diff --git a/packages/eslint-plugin/src/rules/explicit-function-return-type.ts b/packages/eslint-plugin/src/rules/explicit-function-return-type.ts
index d135f4c1a0d3..cba0a6dc712b 100644
--- a/packages/eslint-plugin/src/rules/explicit-function-return-type.ts
+++ b/packages/eslint-plugin/src/rules/explicit-function-return-type.ts
@@ -2,6 +2,7 @@ import type { TSESTree } from '@typescript-eslint/utils';
 import { AST_NODE_TYPES } from '@typescript-eslint/utils';
 
 import { createRule } from '../util';
+import type { FunctionInfo } from '../util/explicitReturnTypeUtils';
 import {
   ancestorHasReturnType,
   checkFunctionReturnType,
@@ -98,6 +99,18 @@ export default createRule<Options, MessageIds>({
     },
   ],
   create(context, [options]) {
+    const functionInfo: FunctionInfo[] = [];
+
+    function pushFunctionInfo(): void {
+      functionInfo.push({
+        returns: [],
+      });
+    }
+
+    function popFunctionInfo(): FunctionInfo {
+      return functionInfo.pop()!;
+    }
+
     function isAllowedFunction(
       node:
         | TSESTree.ArrowFunctionExpression
@@ -168,41 +181,54 @@ export default createRule<Options, MessageIds>({
       return node.parent.type === AST_NODE_TYPES.CallExpression;
     }
 
-    return {
-      'ArrowFunctionExpression, FunctionExpression'(
-        node: TSESTree.ArrowFunctionExpression | TSESTree.FunctionExpression,
-      ): void {
-        if (
-          options.allowConciseArrowFunctionExpressionsStartingWithVoid &&
-          node.type === AST_NODE_TYPES.ArrowFunctionExpression &&
-          node.expression &&
-          node.body.type === AST_NODE_TYPES.UnaryExpression &&
-          node.body.operator === 'void'
-        ) {
-          return;
-        }
+    function exitFunctionExpression(
+      node: TSESTree.ArrowFunctionExpression | TSESTree.FunctionExpression,
+    ): void {
+      const functionInfo = popFunctionInfo();
 
-        if (isAllowedFunction(node)) {
-          return;
-        }
+      if (
+        options.allowConciseArrowFunctionExpressionsStartingWithVoid &&
+        node.type === AST_NODE_TYPES.ArrowFunctionExpression &&
+        node.expression &&
+        node.body.type === AST_NODE_TYPES.UnaryExpression &&
+        node.body.operator === 'void'
+      ) {
+        return;
+      }
 
-        if (
-          options.allowTypedFunctionExpressions &&
-          (isValidFunctionExpressionReturnType(node, options) ||
-            ancestorHasReturnType(node))
-        ) {
-          return;
-        }
+      if (isAllowedFunction(node)) {
+        return;
+      }
+
+      if (
+        options.allowTypedFunctionExpressions &&
+        (isValidFunctionExpressionReturnType(node, options) ||
+          ancestorHasReturnType(node))
+      ) {
+        return;
+      }
 
-        checkFunctionReturnType(node, options, context.sourceCode, loc =>
+      checkFunctionReturnType(
+        node,
+        options,
+        context.sourceCode,
+        functionInfo,
+        loc =>
           context.report({
             node,
             loc,
             messageId: 'missingReturnType',
           }),
-        );
-      },
-      FunctionDeclaration(node): void {
+      );
+    }
+
+    return {
+      'ArrowFunctionExpression, FunctionExpression': pushFunctionInfo,
+      'ArrowFunctionExpression:exit': exitFunctionExpression,
+      'FunctionExpression:exit': exitFunctionExpression,
+      FunctionDeclaration: pushFunctionInfo,
+      'FunctionDeclaration:exit'(node): void {
+        const functionInfo = popFunctionInfo();
         if (isAllowedFunction(node)) {
           return;
         }
@@ -210,14 +236,23 @@ export default createRule<Options, MessageIds>({
           return;
         }
 
-        checkFunctionReturnType(node, options, context.sourceCode, loc =>
-          context.report({
-            node,
-            loc,
-            messageId: 'missingReturnType',
-          }),
+        checkFunctionReturnType(
+          node,
+          options,
+          context.sourceCode,
+          functionInfo,
+          loc =>
+            context.report({
+              node,
+              loc,
+              messageId: 'missingReturnType',
+            }),
         );
       },
+      ReturnStatement(node): void {
+        const current = functionInfo[functionInfo.length - 1];
+        current.returns.push(node);
+      },
     };
   },
 });
diff --git a/packages/eslint-plugin/src/util/explicitReturnTypeUtils.ts b/packages/eslint-plugin/src/util/explicitReturnTypeUtils.ts
index 512ff62202b9..8e12485edcb4 100644
--- a/packages/eslint-plugin/src/util/explicitReturnTypeUtils.ts
+++ b/packages/eslint-plugin/src/util/explicitReturnTypeUtils.ts
@@ -1,5 +1,9 @@
 import type { TSESLint, TSESTree } from '@typescript-eslint/utils';
-import { AST_NODE_TYPES, ESLintUtils } from '@typescript-eslint/utils';
+import {
+  AST_NODE_TYPES,
+  ASTUtils,
+  ESLintUtils,
+} from '@typescript-eslint/utils';
 
 import { isConstructor, isSetter, isTypeAssertion } from './astUtils';
 import { getFunctionHeadLoc } from './getFunctionHeadLoc';
@@ -9,6 +13,10 @@ type FunctionExpression =
   | TSESTree.FunctionExpression;
 type FunctionNode = FunctionExpression | TSESTree.FunctionDeclaration;
 
+export interface FunctionInfo {
+  returns: TSESTree.ReturnStatement[];
+}
+
 /**
  * Checks if a node is a variable declarator with a type annotation.
  * ```
@@ -133,27 +141,23 @@ function isPropertyOfObjectWithType(
  * function fn() { return function() { ... } }
  * ```
  */
-function doesImmediatelyReturnFunctionExpression({
-  body,
-}: FunctionNode): boolean {
-  // Check if body is a block with a single statement
-  if (body.type === AST_NODE_TYPES.BlockStatement && body.body.length === 1) {
-    const [statement] = body.body;
-
-    // Check if that statement is a return statement with an argument
-    if (
-      statement.type === AST_NODE_TYPES.ReturnStatement &&
-      !!statement.argument
-    ) {
-      // If so, check that returned argument as body
-      body = statement.argument;
-    }
+function doesImmediatelyReturnFunctionExpression(
+  node: FunctionNode,
+  functionInfo: FunctionInfo,
+): boolean {
+  if (
+    node.type === AST_NODE_TYPES.ArrowFunctionExpression &&
+    ASTUtils.isFunction(node.body)
+  ) {
+    return true;
   }
 
-  // Check if the body being returned is a function expression
-  return (
-    body.type === AST_NODE_TYPES.ArrowFunctionExpression ||
-    body.type === AST_NODE_TYPES.FunctionExpression
+  if (functionInfo.returns.length === 0) {
+    return false;
+  }
+
+  return functionInfo.returns.every(
+    node => node.argument && ASTUtils.isFunction(node.argument),
   );
 }
 
@@ -253,10 +257,11 @@ function isValidFunctionExpressionReturnType(
 function isValidFunctionReturnType(
   node: FunctionNode,
   options: Options,
+  functionInfo: FunctionInfo,
 ): boolean {
   if (
     options.allowHigherOrderFunctions &&
-    doesImmediatelyReturnFunctionExpression(node)
+    doesImmediatelyReturnFunctionExpression(node, functionInfo)
   ) {
     return true;
   }
@@ -275,9 +280,10 @@ function checkFunctionReturnType(
   node: FunctionNode,
   options: Options,
   sourceCode: TSESLint.SourceCode,
+  functionInfo: FunctionInfo,
   report: (loc: TSESTree.SourceLocation) => void,
 ): void {
-  if (isValidFunctionReturnType(node, options)) {
+  if (isValidFunctionReturnType(node, options, functionInfo)) {
     return;
   }
 
@@ -291,13 +297,14 @@ function checkFunctionExpressionReturnType(
   node: FunctionExpression,
   options: Options,
   sourceCode: TSESLint.SourceCode,
+  functionInfo: FunctionInfo,
   report: (loc: TSESTree.SourceLocation) => void,
 ): void {
   if (isValidFunctionExpressionReturnType(node, options)) {
     return;
   }
 
-  checkFunctionReturnType(node, options, sourceCode, report);
+  checkFunctionReturnType(node, options, sourceCode, functionInfo, report);
 }
 
 /**
diff --git a/packages/eslint-plugin/tests/rules/explicit-function-return-type.test.ts b/packages/eslint-plugin/tests/rules/explicit-function-return-type.test.ts
index 8b0a05d6b5b4..994262a88319 100644
--- a/packages/eslint-plugin/tests/rules/explicit-function-return-type.test.ts
+++ b/packages/eslint-plugin/tests/rules/explicit-function-return-type.test.ts
@@ -267,6 +267,17 @@ const myObj = {
     },
     {
       code: `
+() => {
+  const foo = 'foo';
+  return function (): string {
+    return foo;
+  };
+};
+      `,
+      options: [{ allowHigherOrderFunctions: true }],
+    },
+    {
+      code: `
 function fn() {
   return (): void => {};
 }
@@ -276,6 +287,31 @@ function fn() {
     {
       code: `
 function fn() {
+  return function (): void {};
+}
+      `,
+      options: [{ allowHigherOrderFunctions: true }],
+    },
+    {
+      code: `
+function fn() {
+  const bar = () => (): number => 1;
+  return function (): void {};
+}
+      `,
+      options: [{ allowHigherOrderFunctions: true }],
+    },
+    {
+      code: `
+function fn(arg: boolean) {
+  if (arg) {
+    return () => (): number => 1;
+  } else {
+    return function (): string {
+      return 'foo';
+    };
+  }
+
   return function (): void {};
 }
       `,
@@ -1230,6 +1266,25 @@ function fn() {
     },
     {
       code: `
+function fn() {
+  const bar = () => (): number => 1;
+  const baz = () => () => 'baz';
+  return function (): void {};
+}
+      `,
+      options: [{ allowHigherOrderFunctions: true }],
+      errors: [
+        {
+          messageId: 'missingReturnType',
+          line: 4,
+          endLine: 4,
+          column: 24,
+          endColumn: 26,
+        },
+      ],
+    },
+    {
+      code: `
 function FunctionDeclaration() {
   return function FunctionExpression_Within_FunctionDeclaration() {
     return function FunctionExpression_Within_FunctionExpression() {