diff --git a/test/dynamo/test_repros.py b/test/dynamo/test_repros.py
index 66ca040dd41..74f5e3749c6 100644
--- a/test/dynamo/test_repros.py
+++ b/test/dynamo/test_repros.py
@@ -5912,6 +5912,22 @@ def forward(self, s0 : torch.SymInt, s1 : torch.SymInt, L_x_ : torch.Tensor):
             actual[1].untyped_storage().data_ptr(),
         )
 
+    def test_torch_compile_in_compile_frame(self):
+        # TODO(anijain2305/yanboliang) - Dont graph break on torch.compile.
+        def gn(x, c=None):
+            if c is None:
+                c = 2
+            return c * x
+
+        def outer_func(x):
+            return torch.compile(gn)(x)
+
+        compile_outer = torch.compile(outer_func, backend="eager")
+        x = torch.randn(4)
+        ref = outer_func(x)
+        res = compile_outer(x)
+        self.assertEqual(ref, res)
+
 
 instantiate_parametrized_tests(ReproTests)
 
diff --git a/torch/_dynamo/variables/builder.py b/torch/_dynamo/variables/builder.py
index f7ac4d073b5..bf1cbed10b8 100644
--- a/torch/_dynamo/variables/builder.py
+++ b/torch/_dynamo/variables/builder.py
@@ -547,11 +547,6 @@ class VariableBuilder:
         if id_dispatch is not None:
             return id_dispatch(self, value)
 
-        # Note - There are some nested values where types mismatch!
-        # We want to get those out and wrap those.
-        if is_function_or_wrapper(value):
-            value = inspect.getattr_static(value, "_torchdynamo_inline", value)
-
         # Everything else (NB: order matters!)
         if is_traceable_wrapper_subclass(value) or istype(
             value, config.traceable_tensor_subclasses
@@ -988,6 +983,13 @@ class VariableBuilder:
         elif is_lru_cache_wrapped_function(value):
             self.install_guards(GuardBuilder.TYPE_MATCH)
             return WrapperUserFunctionVariable(value, "__wrapped__", source=self.source)
+        elif is_function_or_wrapper(value) and inspect.getattr_static(
+            value, "_torchdynamo_inline", False
+        ):
+            self.install_guards(GuardBuilder.TYPE_MATCH)
+            return WrapperUserFunctionVariable(
+                value, "_torchdynamo_inline", source=self.source
+            )
         elif is_function_or_wrapper(value):
             value, attr_name = unwrap_with_attr_name_if_wrapper(value)
             # For these wrappers, Dynamo points to the wrapped function,
diff --git a/torch/_dynamo/variables/functions.py b/torch/_dynamo/variables/functions.py
index 90c2d0665ae..c7324960fb9 100644
--- a/torch/_dynamo/variables/functions.py
+++ b/torch/_dynamo/variables/functions.py
@@ -152,6 +152,8 @@ class UserFunctionVariable(BaseUserFunctionVariable):
         assert isinstance(
             fn, (types.FunctionType, torch.jit.ScriptFunction)
         ), f"expected FunctionType found {typestr(fn)} {fn}"
+        # TODO(anijain2305) - Replace directly calling UserFunctionVariable with
+        # VariableBuilder, which handles the wrapping of _torchdynamo_inline.
         # unpack @torch._dynamo.optimize()(fn) wrapped function
         fn = inspect.getattr_static(fn, "_torchdynamo_inline", fn)
         self.fn: types.FunctionType = fn