(#[pyo3(submodule)]));
                 }
             }
             Item::ForeignMod(item) => {
diff --git a/tests/test_declarative_module.rs b/tests/test_declarative_module.rs
index 0bf426a52cc..93ab40f7309 100644
--- a/tests/test_declarative_module.rs
+++ b/tests/test_declarative_module.rs
@@ -115,7 +115,7 @@ mod declarative_module {
         }
     }
 
-    #[pymodule(submodule)]
+    #[pymodule]
     #[pyo3(module = "custom_root")]
     mod inner_custom_root {
         use super::*;