diff --git a/cirq-core/cirq/transformers/eject_phased_paulis.py b/cirq-core/cirq/transformers/eject_phased_paulis.py
index a354fe9f6f1..c58fb6b14ed 100644
--- a/cirq-core/cirq/transformers/eject_phased_paulis.py
+++ b/cirq-core/cirq/transformers/eject_phased_paulis.py
@@ -26,7 +26,7 @@
     import cirq
 
 
-@transformer_api.transformer
+@transformer_api.transformer(add_deep_support=True)
 def eject_phased_paulis(
     circuit: 'cirq.AbstractCircuit',
     *,
diff --git a/cirq-core/cirq/transformers/eject_phased_paulis_test.py b/cirq-core/cirq/transformers/eject_phased_paulis_test.py
index 5f4663da5f4..b0e545250dc 100644
--- a/cirq-core/cirq/transformers/eject_phased_paulis_test.py
+++ b/cirq-core/cirq/transformers/eject_phased_paulis_test.py
@@ -13,6 +13,7 @@
 # limitations under the License.
 from typing import Iterable, cast
 
+import dataclasses
 import numpy as np
 import pytest
 import sympy
@@ -53,29 +54,42 @@ def assert_optimizes(
             )
 
     # And match the expected circuit.
-    assert circuit == expected, (
-        "Circuit wasn't optimized as expected.\n"
-        "INPUT:\n"
-        "{}\n"
-        "\n"
-        "EXPECTED OUTPUT:\n"
-        "{}\n"
-        "\n"
-        "ACTUAL OUTPUT:\n"
-        "{}\n"
-        "\n"
-        "EXPECTED OUTPUT (detailed):\n"
-        "{!r}\n"
-        "\n"
-        "ACTUAL OUTPUT (detailed):\n"
-        "{!r}"
-    ).format(before, expected, circuit, expected, circuit)
+    cirq.testing.assert_same_circuits(circuit, expected)
 
     # And it should be idempotent.
     circuit = cirq.eject_phased_paulis(
         circuit, eject_parameterized=eject_parameterized, context=context
     )
-    assert circuit == expected
+    cirq.testing.assert_same_circuits(circuit, expected)
+
+    # Nested sub-circuits should also get optimized.
+    q = before.all_qubits()
+    c_nested = cirq.Circuit(
+        [cirq.PhasedXPowGate(phase_exponent=0.5).on_each(*q), (cirq.Z ** 0.5).on_each(*q)],
+        cirq.CircuitOperation(before.freeze()).repeat(2).with_tags("ignore"),
+        [cirq.Y.on_each(*q), cirq.X.on_each(*q)],
+        cirq.CircuitOperation(before.freeze()).repeat(3).with_tags("preserve_tag"),
+    )
+    c_expected = cirq.Circuit(
+        cirq.PhasedXPowGate(phase_exponent=0.75).on_each(*q),
+        cirq.Moment(cirq.CircuitOperation(before.freeze()).repeat(2).with_tags("ignore")),
+        cirq.Z.on_each(*q),
+        cirq.Moment(cirq.CircuitOperation(expected.freeze()).repeat(3).with_tags("preserve_tag")),
+    )
+    if context is None:
+        context = cirq.TransformerContext(tags_to_ignore=("ignore",), deep=True)
+    else:
+        context = dataclasses.replace(
+            context, tags_to_ignore=context.tags_to_ignore + ("ignore",), deep=True
+        )
+    c_nested = cirq.eject_phased_paulis(
+        c_nested, context=context, eject_parameterized=eject_parameterized
+    )
+    cirq.testing.assert_same_circuits(c_nested, c_expected)
+    c_nested = cirq.eject_phased_paulis(
+        c_nested, context=context, eject_parameterized=eject_parameterized
+    )
+    cirq.testing.assert_same_circuits(c_nested, c_expected)
 
 
 def quick_circuit(*moments: Iterable[cirq.OP_TREE]) -> cirq.Circuit: