diff --git a/CHANGELOG.md b/CHANGELOG.md
index 1a31f3801b..dfe3906e48 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -4,8 +4,13 @@ All notable changes to this project will be documented in this file.
 The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/),
 and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0.html).
 
+## [Unreleased]
+
 ## [0.11.2] - 11/xx/2021
 
+### Added
+- Extending `dpctl.device_context` with nested contexts (#678)
+
 ## Fixed
 - Fixed issue #649 about incorrect behavior of `.T` method on sliced arrays (#653)
 
diff --git a/dpctl/__init__.py b/dpctl/__init__.py
index 80ce781f3b..efd93f3630 100644
--- a/dpctl/__init__.py
+++ b/dpctl/__init__.py
@@ -61,6 +61,7 @@
     get_current_queue,
     get_num_activated_queues,
     is_in_device_context,
+    nested_context_factories,
     set_global_queue,
 )
 
@@ -111,6 +112,7 @@
     "get_current_queue",
     "get_num_activated_queues",
     "is_in_device_context",
+    "nested_context_factories",
     "set_global_queue",
 ]
 __all__ += [
diff --git a/dpctl/_sycl_queue_manager.pyx b/dpctl/_sycl_queue_manager.pyx
index 53d5058d04..c814b7286a 100644
--- a/dpctl/_sycl_queue_manager.pyx
+++ b/dpctl/_sycl_queue_manager.pyx
@@ -19,7 +19,7 @@
 # cython: linetrace=True
 
 import logging
-from contextlib import contextmanager
+from contextlib import ExitStack, contextmanager
 
 from .enum_types import backend_type, device_type
 
@@ -210,6 +210,22 @@ cpdef get_current_backend():
     return _mgr.get_current_backend()
 
 
+nested_context_factories = []
+
+
+def _get_nested_contexts(ctxt):
+    _help_numba_dppy()
+    return (factory(ctxt) for factory in nested_context_factories)
+
+
+def _help_numba_dppy():
+    """Import numba-dppy for registering nested contexts"""
+    try:
+        import numba_dppy
+    except Exception:
+        pass
+
+
 @contextmanager
 def device_context(arg):
     """
@@ -222,6 +238,9 @@ def device_context(arg):
     the context manager's scope. The yielded queue is removed as the currently
     usable queue on exiting the context manager.
 
+    You can register context factory in the list of factories.
+    This context manager uses context factories to create and activate nested contexts.
+
     Args:
 
         queue_str (str) : A string corresponding to the DPC++ filter selector.
@@ -243,11 +262,26 @@ def device_context(arg):
             with dpctl.device_context("level0:gpu:0"):
                 pass
 
+        The following example registers nested context factory:
+
+        .. code-block:: python
+
+            import dctl
+
+            def factory(sycl_queue):
+                ...
+                return context
+
+            dpctl.nested_context_factories.append(factory)
+
     """
     ctxt = None
     try:
         ctxt = _mgr._set_as_current_queue(arg)
-        yield ctxt
+        with ExitStack() as stack:
+            for nested_context in _get_nested_contexts(ctxt):
+                stack.enter_context(nested_context)
+            yield ctxt
     finally:
         # Code to release resource
         if ctxt:
diff --git a/dpctl/tests/test_sycl_queue_manager.py b/dpctl/tests/test_sycl_queue_manager.py
index 5ff33e09b3..ae7c75cbbd 100644
--- a/dpctl/tests/test_sycl_queue_manager.py
+++ b/dpctl/tests/test_sycl_queue_manager.py
@@ -17,6 +17,8 @@
 """Defines unit test cases for the SyclQueueManager class.
 """
 
+import contextlib
+
 import pytest
 
 import dpctl
@@ -156,3 +158,73 @@ def test_get_current_backend():
         dpctl.set_global_queue("gpu")
     elif has_cpu():
         dpctl.set_global_queue("cpu")
+
+
+def test_nested_context_factory_is_empty_list():
+    assert isinstance(dpctl.nested_context_factories, list)
+    assert not dpctl.nested_context_factories
+
+
+@contextlib.contextmanager
+def _register_nested_context_factory(factory):
+    dpctl.nested_context_factories.append(factory)
+    try:
+        yield
+    finally:
+        dpctl.nested_context_factories.remove(factory)
+
+
+def test_register_nested_context_factory_context():
+    def factory():
+        pass
+
+    with _register_nested_context_factory(factory):
+        assert factory in dpctl.nested_context_factories
+
+    assert isinstance(dpctl.nested_context_factories, list)
+    assert not dpctl.nested_context_factories
+
+
+@pytest.mark.skipif(not has_cpu(), reason="No OpenCL CPU queues available")
+def test_device_context_activates_nested_context():
+    in_context = False
+    factory_called = False
+
+    @contextlib.contextmanager
+    def context():
+        nonlocal in_context
+        old, in_context = in_context, True
+        yield
+        in_context = old
+
+    def factory(_):
+        nonlocal factory_called
+        factory_called = True
+        return context()
+
+    with _register_nested_context_factory(factory):
+        assert not factory_called
+        assert not in_context
+
+        with dpctl.device_context("opencl:cpu:0"):
+            assert factory_called
+            assert in_context
+
+        assert not in_context
+
+
+@pytest.mark.skipif(not has_cpu(), reason="No OpenCL CPU queues available")
+@pytest.mark.parametrize(
+    "factory, exception, match",
+    [
+        (True, TypeError, "object is not callable"),
+        (lambda x: None, AttributeError, "no attribute '__exit__'"),
+    ],
+)
+def test_nested_context_factory_exception_if_wrong_factory(
+    factory, exception, match
+):
+    with pytest.raises(exception, match=match):
+        with _register_nested_context_factory(factory):
+            with dpctl.device_context("opencl:cpu:0"):
+                pass