diff --git a/packages/eslint-plugin/src/rules/explicit-module-boundary-types.ts b/packages/eslint-plugin/src/rules/explicit-module-boundary-types.ts
index fe4dbf28662..49fdfc1d5a0 100644
--- a/packages/eslint-plugin/src/rules/explicit-module-boundary-types.ts
+++ b/packages/eslint-plugin/src/rules/explicit-module-boundary-types.ts
@@ -4,7 +4,6 @@ import {
 } from '@typescript-eslint/experimental-utils';
 import * as util from '../util';
 import {
-  ancestorHasReturnType,
   checkFunctionExpressionReturnType,
   checkFunctionReturnType,
   doesImmediatelyReturnFunctionExpression,
@@ -377,6 +376,51 @@ export default util.createRule<Options, MessageIds>({
       }
     }
 
+    /**
+     * Check whether any ancestor of the provided function has a valid return type.
+     * This function assumes that the function either:
+     * - belongs to an exported function chain validated by isExportedHigherOrderFunction
+     * - is directly exported itself
+     */
+    function ancestorHasReturnType(node: FunctionNode): boolean {
+      let ancestor = node.parent;
+
+      // if the ancestor is not a return, then this function was not returned at all, so we can exit early
+      const isReturnStatement =
+        ancestor?.type === AST_NODE_TYPES.ReturnStatement;
+      const isBodylessArrow =
+        ancestor?.type === AST_NODE_TYPES.ArrowFunctionExpression &&
+        ancestor.body.type !== AST_NODE_TYPES.BlockStatement;
+      if (!isReturnStatement && !isBodylessArrow) {
+        return false;
+      }
+
+      while (ancestor) {
+        switch (ancestor.type) {
+          case AST_NODE_TYPES.ArrowFunctionExpression:
+          case AST_NODE_TYPES.FunctionExpression:
+          case AST_NODE_TYPES.FunctionDeclaration:
+            if (ancestor.returnType) {
+              return true;
+            }
+            // assume
+            break;
+
+          // const x: Foo = () => {};
+          // Assume that a typed variable types the function expression
+          case AST_NODE_TYPES.VariableDeclarator:
+            if (ancestor.id.typeAnnotation) {
+              return true;
+            }
+            break;
+        }
+
+        ancestor = ancestor.parent;
+      }
+
+      return false;
+    }
+
     function checkEmptyBodyFunctionExpression(
       node: TSESTree.TSEmptyBodyFunctionExpression,
     ): void {
@@ -402,7 +446,7 @@ export default util.createRule<Options, MessageIds>({
       if (
         isAllowedName(node.parent) ||
         isTypedFunctionExpression(node, options) ||
-        ancestorHasReturnType(node.parent)
+        ancestorHasReturnType(node)
       ) {
         return;
       }
@@ -424,7 +468,7 @@ export default util.createRule<Options, MessageIds>({
       }
       checkedFunctions.add(node);
 
-      if (isAllowedName(node.parent) || ancestorHasReturnType(node.parent)) {
+      if (isAllowedName(node.parent) || ancestorHasReturnType(node)) {
         return;
       }
 
diff --git a/packages/eslint-plugin/src/util/explicitReturnTypeUtils.ts b/packages/eslint-plugin/src/util/explicitReturnTypeUtils.ts
index 6c9c76645ac..466e7d207eb 100644
--- a/packages/eslint-plugin/src/util/explicitReturnTypeUtils.ts
+++ b/packages/eslint-plugin/src/util/explicitReturnTypeUtils.ts
@@ -347,37 +347,7 @@ function checkFunctionExpressionReturnType(
   checkFunctionReturnType(node, options, sourceCode, report);
 }
 
-/**
- * Check whether any ancestor of the provided node has a valid return type, with
- * the given options.
- */
-function ancestorHasReturnType(ancestor: TSESTree.Node | undefined): boolean {
-  // if the ancestor is not a return, then this function was not returned at all, so we can exit early
-  const isReturnStatne = ancestor?.type === AST_NODE_TYPES.ReturnStatement;
-  const isBodylessArrow =
-    ancestor?.type === AST_NODE_TYPES.ArrowFunctionExpression &&
-    ancestor.body.type !== AST_NODE_TYPES.BlockStatement;
-  if (!isReturnStatne && !isBodylessArrow) {
-    return false;
-  }
-
-  while (ancestor) {
-    switch (ancestor.type) {
-      case AST_NODE_TYPES.ArrowFunctionExpression:
-      case AST_NODE_TYPES.FunctionExpression:
-      case AST_NODE_TYPES.FunctionDeclaration:
-        return ancestor.returnType != null;
-    }
-
-    ancestor = ancestor.parent;
-  }
-
-  /* istanbul ignore next */
-  return false;
-}
-
 export {
-  ancestorHasReturnType,
   checkFunctionExpressionReturnType,
   checkFunctionReturnType,
   doesImmediatelyReturnFunctionExpression,
diff --git a/packages/eslint-plugin/tests/rules/explicit-module-boundary-types.test.ts b/packages/eslint-plugin/tests/rules/explicit-module-boundary-types.test.ts
index 44aa3c3d066..114b26aed0f 100644
--- a/packages/eslint-plugin/tests/rules/explicit-module-boundary-types.test.ts
+++ b/packages/eslint-plugin/tests/rules/explicit-module-boundary-types.test.ts
@@ -624,6 +624,28 @@ export function foo(arg = 1): void {}
 export const foo = (): ((n: number) => string) => n => String(n);
       `,
     },
+    // https://github.com/typescript-eslint/typescript-eslint/issues/2173
+    `
+export function foo(): (n: number) => (m: number) => string {
+  return function (n) {
+    return function (m) {
+      return String(n + m);
+    };
+  };
+}
+    `,
+    `
+export const foo = (): ((n: number) => (m: number) => string) => n => m =>
+  String(n + m);
+    `,
+    `
+export const bar: () => (n: number) => string = () => n => String(n);
+    `,
+    `
+type Buz = () => (n: number) => string;
+
+export const buz: Buz = () => n => String(n);
+    `,
   ],
   invalid: [
     {