diff --git a/src/cdk/drag-drop/directives/drag.spec.ts b/src/cdk/drag-drop/directives/drag.spec.ts
index 0b8c79b0e907..a80f1f05c063 100644
--- a/src/cdk/drag-drop/directives/drag.spec.ts
+++ b/src/cdk/drag-drop/directives/drag.spec.ts
@@ -5592,6 +5592,21 @@ describe('CdkDrag', () => {
 
       expect(event.stopPropagation).toHaveBeenCalled();
     }));
+
+    it('should stop event propagation when dragging item nested via ng-template', fakeAsync(() => {
+      const fixture = createComponent(NestedDragsThroughTemplate);
+      fixture.detectChanges();
+      const dragElement = fixture.componentInstance.item.nativeElement;
+
+      const event = createMouseEvent('mousedown');
+      spyOn(event, 'stopPropagation').and.callThrough();
+
+      dispatchEvent(dragElement, event);
+      fixture.detectChanges();
+
+      expect(event.stopPropagation).toHaveBeenCalled();
+    }));
+
   });
 });
 
@@ -6557,6 +6572,52 @@ class NestedDragsComponent {
   itemDragReleasedSpy = jasmine.createSpy('item drag released spy');
 }
 
+@Component({
+  styles: [`
+    :host {
+      height: 400px;
+      width: 400px;
+      position: absolute;
+    }
+    .container {
+      height: 200px;
+      width: 200px;
+      position: absolute;
+    }
+    .item {
+      height: 50px;
+      width: 50px;
+      position: absolute;
+    }
+  `],
+  template: `
+    <div
+      cdkDrag
+      #container
+      class="container"
+      (cdkDragStarted)="containerDragStartedSpy($event)"
+      (cdkDragMoved)="containerDragMovedSpy($event)"
+      (cdkDragReleased)="containerDragReleasedSpy($event)">
+      <ng-container [ngTemplateOutlet]="itemTemplate"></ng-container>
+    </div>
+
+    <ng-template #itemTemplate>
+      <div
+        cdkDrag
+        class="item"
+        #item
+        (cdkDragStarted)="itemDragStartedSpy($event)"
+        (cdkDragMoved)="itemDragMovedSpy($event)"
+        (cdkDragReleased)="itemDragReleasedSpy($event)">
+      </div>
+    </ng-template>
+  `
+})
+class NestedDragsThroughTemplate {
+  @ViewChild('container') container: ElementRef;
+  @ViewChild('item') item: ElementRef;
+}
+
 @Component({
   styles: [`
     .drop-list {
diff --git a/src/cdk/drag-drop/directives/drag.ts b/src/cdk/drag-drop/directives/drag.ts
index 312a09edfb40..b14ae7c1db5f 100644
--- a/src/cdk/drag-drop/directives/drag.ts
+++ b/src/cdk/drag-drop/directives/drag.ts
@@ -56,12 +56,14 @@ import {DragDrop} from '../drag-drop';
 import {CDK_DRAG_CONFIG, DragDropConfig, DragStartDelay, DragAxis} from './config';
 import {assertElementNode} from './assertions';
 
+const DRAG_HOST_CLASS = 'cdk-drag';
+
 /** Element that can be moved inside a CdkDropList container. */
 @Directive({
   selector: '[cdkDrag]',
   exportAs: 'cdkDrag',
   host: {
-    'class': 'cdk-drag',
+    'class': DRAG_HOST_CLASS,
     '[class.cdk-drag-disabled]': 'disabled',
     '[class.cdk-drag-dragging]': '_dragRef.isDragging()',
   },
@@ -69,6 +71,7 @@ import {assertElementNode} from './assertions';
 })
 export class CdkDrag<T = any> implements AfterViewInit, OnChanges, OnDestroy {
   private _destroyed = new Subject<void>();
+  private static _dragInstances: CdkDrag[] = [];
 
   /** Reference to the underlying drag instance. */
   _dragRef: DragRef<CdkDrag<T>>;
@@ -193,17 +196,21 @@ export class CdkDrag<T = any> implements AfterViewInit, OnChanges, OnDestroy {
       @Optional() private _dir: Directionality, dragDrop: DragDrop,
       private _changeDetectorRef: ChangeDetectorRef,
       @Optional() @Self() @Inject(CDK_DRAG_HANDLE) private _selfHandle?: CdkDragHandle,
-      @Optional() @SkipSelf() @Inject(CDK_DRAG_PARENT) parentDrag?: CdkDrag) {
+      @Optional() @SkipSelf() @Inject(CDK_DRAG_PARENT) private _parentDrag?: CdkDrag) {
     this._dragRef = dragDrop.createDrag(element, {
       dragStartThreshold: config && config.dragStartThreshold != null ?
           config.dragStartThreshold : 5,
       pointerDirectionChangeThreshold: config && config.pointerDirectionChangeThreshold != null ?
           config.pointerDirectionChangeThreshold : 5,
       zIndex: config?.zIndex,
-      parentDragRef: parentDrag?._dragRef
     });
     this._dragRef.data = this;
 
+    // We have to keep track of the drag instances in order to be able to match an element to
+    // a drag instance. We can't go through the global registry of `DragRef`, because the root
+    // element could be different.
+    CdkDrag._dragInstances.push(this);
+
     if (config) {
       this._assignDefaults(config);
     }
@@ -318,6 +325,10 @@ export class CdkDrag<T = any> implements AfterViewInit, OnChanges, OnDestroy {
       this.dropContainer.removeItem(this);
     }
 
+    const index = CdkDrag._dragInstances.indexOf(this);
+    if (index > -1) {
+      CdkDrag._dragInstances.splice(index, -1);
+    }
     this._destroyed.next();
     this._destroyed.complete();
     this._dragRef.dispose();
@@ -392,6 +403,29 @@ export class CdkDrag<T = any> implements AfterViewInit, OnChanges, OnDestroy {
         }
       }
     });
+
+    // This only needs to be resolved once.
+    ref.beforeStarted.pipe(take(1)).subscribe(() => {
+      // If we managed to resolve a parent through DI, use it.
+      if (this._parentDrag) {
+        ref.withParent(this._parentDrag._dragRef);
+        return;
+      }
+
+      // Otherwise fall back to resolving the parent by looking up the DOM. This can happen if
+      // the item was projected into another item by something like `ngTemplateOutlet`.
+      let parent = this.element.nativeElement.parentElement;
+      while (parent) {
+        // `classList` needs to be null checked, because IE doesn't have it on some elements.
+        if (parent.classList?.contains(DRAG_HOST_CLASS)) {
+          ref.withParent(CdkDrag._dragInstances.find(drag => {
+            return drag.element.nativeElement === parent;
+          })?._dragRef || null);
+          break;
+        }
+        parent = parent.parentElement;
+      }
+    });
   }
 
   /** Handles the events from the underlying `DragRef`. */
diff --git a/src/cdk/drag-drop/drag-ref.ts b/src/cdk/drag-drop/drag-ref.ts
index d0340a3567de..1784b1e546f5 100644
--- a/src/cdk/drag-drop/drag-ref.ts
+++ b/src/cdk/drag-drop/drag-ref.ts
@@ -230,6 +230,9 @@ export class DragRef<T = any> {
   /** Layout direction of the item. */
   private _direction: Direction = 'ltr';
 
+  /** Ref that the current drag item is nested in. */
+  private _parentDragRef: DragRef<unknown> | null;
+
   /**
    * Cached shadow root that the element is placed in. `null` means that the element isn't in
    * the shadow DOM and `undefined` means that it hasn't been resolved yet. Should be read via
@@ -324,7 +327,7 @@ export class DragRef<T = any> {
     private _viewportRuler: ViewportRuler,
     private _dragDropRegistry: DragDropRegistry<DragRef, DropListRef>) {
 
-    this.withRootElement(element);
+    this.withRootElement(element).withParent(_config.parentDragRef || null);
     this._parentPositions = new ParentPositionTracker(_document, _viewportRuler);
     _dragDropRegistry.registerDragItem(this);
   }
@@ -430,6 +433,12 @@ export class DragRef<T = any> {
     return this;
   }
 
+  /** Sets the parent ref that the ref is nested in.  */
+  withParent(parent: DragRef<unknown> | null): this {
+    this._parentDragRef = parent;
+    return this;
+  }
+
   /** Removes the dragging functionality from the DOM element. */
   dispose() {
     this._removeRootElementListeners(this._rootElement);
@@ -461,7 +470,7 @@ export class DragRef<T = any> {
     this._resizeSubscription.unsubscribe();
     this._parentPositions.clear();
     this._boundaryElement = this._rootElement = this._ownerSVGElement = this._placeholderTemplate =
-        this._previewTemplate = this._anchor = null!;
+        this._previewTemplate = this._anchor = this._parentDragRef = null!;
   }
 
   /** Checks whether the element is currently being dragged. */
@@ -790,7 +799,7 @@ export class DragRef<T = any> {
   private _initializeDragSequence(referenceElement: HTMLElement, event: MouseEvent | TouchEvent) {
     // Stop propagation if the item is inside another
     // draggable so we don't start multiple drag sequences.
-    if (this._config.parentDragRef) {
+    if (this._parentDragRef) {
       event.stopPropagation();
     }
 
diff --git a/tools/public_api_guard/cdk/drag-drop.d.ts b/tools/public_api_guard/cdk/drag-drop.d.ts
index fc5588fd0f21..cfc4447935d8 100644
--- a/tools/public_api_guard/cdk/drag-drop.d.ts
+++ b/tools/public_api_guard/cdk/drag-drop.d.ts
@@ -42,7 +42,7 @@ export declare class CdkDrag<T = any> implements AfterViewInit, OnChanges, OnDes
     constructor(
     element: ElementRef<HTMLElement>,
     dropContainer: CdkDropList,
-    _document: any, _ngZone: NgZone, _viewContainerRef: ViewContainerRef, config: DragDropConfig, _dir: Directionality, dragDrop: DragDrop, _changeDetectorRef: ChangeDetectorRef, _selfHandle?: CdkDragHandle | undefined, parentDrag?: CdkDrag);
+    _document: any, _ngZone: NgZone, _viewContainerRef: ViewContainerRef, config: DragDropConfig, _dir: Directionality, dragDrop: DragDrop, _changeDetectorRef: ChangeDetectorRef, _selfHandle?: CdkDragHandle | undefined, _parentDrag?: CdkDrag<any> | undefined);
     getFreeDragPosition(): {
         readonly x: number;
         readonly y: number;
@@ -318,6 +318,7 @@ export declare class DragRef<T = any> {
     withBoundaryElement(boundaryElement: ElementRef<HTMLElement> | HTMLElement | null): this;
     withDirection(direction: Direction): this;
     withHandles(handles: (HTMLElement | ElementRef<HTMLElement>)[]): this;
+    withParent(parent: DragRef<unknown> | null): this;
     withPlaceholderTemplate(template: DragHelperTemplate | null): this;
     withPreviewTemplate(template: DragPreviewTemplate | null): this;
     withRootElement(rootElement: ElementRef<HTMLElement> | HTMLElement): this;