diff --git a/markdown-mode.el b/markdown-mode.el
index b9aeec2e..7b3e6342 100644
--- a/markdown-mode.el
+++ b/markdown-mode.el
@@ -2059,24 +2059,20 @@ upon failure."
     (setq indent (markdown-cur-line-indent))
     (while
         (cond
-         ;; Stop at beginning of buffer
-         ((bobp) (setq prev nil))
-         ;; Continue if current line is blank
-         ((markdown-cur-line-blank-p) t)
          ;; List item
          ((and (looking-at markdown-regex-list)
                (setq bounds (markdown-cur-list-item-bounds)))
           (cond
            ;; Continue at item with greater indentation
            ((> (nth 3 bounds) level) t)
-           ;; Stop and return point at item of equal indentation
-           ((= (nth 3 bounds) level)
+           ;; Stop and return point at item of lesser or equal indentation
+           ((<= (nth 3 bounds) level)
             (setq prev (point))
-            nil)
-           ;; Stop and return nil at item with lesser indentation
-           ((< (nth 3 bounds) level)
-            (setq prev nil)
             nil)))
+         ;; Stop at beginning of buffer
+         ((bobp) (setq prev nil))
+         ;; Continue if current line is blank
+         ((markdown-cur-line-blank-p) t)
          ;; Continue while indentation is the same or greater
          ((>= indent level) t)
          ;; Stop if current indentation is less than list item
@@ -4243,7 +4239,7 @@ decrease the indentation by one level.
 With two \\[universal-argument] prefixes (i.e., when ARG is (16)),
 increase the indentation by one level."
   (interactive "p")
-  (let (bounds item-indent marker indent new-indent new-loc)
+  (let (bounds cur-indent marker indent new-indent new-loc)
     (save-match-data
       ;; Look for a list item on current or previous non-blank line
       (save-excursion
@@ -4279,13 +4275,23 @@ increase the indentation by one level."
             (unless (markdown-cur-line-blank-p)
               (insert "\n"))
             (insert markdown-unordered-list-item-prefix))
-        ;; Compute indentation for a new list item
-        (setq item-indent (nth 2 bounds))
+        ;; Compute indentation and marker for new list item
+        (setq cur-indent (nth 2 bounds))
         (setq marker (nth 4 bounds))
-        (setq indent (cond
-                      ((= arg 4) (max (- item-indent 4) 0))
-                      ((= arg 16) (+ item-indent 4))
-                      (t item-indent)))
+        (cond
+         ;; Dedent: decrement indentation, find previous marker.
+         ((= arg 4)
+          (setq indent (max (- cur-indent 4) 0))
+          (let ((prev-bounds
+                 (save-excursion
+                   (when (markdown-prev-list-item (- (nth 3 bounds) 1))
+                     (markdown-cur-list-item-bounds)))))
+            (when prev-bounds
+              (setq marker (nth 4 prev-bounds)))))
+         ;; Indent: increment indentation by 4, use same marker.
+         ((= arg 16) (setq indent (+ cur-indent 4)))
+         ;; Same level: keep current indentation and marker.
+         (t (setq indent cur-indent)))
         (setq new-indent (make-string indent 32))
         (goto-char new-loc)
         (cond
@@ -4294,7 +4300,7 @@ increase the indentation by one level."
           (if (= arg 16) ;; starting a new column indented one more level
               (insert (concat new-indent "1. "))
             ;; travel up to the last item and pick the correct number.  If
-            ;; the argument was nil, "new-indent = item-indent" is the same,
+            ;; the argument was nil, "new-indent = cur-indent" is the same,
             ;; so we don't need special treatment. Neat.
             (save-excursion
               (while (and (not (looking-at (concat new-indent "\\([0-9]+\\)\\(\\.[ \t]*\\)")))
diff --git a/tests/markdown-test.el b/tests/markdown-test.el
index f7bd6b14..0650746a 100644
--- a/tests/markdown-test.el
+++ b/tests/markdown-test.el
@@ -944,6 +944,26 @@ Test point position upon removal and insertion."
                         (call-interactively 'markdown-insert-list-item)
                         (should (string-equal (buffer-string)  "9.\tfoo\n10.\t"))))
 
+(ert-deftest test-markdown-insertion/nested-list-marker ()
+  "Test marker detection for `markdown-insert-list-item'."
+  (markdown-test-string
+   "1. A\n    * AA\n        1. AAA"
+   (goto-char (point-max))
+   (let ((current-prefix-arg '(4)))
+     (call-interactively 'markdown-insert-list-item))
+   (should (eq (point) 36))
+   (should (looking-back "\* "))
+   (should (string-equal
+            (buffer-string)
+            "1. A\n    * AA\n        1. AAA\n    * "))
+   (let ((current-prefix-arg '(4)))
+     (call-interactively 'markdown-insert-list-item))
+   (should (eq (point) 40))
+   (should (looking-back "2\. "))
+   (should (string-equal
+            (buffer-string)
+            "1. A\n    * AA\n        1. AAA\n    * \n2. "))))
+
 (ert-deftest test-markdown-insertion/reference-link ()
   "Basic tests for `markdown-insert-reference-link'."
   ;; Test optional parameters (leave point after link)