diff --git a/packages/components/CHANGELOG.md b/packages/components/CHANGELOG.md
index 5f9f5de9327cd4..986c7fa19b9ea2 100644
--- a/packages/components/CHANGELOG.md
+++ b/packages/components/CHANGELOG.md
@@ -7,6 +7,7 @@
 -   `SearchControl`: polish metrics for `compact` size variant ([#54663](https://github.com/WordPress/gutenberg/pull/54663)).
 -   `Button`: deprecating `isPressed` prop in favour of `aria-pressed` ([#54740](https://github.com/WordPress/gutenberg/pull/54740)).
 -   `DuotonePicker/ColorListPicker`: Adds appropriate label and description to 'Duotone Filter' picker ([#54473](https://github.com/WordPress/gutenberg/pull/54473)).
+-   `Modal`: Accessibly hide/show outer modal when nested ([#54743](https://github.com/WordPress/gutenberg/pull/54743)).
 
 ### Bug Fix
 
diff --git a/packages/components/src/modal/aria-helper.ts b/packages/components/src/modal/aria-helper.ts
index 25ef449a30d3df..6d4427ddea948e 100644
--- a/packages/components/src/modal/aria-helper.ts
+++ b/packages/components/src/modal/aria-helper.ts
@@ -6,8 +6,7 @@ const LIVE_REGION_ARIA_ROLES = new Set( [
 	'timer',
 ] );
 
-let hiddenElements: Element[] = [],
-	isHidden = false;
+const hiddenElementsByDepth: Element[][] = [];
 
 /**
  * Hides all elements in the body element from screen-readers except
@@ -19,31 +18,28 @@ let hiddenElements: Element[] = [],
  * we should consider removing these helper functions in favor of
  * `aria-modal="true"`.
  *
- * @param {HTMLDivElement} unhiddenElement The element that should not be hidden.
+ * @param modalElement The element that should not be hidden.
  */
-export function hideApp( unhiddenElement?: HTMLDivElement ) {
-	if ( isHidden ) {
-		return;
-	}
+export function modalize( modalElement?: HTMLDivElement ) {
 	const elements = Array.from( document.body.children );
-	elements.forEach( ( element ) => {
-		if ( element === unhiddenElement ) {
-			return;
-		}
+	const hiddenElements: Element[] = [];
+	hiddenElementsByDepth.push( hiddenElements );
+	for ( const element of elements ) {
+		if ( element === modalElement ) continue;
+
 		if ( elementShouldBeHidden( element ) ) {
 			element.setAttribute( 'aria-hidden', 'true' );
 			hiddenElements.push( element );
 		}
-	} );
-	isHidden = true;
+	}
 }
 
 /**
  * Determines if the passed element should not be hidden from screen readers.
  *
- * @param {HTMLElement} element The element that should be checked.
+ * @param element The element that should be checked.
  *
- * @return {boolean} Whether the element should not be hidden from screen-readers.
+ * @return Whether the element should not be hidden from screen-readers.
  */
 export function elementShouldBeHidden( element: Element ) {
 	const role = element.getAttribute( 'role' );
@@ -56,16 +52,12 @@ export function elementShouldBeHidden( element: Element ) {
 }
 
 /**
- * Makes all elements in the body that have been hidden by `hideApp`
- * visible again to screen-readers.
+ * Accessibly reveals the elements hidden by the latest modal.
  */
-export function showApp() {
-	if ( ! isHidden ) {
-		return;
-	}
-	hiddenElements.forEach( ( element ) => {
+export function unmodalize() {
+	const hiddenElements = hiddenElementsByDepth.pop();
+	if ( ! hiddenElements ) return;
+
+	for ( const element of hiddenElements )
 		element.removeAttribute( 'aria-hidden' );
-	} );
-	hiddenElements = [];
-	isHidden = false;
 }
diff --git a/packages/components/src/modal/index.tsx b/packages/components/src/modal/index.tsx
index 139b0805a04dbb..13d352f46058b1 100644
--- a/packages/components/src/modal/index.tsx
+++ b/packages/components/src/modal/index.tsx
@@ -112,11 +112,15 @@ function UnforwardedModal(
 		}
 	}, [ contentRef ] );
 
+	useEffect( () => {
+		ariaHelper.modalize( ref.current );
+		return () => ariaHelper.unmodalize();
+	}, [] );
+
 	useEffect( () => {
 		openModalCount++;
 
 		if ( openModalCount === 1 ) {
-			ariaHelper.hideApp( ref.current );
 			document.body.classList.add( bodyOpenClassName );
 		}
 
@@ -125,7 +129,6 @@ function UnforwardedModal(
 
 			if ( openModalCount === 0 ) {
 				document.body.classList.remove( bodyOpenClassName );
-				ariaHelper.showApp();
 			}
 		};
 	}, [ bodyOpenClassName ] );
diff --git a/packages/components/src/modal/test/index.tsx b/packages/components/src/modal/test/index.tsx
index ae606bb8315136..69f28508c14059 100644
--- a/packages/components/src/modal/test/index.tsx
+++ b/packages/components/src/modal/test/index.tsx
@@ -167,8 +167,7 @@ describe( 'Modal', () => {
 		expect( onRequestClose ).not.toHaveBeenCalled();
 	} );
 
-	// TODO enable once nested modals hide outer modals.
-	it.skip( 'should accessibly hide and show siblings including outer modals', async () => {
+	it( 'should accessibly hide and show siblings including outer modals', async () => {
 		const user = userEvent.setup();
 
 		const AriaDemo = () => {