diff --git a/docs/data-sources/group.md b/docs/data-sources/group.md
index 538b04ecb6..34e8b3a6e2 100644
--- a/docs/data-sources/group.md
+++ b/docs/data-sources/group.md
@@ -28,6 +28,7 @@ data "azuread_group" "example" {
 The following arguments are supported:
 
 * `display_name` - (Optional) The display name for the group.
+* `include_transitive_members` - (Optional) Whether to include transitive members (a flat list of all nested members). Defaults to `false`.
 * `mail_nickname` - (Optional) The mail alias for the group, unique in the organisation.
 * `mail_enabled` - (Optional) Whether the group is mail-enabled.
 * `object_id` - (Optional) Specifies the object ID of the group.
@@ -52,7 +53,7 @@ The following attributes are exported:
 * `mail` - The SMTP address for the group.
 * `mail_enabled` - Whether the group is mail-enabled.
 * `mail_nickname` - The mail alias for the group, unique in the organisation.
-* `members` - List of object IDs of the group members.
+* `members` - List of object IDs of the group members. When `include_transitive_members` is `true`, contains a list of object IDs of all transitive group members.
 * `onpremises_domain_name` - The on-premises FQDN, also called dnsDomainName, synchronised from the on-premises directory when Azure AD Connect is used.
 * `onpremises_group_type` - The on-premises group type that the AAD group will be written as, when writeback is enabled. Possible values are `UniversalDistributionGroup`, `UniversalMailEnabledSecurityGroup`, or `UniversalSecurityGroup`.
 * `onpremises_netbios_name` - The on-premises NetBIOS name, synchronised from the on-premises directory when Azure AD Connect is used.
diff --git a/internal/services/groups/group_data_source.go b/internal/services/groups/group_data_source.go
index e7eb5014f0..c36f6f7464 100644
--- a/internal/services/groups/group_data_source.go
+++ b/internal/services/groups/group_data_source.go
@@ -68,6 +68,13 @@ func groupDataSource() *pluginsdk.Resource {
 				Computed:    true,
 			},
 
+			"include_transitive_members": {
+				Description: "Specifies whether to include transitive members (a flat list of all nested members).",
+				Type:        pluginsdk.TypeBool,
+				Optional:    true,
+				Default:     false,
+			},
+
 			"assignable_to_role": {
 				Description: "Indicates whether this group can be assigned to an Azure Active Directory role",
 				Type:        pluginsdk.TypeBool,
@@ -423,9 +430,19 @@ func groupDataSourceRead(ctx context.Context, d *pluginsdk.ResourceData, meta in
 	tf.Set(d, "hide_from_address_lists", hideFromAddressLists)
 	tf.Set(d, "hide_from_outlook_clients", hideFromOutlookClients)
 
-	members, _, err := client.ListMembers(ctx, d.Id())
-	if err != nil {
-		return tf.ErrorDiagF(err, "Could not retrieve group members for group with object ID: %q", d.Id())
+	includeTransitiveMembers := d.Get("include_transitive_members").(bool)
+	var members *[]string
+	var err error
+	if includeTransitiveMembers {
+		members, _, err = client.ListTransitiveMembers(ctx, d.Id())
+		if err != nil {
+			return tf.ErrorDiagF(err, "Could not retrieve transitive group members for group with object ID: %q", d.Id())
+		}
+	} else {
+		members, _, err = client.ListMembers(ctx, d.Id())
+		if err != nil {
+			return tf.ErrorDiagF(err, "Could not retrieve group members for group with object ID: %q", d.Id())
+		}
 	}
 	tf.Set(d, "members", members)
 
diff --git a/internal/services/groups/group_data_source_test.go b/internal/services/groups/group_data_source_test.go
index 33b36698b3..baa4ab76c1 100644
--- a/internal/services/groups/group_data_source_test.go
+++ b/internal/services/groups/group_data_source_test.go
@@ -159,6 +159,20 @@ func TestAccGroupDataSource_members(t *testing.T) {
 	})
 }
 
+func TestAccGroupDataSource_transitiveMembers(t *testing.T) {
+	data := acceptance.BuildTestData(t, "data.azuread_group", "test")
+
+	data.DataSourceTest(t, []acceptance.TestStep{
+		{
+			Config: GroupDataSource{}.transitiveMembers(data),
+			Check: acceptance.ComposeTestCheckFunc(
+				check.That(data.ResourceName).Key("display_name").HasValue(fmt.Sprintf("acctestGroup-%d", data.RandomInteger)),
+				check.That(data.ResourceName).Key("members.#").HasValue("4"),
+			),
+		},
+	})
+}
+
 func TestAccGroupDataSource_owners(t *testing.T) {
 	data := acceptance.BuildTestData(t, "data.azuread_group", "test")
 
@@ -314,6 +328,17 @@ data "azuread_group" "test" {
 `, GroupResource{}.withThreeMembers(data))
 }
 
+func (GroupDataSource) transitiveMembers(data acceptance.TestData) string {
+	return fmt.Sprintf(`
+%[1]s
+
+data "azuread_group" "test" {
+  object_id                  = azuread_group.test.object_id
+  include_transitive_members = true
+}
+`, GroupResource{}.withTransitiveMembers(data))
+}
+
 func (GroupDataSource) dynamicMembership(data acceptance.TestData) string {
 	return fmt.Sprintf(`
 %[1]s
diff --git a/internal/services/groups/group_resource_test.go b/internal/services/groups/group_resource_test.go
index c2cebcf910..fb51147605 100644
--- a/internal/services/groups/group_resource_test.go
+++ b/internal/services/groups/group_resource_test.go
@@ -954,6 +954,30 @@ resource "azuread_group" "test" {
 `, r.templateThreeUsers(data), data.RandomInteger)
 }
 
+func (r GroupResource) withTransitiveMembers(data acceptance.TestData) string {
+	return fmt.Sprintf(`
+%[1]s
+
+resource "azuread_group" "nested" {
+  display_name     = "acctestGroup-%[2]d-Nested"
+  security_enabled = true
+  members = [
+    azuread_user.test.object_id,
+    azuread_group.member.object_id,
+    azuread_service_principal.test.object_id
+  ]
+}
+
+resource "azuread_group" "test" {
+  display_name     = "acctestGroup-%[2]d"
+  security_enabled = true
+  members = [
+    azuread_group.nested.object_id
+  ]
+}
+`, r.templateDiverseDirectoryObjects(data), data.RandomInteger)
+}
+
 func (r GroupResource) withOwnersAndMembers(data acceptance.TestData) string {
 	return fmt.Sprintf(`
 %[1]s