diff --git a/rest_framework/serializers.py b/rest_framework/serializers.py
index e28bbe81d..add465665 100644
--- a/rest_framework/serializers.py
+++ b/rest_framework/serializers.py
@@ -205,18 +205,6 @@ class BaseSerializer(WritableField):
 
         return ret
 
-    #####
-    # Field methods - used when the serializer class is itself used as a field.
-
-    def initialize(self, parent, field_name):
-        """
-        Same behaviour as usual Field, except that we need to keep track
-        of state so that we can deal with handling maximum depth.
-        """
-        super(BaseSerializer, self).initialize(parent, field_name)
-        if parent.opts.depth:
-            self.opts.depth = parent.opts.depth - 1
-
     #####
     # Methods to convert or revert from objects <--> primitive representations.
 
@@ -619,6 +607,8 @@ class ModelSerializer(Serializer):
         class NestedModelSerializer(ModelSerializer):
             class Meta:
                 model = model_field.rel.to
+                depth = self.opts.depth - 1
+
         return NestedModelSerializer()
 
     def get_related_field(self, model_field, to_many=False):
diff --git a/rest_framework/tests/serializer.py b/rest_framework/tests/serializer.py
index 05217f35a..bd874253d 100644
--- a/rest_framework/tests/serializer.py
+++ b/rest_framework/tests/serializer.py
@@ -3,7 +3,7 @@ from django.utils.datastructures import MultiValueDict
 from django.test import TestCase
 from rest_framework import serializers
 from rest_framework.tests.models import (HasPositiveIntegerAsChoice, Album, ActionItem, Anchor, BasicModel,
-    BlankFieldModel, BlogPost, Book, CallableDefaultValueModel, DefaultValueModel,
+    BlankFieldModel, BlogPost, BlogPostComment, Book, CallableDefaultValueModel, DefaultValueModel,
     ManyToManyModel, Person, ReadOnlyManyToManyModel, Photo)
 import datetime
 import pickle
@@ -767,8 +767,6 @@ class RelatedTraversalTest(TestCase):
         post = BlogPost.objects.create(title="Test blog post", writer=user)
         post.blogpostcomment_set.create(text="I love this blog post")
 
-        from rest_framework.tests.models import BlogPostComment
-
         class PersonSerializer(serializers.ModelSerializer):
             class Meta:
                 model = Person
@@ -968,23 +966,26 @@ class SerializerPickleTests(TestCase):
 
 class DepthTest(TestCase):
     def test_implicit_nesting(self):
+
         writer = Person.objects.create(name="django", age=1)
         post = BlogPost.objects.create(title="Test blog post", writer=writer)
+        comment = BlogPostComment.objects.create(text="Test blog post comment", blog_post=post)
 
-        class BlogPostSerializer(serializers.ModelSerializer):
+        class BlogPostCommentSerializer(serializers.ModelSerializer):
             class Meta:
-                model = BlogPost
-                depth = 1
+                model = BlogPostComment
+                depth = 2
 
-        serializer = BlogPostSerializer(instance=post)
-        expected = {'id': 1, 'title': 'Test blog post',
-                    'writer': {'id': 1, 'name': 'django', 'age': 1}}
+        serializer = BlogPostCommentSerializer(instance=comment)
+        expected = {'id': 1, 'text': 'Test blog post comment', 'blog_post': {'id': 1, 'title': 'Test blog post',
+                    'writer': {'id': 1, 'name': 'django', 'age': 1}}}
 
         self.assertEqual(serializer.data, expected)
 
     def test_explicit_nesting(self):
         writer = Person.objects.create(name="django", age=1)
         post = BlogPost.objects.create(title="Test blog post", writer=writer)
+        comment = BlogPostComment.objects.create(text="Test blog post comment", blog_post=post)
 
         class PersonSerializer(serializers.ModelSerializer):
             class Meta:
@@ -996,9 +997,15 @@ class DepthTest(TestCase):
             class Meta:
                 model = BlogPost
 
-        serializer = BlogPostSerializer(instance=post)
-        expected = {'id': 1, 'title': 'Test blog post',
-                    'writer': {'id': 1, 'name': 'django', 'age': 1}}
+        class BlogPostCommentSerializer(serializers.ModelSerializer):
+            blog_post = BlogPostSerializer()
+
+            class Meta:
+                model = BlogPostComment
+
+        serializer = BlogPostCommentSerializer(instance=comment)
+        expected = {'id': 1, 'text': 'Test blog post comment', 'blog_post': {'id': 1, 'title': 'Test blog post',
+                    'writer': {'id': 1, 'name': 'django', 'age': 1}}}
 
         self.assertEqual(serializer.data, expected)