diff --git a/CHANGELOG.md b/CHANGELOG.md
index 2efa0f40..97546f10 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -19,6 +19,7 @@ any parts of the framework not mentioned in the documentation should generally b
 * Avoid `AttributeError` for PUT and PATCH methods when using `APIView`
 * Clear many-to-many relationships instead of deleting related objects during PATCH on `RelationshipView`
 * Allow POST, PATCH, DELETE for actions in `ReadOnlyModelViewSet`. It was problematic since 2.8.0.
+* Properly format nested errors
 
 ### Changed
 
diff --git a/example/tests/snapshots/__init__.py b/example/tests/snapshots/__init__.py
new file mode 100644
index 00000000..e69de29b
diff --git a/example/tests/snapshots/snap_test_errors.py b/example/tests/snapshots/snap_test_errors.py
new file mode 100644
index 00000000..d77c1e24
--- /dev/null
+++ b/example/tests/snapshots/snap_test_errors.py
@@ -0,0 +1,121 @@
+# -*- coding: utf-8 -*-
+# snapshottest: v1 - https://goo.gl/zC4yUc
+from __future__ import unicode_literals
+
+from snapshottest import Snapshot
+
+
+snapshots = Snapshot()
+
+snapshots['test_first_level_attribute_error 1'] = {
+    'errors': [
+        {
+            'code': 'required',
+            'detail': 'This field is required.',
+            'source': {
+                'pointer': '/data/attributes/headline'
+            },
+            'status': '400'
+        }
+    ]
+}
+
+snapshots['test_first_level_custom_attribute_error 1'] = {
+    'errors': [
+        {
+            'detail': 'Too short',
+            'source': {
+                'pointer': '/data/attributes/body-text'
+            },
+            'title': 'Too Short title'
+        }
+    ]
+}
+
+snapshots['test_second_level_array_error 1'] = {
+    'errors': [
+        {
+            'code': 'required',
+            'detail': 'This field is required.',
+            'source': {
+                'pointer': '/data/attributes/comments/0/body'
+            },
+            'status': '400'
+        }
+    ]
+}
+
+snapshots['test_second_level_dict_error 1'] = {
+    'errors': [
+        {
+            'code': 'required',
+            'detail': 'This field is required.',
+            'source': {
+                'pointer': '/data/attributes/comment/body'
+            },
+            'status': '400'
+        }
+    ]
+}
+
+snapshots['test_third_level_array_error 1'] = {
+    'errors': [
+        {
+            'code': 'required',
+            'detail': 'This field is required.',
+            'source': {
+                'pointer': '/data/attributes/comments/0/attachments/0/data'
+            },
+            'status': '400'
+        }
+    ]
+}
+
+snapshots['test_third_level_custom_array_error 1'] = {
+    'errors': [
+        {
+            'code': 'invalid',
+            'detail': 'Too short data',
+            'source': {
+                'pointer': '/data/attributes/comments/0/attachments/0/data'
+            },
+            'status': '400'
+        }
+    ]
+}
+
+snapshots['test_third_level_dict_error 1'] = {
+    'errors': [
+        {
+            'code': 'required',
+            'detail': 'This field is required.',
+            'source': {
+                'pointer': '/data/attributes/comments/0/attachment/data'
+            },
+            'status': '400'
+        }
+    ]
+}
+
+snapshots['test_many_third_level_dict_errors 1'] = {
+    'errors': [
+        {
+            'code': 'required',
+            'detail': 'This field is required.',
+            'source': {
+                'pointer': '/data/attributes/comments/0/attachment/data'
+            },
+            'status': '400'
+        },
+        {
+            'code': 'required',
+            'detail': 'This field is required.',
+            'source': {
+                'pointer': '/data/attributes/comments/0/body'
+            },
+            'status': '400'
+        }
+    ]
+}
+
+snapshots['test_deprecation_warning 1'] = 'Rendering nested serializer as relationship is deprecated. Use `ResourceRelatedField` instead if DummyNestedSerializer in serializer example.tests.test_errors.test_deprecation_warning.<locals>.DummySerializer should remain a relationship. Otherwise set JSON_API_SERIALIZE_NESTED_SERIALIZERS_AS_ATTRIBUTE to True to render nested serializer as nested json attribute'
diff --git a/example/tests/test_errors.py b/example/tests/test_errors.py
new file mode 100644
index 00000000..75bc8842
--- /dev/null
+++ b/example/tests/test_errors.py
@@ -0,0 +1,240 @@
+import pytest
+from django.conf.urls import url
+from django.test import override_settings
+from django.urls import reverse
+from rest_framework import views
+
+from rest_framework_json_api import serializers
+
+from example.models import Blog
+
+
+# serializers
+class CommentAttachmentSerializer(serializers.Serializer):
+    data = serializers.CharField(allow_null=False, required=True)
+
+    def validate_data(self, value):
+        if value and len(value) < 10:
+            raise serializers.ValidationError('Too short data')
+
+
+class CommentSerializer(serializers.Serializer):
+    attachments = CommentAttachmentSerializer(many=True, required=False)
+    attachment = CommentAttachmentSerializer(required=False)
+    one_more_attachment = CommentAttachmentSerializer(required=False)
+    body = serializers.CharField(allow_null=False, required=True)
+
+
+class EntrySerializer(serializers.Serializer):
+    blog = serializers.IntegerField()
+    comments = CommentSerializer(many=True, required=False)
+    comment = CommentSerializer(required=False)
+    headline = serializers.CharField(allow_null=True, required=True)
+    body_text = serializers.CharField()
+
+    def validate(self, attrs):
+        body_text = attrs['body_text']
+        if len(body_text) < 5:
+            raise serializers.ValidationError({'body_text': {
+                'title': 'Too Short title', 'detail': 'Too short'}
+            })
+
+
+# view
+class DummyTestView(views.APIView):
+    serializer_class = EntrySerializer
+    resource_name = 'entries'
+
+    def post(self, request, *args, **kwargs):
+        serializer = self.serializer_class(data=request.data)
+        serializer.is_valid(raise_exception=True)
+
+
+urlpatterns = [
+    url('entries-nested', DummyTestView.as_view(),
+        name='entries-nested-list')
+]
+
+
+@pytest.fixture(scope='function')
+def some_blog(db):
+    return Blog.objects.create(name='Some Blog', tagline="It's a blog")
+
+
+def perform_error_test(client, data):
+    with override_settings(
+            JSON_API_SERIALIZE_NESTED_SERIALIZERS_AS_ATTRIBUTE=True,
+            ROOT_URLCONF=__name__
+    ):
+        url = reverse('entries-nested-list')
+        response = client.post(url, data=data)
+
+    return response.json()
+
+
+def test_first_level_attribute_error(client, some_blog, snapshot):
+    data = {
+        'data': {
+            'type': 'entries',
+            'attributes': {
+                'blog': some_blog.pk,
+                'bodyText': 'body_text',
+            }
+        }
+    }
+    snapshot.assert_match(perform_error_test(client, data))
+
+
+def test_first_level_custom_attribute_error(client, some_blog, snapshot):
+    data = {
+        'data': {
+            'type': 'entries',
+            'attributes': {
+                'blog': some_blog.pk,
+                'body-text': 'body',
+                'headline': 'headline'
+            }
+        }
+    }
+    with override_settings(JSON_API_FORMAT_FIELD_NAMES='dasherize'):
+        snapshot.assert_match(perform_error_test(client, data))
+
+
+def test_second_level_array_error(client, some_blog, snapshot):
+    data = {
+        'data': {
+            'type': 'entries',
+            'attributes': {
+                'blog': some_blog.pk,
+                'bodyText': 'body_text',
+                'headline': 'headline',
+                'comments': [
+                    {
+                    }
+                ]
+            }
+        }
+    }
+
+    snapshot.assert_match(perform_error_test(client, data))
+
+
+def test_second_level_dict_error(client, some_blog, snapshot):
+    data = {
+        'data': {
+            'type': 'entries',
+            'attributes': {
+                'blog': some_blog.pk,
+                'bodyText': 'body_text',
+                'headline': 'headline',
+                'comment': {}
+            }
+        }
+    }
+
+    snapshot.assert_match(perform_error_test(client, data))
+
+
+def test_third_level_array_error(client, some_blog, snapshot):
+    data = {
+        'data': {
+            'type': 'entries',
+            'attributes': {
+                'blog': some_blog.pk,
+                'bodyText': 'body_text',
+                'headline': 'headline',
+                'comments': [
+                    {
+                        'body': 'test comment',
+                        'attachments': [
+                            {
+                            }
+                        ]
+                    }
+                ]
+            }
+        }
+    }
+
+    snapshot.assert_match(perform_error_test(client, data))
+
+
+def test_third_level_custom_array_error(client, some_blog, snapshot):
+    data = {
+        'data': {
+            'type': 'entries',
+            'attributes': {
+                'blog': some_blog.pk,
+                'bodyText': 'body_text',
+                'headline': 'headline',
+                'comments': [
+                    {
+                        'body': 'test comment',
+                        'attachments': [
+                            {
+                                'data': 'text'
+                            }
+                        ]
+                    }
+                ]
+            }
+        }
+    }
+
+    snapshot.assert_match(perform_error_test(client, data))
+
+
+def test_third_level_dict_error(client, some_blog, snapshot):
+    data = {
+        'data': {
+            'type': 'entries',
+            'attributes': {
+                'blog': some_blog.pk,
+                'bodyText': 'body_text',
+                'headline': 'headline',
+                'comments': [
+                    {
+                        'body': 'test comment',
+                        'attachment': {}
+                    }
+                ]
+            }
+        }
+    }
+
+    snapshot.assert_match(perform_error_test(client, data))
+
+
+def test_many_third_level_dict_errors(client, some_blog, snapshot):
+    data = {
+        'data': {
+            'type': 'entries',
+            'attributes': {
+                'blog': some_blog.pk,
+                'bodyText': 'body_text',
+                'headline': 'headline',
+                'comments': [
+                    {
+                        'attachment': {}
+                    }
+                ]
+            }
+        }
+    }
+
+    snapshot.assert_match(perform_error_test(client, data))
+
+
+@pytest.mark.filterwarnings('default::DeprecationWarning:rest_framework_json_api.serializers')
+def test_deprecation_warning(recwarn, settings, snapshot):
+    settings.JSON_API_SERIALIZE_NESTED_SERIALIZERS_AS_ATTRIBUTE = False
+
+    class DummyNestedSerializer(serializers.Serializer):
+        field = serializers.CharField()
+
+    class DummySerializer(serializers.Serializer):
+        nested = DummyNestedSerializer(many=True)
+
+    assert len(recwarn) == 1
+    warning = recwarn.pop(DeprecationWarning)
+    snapshot.assert_match(str(warning.message))
diff --git a/example/tests/test_generic_viewset.py b/example/tests/test_generic_viewset.py
index a9abdd53..ba315740 100644
--- a/example/tests/test_generic_viewset.py
+++ b/example/tests/test_generic_viewset.py
@@ -95,11 +95,6 @@ def test_custom_validation_exceptions(self):
         """
         expected = {
             'errors': [
-                {
-                    'id': 'armageddon101',
-                    'detail': 'Hey! You need a last name!',
-                    'meta': 'something',
-                },
                 {
                     'status': '400',
                     'source': {
@@ -108,6 +103,12 @@ def test_custom_validation_exceptions(self):
                     'detail': 'Enter a valid email address.',
                     'code': 'invalid',
                 },
+                {
+                    'id': 'armageddon101',
+                    'detail': 'Hey! You need a last name!',
+                    'meta': 'something',
+                    'source': {'pointer': '/data/attributes/lastName'}
+                },
             ]
         }
         response = self.client.post('/identities', {
diff --git a/requirements/requirements-testing.txt b/requirements/requirements-testing.txt
index 357bf12a..6f02437a 100644
--- a/requirements/requirements-testing.txt
+++ b/requirements/requirements-testing.txt
@@ -5,3 +5,4 @@ pytest==6.0.1
 pytest-cov==2.10.1
 pytest-django==3.9.0
 pytest-factoryboy==2.0.3
+snapshottest==0.5.1
diff --git a/rest_framework_json_api/utils.py b/rest_framework_json_api/utils.py
index b3932651..2443575f 100644
--- a/rest_framework_json_api/utils.py
+++ b/rest_framework_json_api/utils.py
@@ -312,29 +312,25 @@ def format_drf_errors(response, context, exc):
     # handle generic errors. ValidationError('test') in a view for example
     if isinstance(response.data, list):
         for message in response.data:
-            errors.append(format_error_object(message, '/data', response))
+            errors.extend(format_error_object(message, '/data', response))
     # handle all errors thrown from serializers
     else:
         for field, error in response.data.items():
             field = format_value(field)
             pointer = '/data/attributes/{}'.format(field)
-            # see if they passed a dictionary to ValidationError manually
-            if isinstance(error, dict):
-                errors.append(error)
-            elif isinstance(exc, Http404) and isinstance(error, str):
+            if isinstance(exc, Http404) and isinstance(error, str):
                 # 404 errors don't have a pointer
-                errors.append(format_error_object(error, None, response))
+                errors.extend(format_error_object(error, None, response))
             elif isinstance(error, str):
                 classes = inspect.getmembers(exceptions, inspect.isclass)
                 # DRF sets the `field` to 'detail' for its own exceptions
                 if isinstance(exc, tuple(x[1] for x in classes)):
                     pointer = '/data'
-                errors.append(format_error_object(error, pointer, response))
+                errors.extend(format_error_object(error, pointer, response))
             elif isinstance(error, list):
-                for message in error:
-                    errors.append(format_error_object(message, pointer, response))
+                errors.extend(format_error_object(error, pointer, response))
             else:
-                errors.append(format_error_object(error, pointer, response))
+                errors.extend(format_error_object(error, pointer, response))
 
     context['view'].resource_name = 'errors'
     response.data = errors
@@ -343,18 +339,49 @@ def format_drf_errors(response, context, exc):
 
 
 def format_error_object(message, pointer, response):
-    error_obj = {
-        'detail': message,
-        'status': encoding.force_str(response.status_code),
-    }
-    if pointer is not None:
-        error_obj['source'] = {
-            'pointer': pointer,
+    errors = []
+    if isinstance(message, dict):
+
+        # as there is no required field in error object we check that all fields are string
+        # except links and source which might be a dict
+        is_custom_error = all([
+            isinstance(value, str)
+            for key, value in message.items() if key not in ['links', 'source']
+        ])
+
+        if is_custom_error:
+            if 'source' not in message:
+                message['source'] = {}
+            message['source'] = {
+                'pointer': pointer,
+            }
+            errors.append(message)
+        else:
+            for k, v in message.items():
+                errors.extend(format_error_object(v, pointer + '/{}'.format(k), response))
+    elif isinstance(message, list):
+        for num, error in enumerate(message):
+            if isinstance(error, (list, dict)):
+                new_pointer = pointer + '/{}'.format(num)
+            else:
+                new_pointer = pointer
+            if error:
+                errors.extend(format_error_object(error, new_pointer, response))
+    else:
+        error_obj = {
+            'detail': message,
+            'status': encoding.force_str(response.status_code),
         }
-    code = getattr(message, "code", None)
-    if code is not None:
-        error_obj['code'] = code
-    return error_obj
+        if pointer is not None:
+            error_obj['source'] = {
+                'pointer': pointer,
+            }
+        code = getattr(message, "code", None)
+        if code is not None:
+            error_obj['code'] = code
+        errors.append(error_obj)
+
+    return errors
 
 
 def format_errors(data):
diff --git a/setup.cfg b/setup.cfg
index ef25b7bd..d8247c1d 100644
--- a/setup.cfg
+++ b/setup.cfg
@@ -8,6 +8,7 @@ universal = 1
 ignore = F405,W504
 max-line-length = 100
 exclude =
+    snapshots
     build/lib,
     docs/conf.py,
     migrations,