diff --git a/lib/gitlab/ci/config/extendable/collection.rb b/lib/gitlab/ci/config/extendable/collection.rb
index 123219c90f2..13d81987b7a 100644
--- a/lib/gitlab/ci/config/extendable/collection.rb
+++ b/lib/gitlab/ci/config/extendable/collection.rb
@@ -8,6 +8,7 @@ module Gitlab
           ExtensionError = Class.new(StandardError)
           InvalidExtensionError = Class.new(ExtensionError)
           CircularDependencyError = Class.new(ExtensionError)
+          NestingTooDeepError = Class.new(ExtensionError)
 
           def initialize(hash)
             @hash = hash.to_h.deep_dup
diff --git a/lib/gitlab/ci/config/extendable/entry.rb b/lib/gitlab/ci/config/extendable/entry.rb
index f14d2c1817c..d1fd8005b71 100644
--- a/lib/gitlab/ci/config/extendable/entry.rb
+++ b/lib/gitlab/ci/config/extendable/entry.rb
@@ -3,6 +3,8 @@ module Gitlab
     class Config
       module Extendable
         class Entry
+          MAX_NESTING_LEVELS = 10
+
           attr_reader :key
 
           def initialize(key, context, parent = nil)
@@ -10,7 +12,9 @@ module Gitlab
             @context = context
             @parent = parent
 
-            raise StandardError, 'Invalid entry key!' unless @context.key?(@key)
+            unless @context.key?(@key)
+              raise StandardError, 'Invalid entry key!'
+            end
           end
 
           def extensible?
@@ -31,8 +35,8 @@ module Gitlab
             value.fetch(:extends).to_s.to_sym if extensible?
           end
 
-          def path
-            Array(@parent&.path).compact.push(key)
+          def ancestors
+            @ancestors ||= Array(@parent&.ancestors) + Array(@parent&.key)
           end
 
           def extend!
@@ -48,6 +52,11 @@ module Gitlab
                     "Invalid base hash in extended `#{key}`!"
             end
 
+            if nesting_too_deep?
+              raise Extendable::Collection::NestingTooDeepError,
+                    "`extends` nesting too deep in `#{key}`!"
+            end
+
             if circular_dependency?
               raise Extendable::Collection::CircularDependencyError,
                     "Circular dependency detected in extended `#{key}`!"
@@ -58,8 +67,12 @@ module Gitlab
 
           private
 
+          def nesting_too_deep?
+            ancestors.count > MAX_NESTING_LEVELS
+          end
+
           def circular_dependency?
-            path.count(key) > 1
+            ancestors.include?(key)
           end
 
           def unknown_extension?
diff --git a/spec/lib/gitlab/ci/config/extendable/entry_spec.rb b/spec/lib/gitlab/ci/config/extendable/entry_spec.rb
index 2726d91f6d6..8afdff99c7f 100644
--- a/spec/lib/gitlab/ci/config/extendable/entry_spec.rb
+++ b/spec/lib/gitlab/ci/config/extendable/entry_spec.rb
@@ -62,12 +62,17 @@ describe Gitlab::Ci::Config::Extendable::Entry do
     end
   end
 
-  describe '#path' do
-    it 'returns inheritance chain path' do
-      parent = described_class.new(:test, test: { extends: 'something' })
-      child = described_class.new(:job, { job: { script: 'something' } }, parent)
+  describe '#ancestors' do
+    let(:parent) do
+      described_class.new(:test, test: { extends: 'something' })
+    end
 
-      expect(child.path).to eq [:test, :job]
+    let(:child) do
+      described_class.new(:job, { job: { script: 'something' } }, parent)
+    end
+
+    it 'returns ancestors keys' do
+      expect(child.ancestors).to eq [:test]
     end
   end
 
@@ -196,5 +201,24 @@ describe Gitlab::Ci::Config::Extendable::Entry do
           .to raise_error(StandardError, /Circular dependency detected/)
       end
     end
+
+    context 'when nesting level is too deep' do
+      before do
+        stub_const("#{described_class}::MAX_NESTING_LEVELS", 0)
+      end
+
+      let(:hash) do
+        {
+          first: { script: 'my value' },
+          second: { extends: 'first' },
+          test: { extends: 'second' }
+        }
+      end
+
+      it 'raises an error' do
+        expect { subject.extend! }
+          .to raise_error(Gitlab::Ci::Config::Extendable::Collection::NestingTooDeepError)
+      end
+    end
   end
 end