diff --git a/src/Aspire.Hosting/Orchestrator/ApplicationOrchestrator.cs b/src/Aspire.Hosting/Orchestrator/ApplicationOrchestrator.cs
index 60f840df9ee..d1bd69689cf 100644
--- a/src/Aspire.Hosting/Orchestrator/ApplicationOrchestrator.cs
+++ b/src/Aspire.Hosting/Orchestrator/ApplicationOrchestrator.cs
@@ -238,6 +238,11 @@ await _notificationService.PublishUpdateAsync(child, s => s with
                 StopTimeStamp = stopTimeStamp,
                 Properties = s.Properties.SetResourceProperty(KnownProperties.Resource.ParentName, parentName)
             }).ConfigureAwait(false);
+
+            // the parent name needs to be an instance name, not the resource name.
+            // parent the children of the child under the first resource instance.
+            await SetChildResourceAsync(child, child.GetResolvedResourceNames()[0], state, startTimeStamp, stopTimeStamp)
+                .ConfigureAwait(false);
         }
     }
 
@@ -253,6 +258,8 @@ await _notificationService.PublishUpdateAsync(child, s => s with
             {
                 Properties = s.Properties.SetResourceProperty(KnownProperties.Resource.ParentName, parentName)
             }).ConfigureAwait(false);
+
+            await SetExecutableChildResourceAsync(child).ConfigureAwait(false);
         }
     }
 
diff --git a/src/Aspire.Hosting/Orchestrator/RelationshipEvaluator.cs b/src/Aspire.Hosting/Orchestrator/RelationshipEvaluator.cs
index 44f0e17081c..3a782ba9f44 100644
--- a/src/Aspire.Hosting/Orchestrator/RelationshipEvaluator.cs
+++ b/src/Aspire.Hosting/Orchestrator/RelationshipEvaluator.cs
@@ -12,23 +12,16 @@ internal static class RelationshipEvaluator
 {
     public static ILookup<IResource, IResource> GetParentChildLookup(DistributedApplicationModel model)
     {
-        static IResource? SelectParentContainerResource(IResource resource) => resource switch
-        {
-            IResourceWithParent rp => SelectParentContainerResource(rp.Parent),
-            IResource r when r.IsContainer() => r,
-            _ => null
-        };
-
         // parent -> children lookup
         // Built from IResourceWithParent first, then from annotations.
         return model.Resources.OfType<IResourceWithParent>()
-                              .Select(x => (Child: (IResource)x, Root: SelectParentContainerResource(x.Parent)))
-                              .Where(x => x.Root is not null)
+                              .Select(x => (Child: (IResource)x, Parent: x.Parent))
+                              .Where(x => x.Parent is not null)
                               .Concat(GetParentChildRelationshipsFromAnnotations(model))
-                              .ToLookup(x => x.Root!, x => x.Child);
+                              .ToLookup(x => x.Parent!, x => x.Child);
     }
 
-    private static IEnumerable<(IResource Child, IResource? Root)> GetParentChildRelationshipsFromAnnotations(DistributedApplicationModel model)
+    private static IEnumerable<(IResource Child, IResource Parent)> GetParentChildRelationshipsFromAnnotations(DistributedApplicationModel model)
     {
         static bool TryGetParent(IResource resource, [NotNullWhen(true)] out IResource? parent)
         {
@@ -55,14 +48,7 @@ IResource r when TryGetParent(r, out var parent) => parent,
 
         ValidateRelationships(result!);
 
-        static IResource? SelectRootResource(IResource? resource) => resource switch
-        {
-            IResource r when TryGetParent(r, out var parent) => SelectRootResource(parent) ?? parent,
-            _ => null
-        };
-
-        // translate the result to child -> root, which the dashboard expects
-        return result.Select(x => (x.Child, Root: SelectRootResource(x.Child)));
+        return result!;
     }
 
     private static void ValidateRelationships((IResource Child, IResource Parent)[] relationships)
diff --git a/tests/Aspire.Hosting.Tests/Orchestrator/ApplicationOrchestratorTests.cs b/tests/Aspire.Hosting.Tests/Orchestrator/ApplicationOrchestratorTests.cs
index 2cfc3708ef2..9569a8f5b2d 100644
--- a/tests/Aspire.Hosting.Tests/Orchestrator/ApplicationOrchestratorTests.cs
+++ b/tests/Aspire.Hosting.Tests/Orchestrator/ApplicationOrchestratorTests.cs
@@ -83,6 +83,7 @@ public async Task WithParentRelationshipSetsParentPropertyCorrectly()
         await appOrchestrator.RunApplicationAsync();
 
         string? parentResourceId = null;
+        string? childResourceId = null;
         string? childParentResourceId = null;
         string? child2ParentResourceId = null;
         string? nestedChildParentResourceId = null;
@@ -96,6 +97,7 @@ public async Task WithParentRelationshipSetsParentPropertyCorrectly()
                 }
                 else if (item.Resource == child.Resource)
                 {
+                    childResourceId = item.ResourceId;
                     childParentResourceId = item.Snapshot.Properties.SingleOrDefault(p => p.Name == KnownProperties.Resource.ParentName)?.Value?.ToString();
                 }
                 else if (item.Resource == nestedChild.Resource)
@@ -121,8 +123,8 @@ public async Task WithParentRelationshipSetsParentPropertyCorrectly()
         Assert.Equal(parentResourceId, childParentResourceId);
         Assert.Equal(parentResourceId, child2ParentResourceId);
 
-        // Nested child should have parent set to the root parent, not direct parent
-        Assert.Equal(parentResourceId, nestedChildParentResourceId);
+        // Nested child should be parented on the direct parent
+        Assert.Equal(childResourceId, nestedChildParentResourceId);
     }
 
     [Fact]
diff --git a/tests/Aspire.Hosting.Tests/Orchestrator/RelationshipEvaluatorTests.cs b/tests/Aspire.Hosting.Tests/Orchestrator/RelationshipEvaluatorTests.cs
new file mode 100644
index 00000000000..786a2e42aed
--- /dev/null
+++ b/tests/Aspire.Hosting.Tests/Orchestrator/RelationshipEvaluatorTests.cs
@@ -0,0 +1,52 @@
+// Licensed to the .NET Foundation under one or more agreements.
+// The .NET Foundation licenses this file to you under the MIT license.
+
+using Aspire.Hosting.Orchestrator;
+using Microsoft.Extensions.DependencyInjection;
+using Xunit;
+
+namespace Aspire.Hosting.Tests.Orchestrator;
+
+public class RelationshipEvaluatorTests
+{
+    [Fact]
+    public void HandlesNestedChildren()
+    {
+        var builder = DistributedApplication.CreateBuilder();
+
+        var parentResource = builder.AddContainer("parent", "image");
+        var childResource = builder.AddResource(new CustomChildResource("child", parentResource.Resource));
+        var grandChildResource = builder.AddResource(new CustomChildResource("grandchild", childResource.Resource));
+        var greatGrandChildResource = builder.AddResource(new CustomChildResource("greatgrandchild", grandChildResource.Resource));
+
+        var childWithAnnotationsResource = builder.AddContainer("child-with-annotations", "image")
+            .WithParentRelationship(parentResource.Resource);
+
+        var grandChildWithAnnotationsResource = builder.AddContainer("grandchild-with-annotations", "image")
+            .WithParentRelationship(childWithAnnotationsResource.Resource);
+
+        using var app = builder.Build();
+        var appModel = app.Services.GetRequiredService<DistributedApplicationModel>();
+
+        var parentChildLookup = RelationshipEvaluator.GetParentChildLookup(appModel);
+        Assert.Equal(4, parentChildLookup.Count);
+
+        Assert.Collection(parentChildLookup[parentResource.Resource],
+            x => Assert.Equal(childResource.Resource, x),
+            x => Assert.Equal(childWithAnnotationsResource.Resource, x));
+
+        Assert.Single(parentChildLookup[childResource.Resource], grandChildResource.Resource);
+        Assert.Single(parentChildLookup[grandChildResource.Resource], greatGrandChildResource.Resource);
+
+        Assert.Empty(parentChildLookup[greatGrandChildResource.Resource]);
+
+        Assert.Single(parentChildLookup[childWithAnnotationsResource.Resource], grandChildWithAnnotationsResource.Resource);
+
+        Assert.Empty(parentChildLookup[grandChildWithAnnotationsResource.Resource]);
+    }
+
+    private sealed class CustomChildResource(string name, IResource parent) : Resource(name), IResourceWithParent
+    {
+        public IResource Parent => parent;
+    }
+}