diff --git a/RELEASE.md b/RELEASE.md
index 0a8f921358..fc0281cc1c 100644
--- a/RELEASE.md
+++ b/RELEASE.md
@@ -23,6 +23,7 @@
 * Removed `.coveragerc` from the Kedro project template. `coverage` settings are now given in `pyproject.toml`.
 * Fixed a bug where packaging or pulling a modular pipeline with the same name as the project's package name would throw an error (or silently pass without including the pipeline source code in the wheel file).
 * Removed unintentional dependency on `git`.
+* Fixed an issue where nested pipeline configuration was not included in the packaged pipeline.
 
 ## Minor breaking changes to the API
 
diff --git a/kedro/framework/cli/pipeline.py b/kedro/framework/cli/pipeline.py
index 883167e953..e2b54529ce 100644
--- a/kedro/framework/cli/pipeline.py
+++ b/kedro/framework/cli/pipeline.py
@@ -667,7 +667,7 @@ def _package_pipeline(  # pylint: disable=too-many-arguments
     # config files not to confuse users and avoid useless file copies
     configs_to_package = _find_config_files(
         artifacts_to_package.pipeline_conf,
-        [f"parameters*/**/{pipeline_name}.yml", f"parameters*/**/{pipeline_name}/*"],
+        [f"parameters*/**/{pipeline_name}.yml", f"parameters*/**/{pipeline_name}/**/*"],
     )
 
     source_paths = (
@@ -901,8 +901,9 @@ def _generate_wheel_file(
             cls = exc.__class__
             raise KedroCliError(f"{cls.__module__}.{cls.__qualname__}: {exc}") from exc
 
+        config_files = [str(file) for file in conf_target.rglob("*") if file.is_file()]
         setup_file = _generate_setup_file(
-            package_name, version, install_requires, temp_dir_path
+            package_name, version, install_requires, temp_dir_path, config_files
         )
 
         package_file = destination / _get_wheel_name(name=package_name, version=version)
@@ -925,18 +926,15 @@ def _generate_wheel_file(
 
 
 def _generate_setup_file(
-    package_name: str, version: str, install_requires: List[str], output_dir: Path
+    package_name: str,
+    version: str,
+    install_requires: List[str],
+    output_dir: Path,
+    config_files: List[str],
 ) -> Path:
     setup_file = output_dir / "setup.py"
-    package_data = {
-        package_name: [
-            "README.md",
-            "config/parameters*",
-            "config/**/parameters*",
-            "config/parameters*/**",
-            "config/parameters*/**/*",
-        ]
-    }
+
+    package_data = {package_name: ["README.md"] + config_files}
     setup_file_context = dict(
         name=package_name,
         version=version,
diff --git a/tests/framework/cli/pipeline/test_pipeline_package.py b/tests/framework/cli/pipeline/test_pipeline_package.py
index c53916f808..f1894de041 100644
--- a/tests/framework/cli/pipeline/test_pipeline_package.py
+++ b/tests/framework/cli/pipeline/test_pipeline_package.py
@@ -334,6 +334,66 @@ def test_package_modular_pipeline_with_nested_parameters(
         assert "retail/config/parameters/retail.yml" in wheel_contents
         assert "retail/config/parameters/retail_banking.yml" not in wheel_contents
 
+    def test_package_pipeline_with_deep_nested_parameters(
+        self, fake_repo_path, fake_project_cli, fake_metadata
+    ):
+        CliRunner().invoke(
+            fake_project_cli, ["pipeline", "create", "retail"], obj=fake_metadata
+        )
+        deep_nested_param_path = Path(
+            fake_repo_path / "conf" / "base" / "parameters" / "deep" / "retail"
+        )
+        deep_nested_param_path.mkdir(parents=True, exist_ok=True)
+        (deep_nested_param_path / "params1.yml").touch()
+
+        deep_nested_param_path2 = Path(
+            fake_repo_path / "conf" / "base" / "parameters" / "retail" / "deep"
+        )
+        deep_nested_param_path2.mkdir(parents=True, exist_ok=True)
+        (deep_nested_param_path2 / "params1.yml").touch()
+
+        deep_nested_param_path3 = Path(
+            fake_repo_path / "conf" / "base" / "parameters" / "deep"
+        )
+        deep_nested_param_path3.mkdir(parents=True, exist_ok=True)
+        (deep_nested_param_path3 / "retail.yml").touch()
+
+        super_deep_nested_param_path = Path(
+            fake_repo_path
+            / "conf"
+            / "base"
+            / "parameters"
+            / "a"
+            / "b"
+            / "c"
+            / "d"
+            / "retail"
+        )
+        super_deep_nested_param_path.mkdir(parents=True, exist_ok=True)
+        (super_deep_nested_param_path / "params3.yml").touch()
+        result = CliRunner().invoke(
+            fake_project_cli, ["pipeline", "package", "retail"], obj=fake_metadata
+        )
+
+        assert result.exit_code == 0
+        assert "Pipeline `retail` packaged!" in result.output
+
+        wheel_location = fake_repo_path / "src" / "dist"
+        assert f"Location: {wheel_location}" in result.output
+
+        wheel_name = _get_wheel_name(name="retail", version="0.1")
+        wheel_file = wheel_location / wheel_name
+        assert wheel_file.is_file()
+        assert len(list(wheel_location.iterdir())) == 1
+
+        # pylint: disable=consider-using-with
+        wheel_contents = set(ZipFile(str(wheel_file)).namelist())
+        assert "retail/config/parameters/deep/retail/params1.yml" in wheel_contents
+        assert "retail/config/parameters/retail/deep/params1.yml" in wheel_contents
+        assert "retail/config/parameters/retail.yml" in wheel_contents
+        assert "retail/config/parameters/deep/retail.yml" in wheel_contents
+        assert "retail/config/parameters/a/b/c/d/retail/params3.yml" in wheel_contents
+
     def test_pipeline_package_version(
         self, fake_repo_path, fake_package_path, fake_project_cli, fake_metadata
     ):