diff --git a/api/coverage/tools/ExtractFlaggedApis.kt b/api/coverage/tools/ExtractFlaggedApis.kt
index 5178f09..5efda98 100644
--- a/api/coverage/tools/ExtractFlaggedApis.kt
+++ b/api/coverage/tools/ExtractFlaggedApis.kt
@@ -17,6 +17,7 @@
 package android.platform.coverage
 
 import com.android.tools.metalava.model.ClassItem
+import com.android.tools.metalava.model.Item
 import com.android.tools.metalava.model.MethodItem
 import com.android.tools.metalava.model.text.ApiFile
 import java.io.File
@@ -44,20 +45,9 @@
     builder: FlagApiMap.Builder
 ) {
     if (methods.isEmpty()) return
-    val classFlag =
-        classItem.modifiers
-            .findAnnotation("android.annotation.FlaggedApi")
-            ?.findAttribute("value")
-            ?.value
-            ?.value() as? String
+    val classFlag = getClassFlag(classItem)
     for (method in methods) {
-        val methodFlag =
-            method.modifiers
-                .findAnnotation("android.annotation.FlaggedApi")
-                ?.findAttribute("value")
-                ?.value
-                ?.value() as? String
-                ?: classFlag
+        val methodFlag = getFlagAnnotation(method) ?: classFlag
         val api =
             JavaMethod.newBuilder()
                 .setPackageName(packageName)
@@ -81,3 +71,23 @@
         builder.putFlagToApi(flag, apis)
     }
 }
+
+fun getClassFlag(classItem: ClassItem): String? {
+    var classFlag = getFlagAnnotation(classItem)
+    var cur = classItem
+    // If a class is not an inner class, use its @FlaggedApi annotation value.
+    // Otherwise, use the flag value of the closest outer class that is annotated by @FlaggedApi.
+    while (cur.isInnerClass() && classFlag == null) {
+        cur = cur.parent() as ClassItem
+        classFlag = getFlagAnnotation(cur)
+    }
+    return classFlag
+}
+
+fun getFlagAnnotation(item: Item): String? {
+    return item.modifiers
+        .findAnnotation("android.annotation.FlaggedApi")
+        ?.findAttribute("value")
+        ?.value
+        ?.value() as? String
+}
diff --git a/api/coverage/tools/ExtractFlaggedApisTest.kt b/api/coverage/tools/ExtractFlaggedApisTest.kt
index ee5aaf1..427be36 100644
--- a/api/coverage/tools/ExtractFlaggedApisTest.kt
+++ b/api/coverage/tools/ExtractFlaggedApisTest.kt
@@ -141,6 +141,84 @@
         assertThat(result).isEqualTo(expected.build())
     }
 
+    @Test
+    fun extractFlaggedApis_unflaggedNestedClassShouldUseOuterClassFlag() {
+        val apiText =
+            """
+            // Signature format: 2.0
+            package android.location.provider {
+              @FlaggedApi(Flags.FLAG_NEW_GEOCODER) public final class ForwardGeocodeRequest implements android.os.Parcelable {
+                method public int describeContents();
+              }
+              public static final class ForwardGeocodeRequest.Builder {
+                method @NonNull public android.location.provider.ForwardGeocodeRequest build();
+              }
+            }
+        """
+                .trimIndent()
+        Files.write(apiTextFile, apiText.toByteArray(Charsets.UTF_8), StandardOpenOption.APPEND)
+
+        val process = Runtime.getRuntime().exec(createCommand())
+        process.waitFor()
+
+        val content = Files.readAllBytes(flagToApiMap).toString(Charsets.UTF_8)
+        val result = TextFormat.parse(content, FlagApiMap::class.java)
+
+        val expected = FlagApiMap.newBuilder()
+        val api1 =
+            JavaMethod.newBuilder()
+                .setPackageName("android.location.provider")
+                .setClassName("ForwardGeocodeRequest")
+                .setMethodName("describeContents")
+        addFlaggedApi(expected, api1, "Flags.FLAG_NEW_GEOCODER")
+        val api2 =
+            JavaMethod.newBuilder()
+                .setPackageName("android.location.provider")
+                .setClassName("ForwardGeocodeRequest.Builder")
+                .setMethodName("build")
+        addFlaggedApi(expected, api2, "Flags.FLAG_NEW_GEOCODER")
+        assertThat(result).ignoringRepeatedFieldOrder().isEqualTo(expected.build())
+    }
+
+    @Test
+    fun extractFlaggedApis_unflaggedNestedClassShouldUseOuterClassFlag_deeplyNested() {
+        val apiText =
+            """
+            // Signature format: 2.0
+            package android.package.xyz {
+              @FlaggedApi(outer_class_flag) public final class OuterClass {
+                method public int apiInOuterClass();
+              }
+              public final class OuterClass.Deeply.NestedClass {
+                method public void apiInNestedClass();
+              }
+            }
+        """
+                .trimIndent()
+        Files.write(apiTextFile, apiText.toByteArray(Charsets.UTF_8), StandardOpenOption.APPEND)
+
+        val process = Runtime.getRuntime().exec(createCommand())
+        process.waitFor()
+
+        val content = Files.readAllBytes(flagToApiMap).toString(Charsets.UTF_8)
+        val result = TextFormat.parse(content, FlagApiMap::class.java)
+
+        val expected = FlagApiMap.newBuilder()
+        val api1 =
+            JavaMethod.newBuilder()
+                .setPackageName("android.package.xyz")
+                .setClassName("OuterClass")
+                .setMethodName("apiInOuterClass")
+        addFlaggedApi(expected, api1, "outer_class_flag")
+        val api2 =
+            JavaMethod.newBuilder()
+                .setPackageName("android.package.xyz")
+                .setClassName("OuterClass.Deeply.NestedClass")
+                .setMethodName("apiInNestedClass")
+        addFlaggedApi(expected, api2, "outer_class_flag")
+        assertThat(result).ignoringRepeatedFieldOrder().isEqualTo(expected.build())
+    }
+
     private fun addFlaggedApi(builder: FlagApiMap.Builder, api: JavaMethod.Builder, flag: String) {
         if (builder.containsFlagToApi(flag)) {
             val updatedApis =