diff --git a/CHANGELOG.md b/CHANGELOG.md
index cce3e765b638..4d3113e54b2e 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -20,6 +20,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Ensure `--default-outline-width` can be used to change the `outline-width` value of the `outline` utility
 - Ensure drop shadow utilities don't inherit unexpectedly ([#16471](https://github.com/tailwindlabs/tailwindcss/pull/16471))
 - Export backwards compatible config and plugin types from `tailwindcss/plugin` ([#16505](https://github.com/tailwindlabs/tailwindcss/pull/16505))
+- Ensure JavaScript plugins that emit nested rules referencing to the utility name work as expected ([#16539](https://github.com/tailwindlabs/tailwindcss/pull/16539))
 - Upgrade: Report errors when updating dependencies ([#16504](https://github.com/tailwindlabs/tailwindcss/pull/16504))
 
 ## [4.0.6] - 2025-02-10
diff --git a/packages/tailwindcss/src/compat/plugin-api.test.ts b/packages/tailwindcss/src/compat/plugin-api.test.ts
index 9eb65ccb954a..ff9a016e391a 100644
--- a/packages/tailwindcss/src/compat/plugin-api.test.ts
+++ b/packages/tailwindcss/src/compat/plugin-api.test.ts
@@ -3171,6 +3171,68 @@ describe('addUtilities()', () => {
     `,
     )
   })
+
+  test('replaces the class name with variants in nested selectors', async () => {
+    let compiled = await compile(
+      css`
+        @plugin "my-plugin";
+        @theme {
+          --breakpoint-md: 768px;
+        }
+        @tailwind utilities;
+      `,
+      {
+        async loadModule(id, base) {
+          return {
+            base,
+            module: ({ addUtilities }: PluginAPI) => {
+              addUtilities({
+                '.foo': {
+                  ':where(.foo > :first-child)': {
+                    color: 'red',
+                  },
+                },
+              })
+            },
+          }
+        },
+      },
+    )
+
+    expect(compiled.build(['foo', 'md:foo', 'not-hover:md:foo']).trim()).toMatchInlineSnapshot(`
+      ":root, :host {
+        --breakpoint-md: 768px;
+      }
+      .foo {
+        :where(.foo > :first-child) {
+          color: red;
+        }
+      }
+      .md\\:foo {
+        @media (width >= 768px) {
+          :where(.md\\:foo > :first-child) {
+            color: red;
+          }
+        }
+      }
+      .not-hover\\:md\\:foo {
+        &:not(*:hover) {
+          @media (width >= 768px) {
+            :where(.not-hover\\:md\\:foo > :first-child) {
+              color: red;
+            }
+          }
+        }
+        @media not (hover: hover) {
+          @media (width >= 768px) {
+            :where(.not-hover\\:md\\:foo > :first-child) {
+              color: red;
+            }
+          }
+        }
+      }"
+    `)
+  })
 })
 
 describe('matchUtilities()', () => {
@@ -3981,6 +4043,76 @@ describe('matchUtilities()', () => {
       )
     }).rejects.toThrowError(/invalid utility name/)
   })
+
+  test('replaces the class name with variants in nested selectors', async () => {
+    let compiled = await compile(
+      css`
+        @plugin "my-plugin";
+        @theme {
+          --breakpoint-md: 768px;
+        }
+        @tailwind utilities;
+      `,
+      {
+        async loadModule(base) {
+          return {
+            base,
+            module: ({ matchUtilities }: PluginAPI) => {
+              matchUtilities(
+                {
+                  foo: (value) => ({
+                    ':where(.foo > :first-child)': {
+                      color: value,
+                    },
+                  }),
+                },
+                {
+                  values: {
+                    red: 'red',
+                  },
+                },
+              )
+            },
+          }
+        },
+      },
+    )
+
+    expect(compiled.build(['foo-red', 'md:foo-red', 'not-hover:md:foo-red']).trim())
+      .toMatchInlineSnapshot(`
+        ":root, :host {
+          --breakpoint-md: 768px;
+        }
+        .foo-red {
+          :where(.foo-red > :first-child) {
+            color: red;
+          }
+        }
+        .md\\:foo-red {
+          @media (width >= 768px) {
+            :where(.md\\:foo-red > :first-child) {
+              color: red;
+            }
+          }
+        }
+        .not-hover\\:md\\:foo-red {
+          &:not(*:hover) {
+            @media (width >= 768px) {
+              :where(.not-hover\\:md\\:foo-red > :first-child) {
+                color: red;
+              }
+            }
+          }
+          @media not (hover: hover) {
+            @media (width >= 768px) {
+              :where(.not-hover\\:md\\:foo-red > :first-child) {
+                color: red;
+              }
+            }
+          }
+        }"
+      `)
+  })
 })
 
 describe('addComponents()', () => {
diff --git a/packages/tailwindcss/src/compat/plugin-api.ts b/packages/tailwindcss/src/compat/plugin-api.ts
index 8db4d68973fb..9a2f5d117e5c 100644
--- a/packages/tailwindcss/src/compat/plugin-api.ts
+++ b/packages/tailwindcss/src/compat/plugin-api.ts
@@ -7,6 +7,7 @@ import * as CSS from '../css-parser'
 import type { DesignSystem } from '../design-system'
 import { withAlpha } from '../utilities'
 import { DefaultMap } from '../utils/default-map'
+import { escape } from '../utils/escape'
 import { inferDataType } from '../utils/infer-data-type'
 import { segment } from '../utils/segment'
 import { toKeyPath } from '../utils/to-key-path'
@@ -282,8 +283,9 @@ export function buildPluginApi({
           })
         }
 
-        designSystem.utilities.static(className, () => {
+        designSystem.utilities.static(className, (candidate) => {
           let clonedAst = structuredClone(ast)
+          replaceNestedClassNameReferences(clonedAst, className, candidate.raw)
           featuresRef.current |= substituteAtApply(clonedAst, designSystem)
           return clonedAst
         })
@@ -406,6 +408,7 @@ export function buildPluginApi({
             }
 
             let ast = objectToAst(fn(value, { modifier }))
+            replaceNestedClassNameReferences(ast, name, candidate.raw)
             featuresRef.current |= substituteAtApply(ast, designSystem)
             return ast
           }
@@ -543,3 +546,22 @@ function parseVariantValue(resolved: string | string[], nodes: AstNode[]): AstNo
 
 type Primitive = string | number | boolean | null
 export type CssPluginOptions = Record<string, Primitive | Primitive[]>
+
+function replaceNestedClassNameReferences(
+  ast: AstNode[],
+  utilityName: string,
+  rawCandidate: string,
+) {
+  // Replace nested rules using the utility name in the selector
+  walk(ast, (node) => {
+    if (node.kind === 'rule') {
+      let selectorAst = SelectorParser.parse(node.selector)
+      SelectorParser.walk(selectorAst, (node) => {
+        if (node.kind === 'selector' && node.value === `.${utilityName}`) {
+          node.value = `.${escape(rawCandidate)}`
+        }
+      })
+      node.selector = SelectorParser.toCss(selectorAst)
+    }
+  })
+}