diff --git a/doc_src/language.rst b/doc_src/language.rst
index 831515bb9..d1bb2b2cb 100644
--- a/doc_src/language.rst
+++ b/doc_src/language.rst
@@ -1248,7 +1248,7 @@ Fish also provides additional information through the values of certain environm
 
 - ``pipestatus``, a list of exit statuses of all processes that made up the last executed pipe.
 
-- ``SHLVL``, the level of nesting of shells.
+- ``SHLVL``, the level of nesting of shells. Fish increments this in interactive shells, otherwise it simply passes it along.
 
 - ``status``, the `exit status <#variables-status>`_ of the last foreground job to exit. If the job was terminated through a signal, the exit status will be 128 plus the signal number.
 
diff --git a/src/env.cpp b/src/env.cpp
index db6361241..956d7b583 100644
--- a/src/env.cpp
+++ b/src/env.cpp
@@ -351,16 +351,23 @@ void env_init(const struct config_paths_t *paths /* or NULL */) {
 
     // Set up SHLVL variable. Not we can't use vars.get() because SHLVL is read-only, and therefore
     // was not inherited from the environment.
-    wcstring nshlvl_str = L"1";
-    if (const char *shlvl_var = getenv("SHLVL")) {
-        const wchar_t *end;
-        // TODO: Figure out how to handle invalid numbers better. Shouldn't we issue a diagnostic?
-        long shlvl_i = fish_wcstol(str2wcstring(shlvl_var).c_str(), &end);
-        if (!errno && shlvl_i >= 0) {
-            nshlvl_str = to_string(shlvl_i + 1);
+    if (is_interactive_session()) {
+        wcstring nshlvl_str = L"1";
+        if (const char *shlvl_var = getenv("SHLVL")) {
+            const wchar_t *end;
+            // TODO: Figure out how to handle invalid numbers better. Shouldn't we issue a diagnostic?
+            long shlvl_i = fish_wcstol(str2wcstring(shlvl_var).c_str(), &end);
+            if (!errno && shlvl_i >= 0) {
+                nshlvl_str = to_string(shlvl_i + 1);
+            }
+        }
+        vars.set_one(L"SHLVL", ENV_GLOBAL | ENV_EXPORT, nshlvl_str);
+    } else {
+        // If we're not interactive, simply pass the value along.
+        if (const char *shlvl_var = getenv("SHLVL")) {
+            vars.set_one(L"SHLVL", ENV_GLOBAL | ENV_EXPORT, str2wcstring(shlvl_var));
         }
     }
-    vars.set_one(L"SHLVL", ENV_GLOBAL | ENV_EXPORT, nshlvl_str);
 
     // initialize the PWD variable if necessary
     // Note we may inherit a virtual PWD that doesn't match what getcwd would return; respect that
diff --git a/src/exec.cpp b/src/exec.cpp
index 0613668e8..6e6fcc02b 100644
--- a/src/exec.cpp
+++ b/src/exec.cpp
@@ -240,15 +240,17 @@ static void internal_exec(env_stack_t &vars, job_t *j, const io_chain_t &block_i
     dup2_list_t redirs = dup2_list_t::resolve_chain(all_ios);
     if (child_setup_process(INVALID_PID, INVALID_PID, *j, false, redirs) == 0) {
         // Decrement SHLVL as we're removing ourselves from the shell "stack".
-        auto shlvl_var = vars.get(L"SHLVL", ENV_GLOBAL | ENV_EXPORT);
-        wcstring shlvl_str = L"0";
-        if (shlvl_var) {
-            long shlvl = fish_wcstol(shlvl_var->as_string().c_str());
-            if (!errno && shlvl > 0) {
-                shlvl_str = to_string(shlvl - 1);
+        if (is_interactive_session()) {
+            auto shlvl_var = vars.get(L"SHLVL", ENV_GLOBAL | ENV_EXPORT);
+            wcstring shlvl_str = L"0";
+            if (shlvl_var) {
+                long shlvl = fish_wcstol(shlvl_var->as_string().c_str());
+                if (!errno && shlvl > 0) {
+                    shlvl_str = to_string(shlvl - 1);
+                }
             }
+            vars.set_one(L"SHLVL", ENV_GLOBAL | ENV_EXPORT, std::move(shlvl_str));
         }
-        vars.set_one(L"SHLVL", ENV_GLOBAL | ENV_EXPORT, std::move(shlvl_str));
 
         // launch_process _never_ returns.
         launch_process_nofork(vars, p);
diff --git a/tests/checks/set.fish b/tests/checks/set.fish
index 2e05e629c..ffa30bb87 100644
--- a/tests/checks/set.fish
+++ b/tests/checks/set.fish
@@ -347,25 +347,32 @@ $FISH -c 'set -q testu; or echo testu undef in sub shell'
 
 # test SHLVL
 # use a subshell to ensure a clean slate
-env SHLVL= $FISH -c 'echo SHLVL: $SHLVL; $FISH -c \'echo SHLVL: $SHLVL\''
+env SHLVL= $FISH -ic 'echo SHLVL: $SHLVL; $FISH -ic \'echo SHLVL: $SHLVL\''
 # CHECK: SHLVL: 1
 # CHECK: SHLVL: 2
 
-# exec should decrement SHLVL
-env SHLVL= $FISH -c 'echo SHLVL: $SHLVL; exec $FISH -c \'echo SHLVL: $SHLVL\''
-# CHECK: SHLVL: 1
-# CHECK: SHLVL: 1
+# exec should decrement SHLVL - outer fish increments by 1, decrements for exec,
+# inner fish increments again so the value stays the same.
+env SHLVL=1 $FISH -ic 'echo SHLVL: $SHLVL; exec $FISH -ic \'echo SHLVL: $SHLVL\''
+# CHECK: SHLVL: 2
+# CHECK: SHLVL: 2
 
 # garbage SHLVLs should be treated as garbage
-env SHLVL=3foo $FISH -c 'echo SHLVL: $SHLVL'
+env SHLVL=3foo $FISH -ic 'echo SHLVL: $SHLVL'
 # CHECK: SHLVL: 1
 
 # whitespace is allowed though (for bash compatibility)
-env SHLVL="3  " $FISH -c 'echo SHLVL: $SHLVL'
-env SHLVL="  3" $FISH -c 'echo SHLVL: $SHLVL'
+env SHLVL="3  " $FISH -ic 'echo SHLVL: $SHLVL'
+env SHLVL="  3" $FISH -ic 'echo SHLVL: $SHLVL'
 # CHECK: SHLVL: 4
 # CHECK: SHLVL: 4
 
+# Non-interactive fish doesn't touch $SHLVL
+env SHLVL=2 $FISH -c 'echo SHLVL: $SHLVL'
+# CHECK: SHLVL: 2
+env SHLVL=banana $FISH -c 'echo SHLVL: $SHLVL'
+# CHECK: SHLVL: banana
+
 # Test transformation of inherited variables
 env DISPLAY="localhost:0.0" $FISH -c 'echo Elements in DISPLAY: (count $DISPLAY)'
 # CHECK: Elements in DISPLAY: 1