diff --git a/test/dynamo/test_misc.py b/test/dynamo/test_misc.py
index 8f195f60d15..45433b6795c 100644
--- a/test/dynamo/test_misc.py
+++ b/test/dynamo/test_misc.py
@@ -2799,6 +2799,22 @@ class MiscTests(torch._dynamo.test_case.TestCase):
         with self.assertRaisesRegex(RuntimeError, "Detected that you are using FX"):
             gm = torch.fx.symbolic_trace(optimized)
 
+    @patch.object(torch._dynamo.config, "error_on_nested_fx_trace", False)
+    def test_no_error_on_nested_fx_trace(self):
+        input = torch.rand(2, 3)
+
+        def f(x):
+            x + x
+
+        real = f(input)
+
+        optimized = torch._dynamo.optimize("eager")(f)
+        self.assertTrue(same(optimized(input), real))
+
+        # should not error
+        gm = torch.fx.symbolic_trace(optimized)
+        self.assertTrue(same(gm(input), real))
+
     def test_inference_mode(self):
         @torch.inference_mode()
         def func(x, y):
diff --git a/torch/_dynamo/eval_frame.py b/torch/_dynamo/eval_frame.py
index cd6aedee604..09bfa572d77 100644
--- a/torch/_dynamo/eval_frame.py
+++ b/torch/_dynamo/eval_frame.py
@@ -2,7 +2,6 @@ import contextlib
 import copy
 import functools
 import inspect
-import itertools
 import logging
 import os
 import sys
@@ -150,20 +149,17 @@ class _TorchDynamoContext:
 
         @functools.wraps(fn)
         def _fn(*args, **kwargs):
-            any_arg_is_proxy = any(
-                map(
-                    lambda arg: isinstance(arg, torch.fx.Proxy),
-                    itertools.chain(args, kwargs.values()),
-                )
-            )
-            if any_arg_is_proxy:
+            if (
+                not isinstance(self, DisableContext)
+                and torch.fx._symbolic_trace.is_fx_tracing()
+            ):
                 if config.error_on_nested_fx_trace:
                     raise RuntimeError(
                         "Detected that you are using FX to symbolically trace "
                         "a dynamo-optimized function. This is not supported at the moment."
                     )
                 else:
-                    return fn
+                    return fn(*args, **kwargs)
 
             on_enter()
             prior = set_eval_frame(callback)