diff --git a/R/demean.R b/R/demean.R
index fd2722ac7..5f78e83b1 100644
--- a/R/demean.R
+++ b/R/demean.R
@@ -12,9 +12,23 @@
 #' @param select Character vector (or formula) with names of variables to select
 #'   that should be group- and de-meaned.
 #' @param by Character vector (or formula) with the name of the variable(s) that
-#'   indicates the group- or cluster-ID. For cross-classified designs, `by` can
-#'   also identify two or more variables as group- or cluster-IDs. See also
-#'   section _De-meaning for cross-classified designs_ below.
+#'   indicates the group- or cluster-ID. For cross-classified or nested designs,
+#'   `by` can also identify two or more variables as group- or cluster-IDs. If
+#'   the data is nested and should be treated as such, set `nested = TRUE`. Else,
+#'   if `by` defines two or more variables and `nested = FALSE`, a cross-classified
+#'   design is assumed.
+#'
+#'   For nested designs, `by` can be:
+#'   - a character vector with the name of the variable that indicates the
+#'     levels, ordered from *highest* level to *lowest* (e.g. `by = c("L3", "L2"`).
+#'   - a character vector with variable names in the format `by = "L4/L3/L2"`,
+#'     where the levels are separated by `/`.
+#'
+#'   See also section _De-meaning for cross-classified designs_ and
+#'   _De-meaning for nested designs_ below.
+#' @param nested Logical, if `TRUE`, the data is treated as nested. If `FALSE`,
+#'   the data is treated as cross-classified. Only applies if `by` contains more
+#'   than one variable.
 #' @param center Method for centering. `demean()` always performs
 #'   mean-centering, while `degroup()` can use `center = "median"` or
 #'   `center = "mode"` for median- or mode-centering, and also `"min"`
@@ -244,6 +258,7 @@
 demean <- function(x,
                    select,
                    by,
+                   nested = FALSE,
                    suffix_demean = "_within",
                    suffix_groupmean = "_between",
                    add_attributes = TRUE,
@@ -259,6 +274,7 @@ demean <- function(x,
     x = x,
     select = select,
     by = by,
+    nested = nested,
     center = "mean",
     suffix_demean = suffix_demean,
     suffix_groupmean = suffix_groupmean,
@@ -268,15 +284,12 @@ demean <- function(x,
 }
 
 
-
-
-
-
 #' @rdname demean
 #' @export
 degroup <- function(x,
                     select,
                     by,
+                    nested = FALSE,
                     center = "mean",
                     suffix_demean = "_within",
                     suffix_groupmean = "_between",
@@ -303,10 +316,17 @@ degroup <- function(x,
     ))
   }
 
+  # handle different "by" options
   if (inherits(by, "formula")) {
     by <- all.vars(by)
   }
 
+  # we also allow lme4-syntax here: if by = "L4/L3/L2", we assume a nested design
+  if (length(by) == 1 && grepl("/", by, fixed = TRUE)) {
+    by <- insight::trim_ws(unlist(strsplit(by, "/", fixed = TRUE), use.names = FALSE))
+    nested <- TRUE
+  }
+
   # identify interaction terms
   interactions_no <- select[!grepl("(\\*|\\:)", select)]
   interactions_yes <- select[grepl("(\\*|\\:)", select)]
@@ -407,6 +427,9 @@ degroup <- function(x,
     names(group_means_list) <- select
     # create de-meaned variables by subtracting the group mean from each individual value
     person_means_list <- lapply(select, function(i) dat[[i]] - group_means_list[[i]])
+  } else if (nested) {
+    # nested design: by > 1, nested is explicitly set to TRUE
+
   } else {
     # cross-classified design: by > 1
     group_means_list <- lapply(by, function(j) {
diff --git a/man/demean.Rd b/man/demean.Rd
index 4f867260c..b86c13335 100644
--- a/man/demean.Rd
+++ b/man/demean.Rd
@@ -10,6 +10,7 @@ demean(
   x,
   select,
   by,
+  nested = FALSE,
   suffix_demean = "_within",
   suffix_groupmean = "_between",
   add_attributes = TRUE,
@@ -21,6 +22,7 @@ degroup(
   x,
   select,
   by,
+  nested = FALSE,
   center = "mean",
   suffix_demean = "_within",
   suffix_groupmean = "_between",
@@ -33,6 +35,7 @@ detrend(
   x,
   select,
   by,
+  nested = FALSE,
   center = "mean",
   suffix_demean = "_within",
   suffix_groupmean = "_between",
@@ -48,9 +51,26 @@ detrend(
 that should be group- and de-meaned.}
 
 \item{by}{Character vector (or formula) with the name of the variable(s) that
-indicates the group- or cluster-ID. For cross-classified designs, \code{by} can
-also identify two or more variables as group- or cluster-IDs. See also
-section \emph{De-meaning for cross-classified designs} below.}
+indicates the group- or cluster-ID. For cross-classified or nested designs,
+\code{by} can also identify two or more variables as group- or cluster-IDs. If
+the data is nested and should be treated as such, set \code{nested = TRUE}. Else,
+if \code{by} defines two or more variables and \code{nested = FALSE}, a cross-classified
+design is assumed.
+
+For nested designs, \code{by} can be:
+\itemize{
+\item a character vector with the name of the variable that indicates the
+levels, ordered from \emph{highest} level to \emph{lowest} (e.g. \verb{by = c("L3", "L2"}).
+\item a character vector with variable names in the format \code{by = "L4/L3/L2"},
+where the levels are separated by \code{/}.
+}
+
+See also section \emph{De-meaning for cross-classified designs} and
+\emph{De-meaning for nested designs} below.}
+
+\item{nested}{Logical, if \code{TRUE}, the data is treated as nested. If \code{FALSE},
+the data is treated as cross-classified. Only applies if \code{by} contains more
+than one variable.}
 
 \item{suffix_demean, suffix_groupmean}{String value, will be appended to the
 names of the group-meaned and de-meaned variables of \code{x}. By default,