diff --git a/modules/top-level/nixpkgs.nix b/modules/top-level/nixpkgs.nix
index 3116ec7603..a497f9559a 100644
--- a/modules/top-level/nixpkgs.nix
+++ b/modules/top-level/nixpkgs.nix
@@ -55,31 +55,100 @@ in
         > Use this option with care.
       '';
     };
+
+    overlays = lib.mkOption {
+      type =
+        let
+          overlayType = lib.mkOptionType {
+            name = "nixpkgs-overlay";
+            description = "nixpkgs overlay";
+            check = lib.isFunction;
+            merge = lib.mergeOneOption;
+          };
+        in
+        lib.types.listOf overlayType;
+      default = [ ];
+      # First example from https://nixos.org/manual/nixpkgs/unstable/#what-if-your-favourite-vim-plugin-isnt-already-packaged
+      # Second example from https://github.com/nix-community/nixvim/pull/2430#discussion_r1805700738
+      # Third example from https://github.com/atimofeev/nixos-config/blob/0b1c1c47c4359d6a2aa9a5eeecb32fa89ad08c88/overlays/neovim-unwrapped.nix
+      example = lib.literalExpression ''
+        [
+
+          # Add a vim plugin that isn't packaged in nixpkgs
+          (final: prev: {
+            easygrep = final.vimUtils.buildVimPlugin {
+              name = "vim-easygrep";
+              src = final.fetchFromGitHub {
+                owner = "dkprice";
+                repo = "vim-easygrep";
+                rev = "d0c36a77cc63c22648e792796b1815b44164653a";
+                hash = "sha256-bL33/S+caNmEYGcMLNCanFZyEYUOUmSsedCVBn4tV3g=";
+              };
+            };
+          })
+
+          # Override neovim-unwrapped with one from a flake input
+          # Using `stdenv.hostPlatform` to access `system`
+          (final: prev: {
+            neovim-unwrapped =
+              inputs.neovim-nightly-overlay.packages.''${final.stdenv.hostPlatform.system}.default;
+          })
+
+          # Override neovim-unwrapped to tweak its desktop entry
+          (final: prev: {
+            neovim-unwrapped = prev.neovim-unwrapped.overrideAttrs (old: {
+              postInstall = old.postInstall or "" + '''
+                substituteInPlace $out/share/applications/nvim.desktop \
+                  --replace "TryExec=nvim" "" \
+                  --replace "Terminal=true" "Terminal=false" \
+                  --replace "Exec=nvim %F" "Exec=kitty -e nvim %F"
+              ''';
+            });
+          })
+
+        ]
+      '';
+      description = ''
+        List of overlays to apply to Nixpkgs.
+        This option allows modifying the Nixpkgs package set accessed through the `pkgs` module argument.
+
+        For details, see the [Overlays chapter in the Nixpkgs manual](https://nixos.org/manual/nixpkgs/stable/#chap-overlays).
+
+        <!-- TODO: Remove -->
+        Overlays specified using the {option}`nixpkgs.overlays` option will be
+        applied after the overlays that were already included in `nixpkgs.pkgs`.
+
+        <!--
+          TODO:
+          If the {option}`nixpkgs.pkgs` option is set, overlays specified using `nixpkgs.overlays`
+          will be applied after the overlays that were already included in `nixpkgs.pkgs`.
+        -->
+      '';
+    };
   };
 
-  config = {
-    # For now we only set this when `nixpkgs.pkgs` is defined
-    # TODO: construct a default pkgs instance from pkgsPath and cfg options
-    # https://github.com/nix-community/nixvim/issues/1784
-    _module.args = lib.optionalAttrs opt.pkgs.isDefined {
+  config =
+    let
+      # TODO: construct a default pkgs instance from pkgsPath and cfg options
+      # https://github.com/nix-community/nixvim/issues/1784
+
+      finalPkgs =
+        if opt.pkgs.isDefined then
+          cfg.pkgs.appendOverlays cfg.overlays
+        else
+          # TODO: Remove once pkgs can be constructed internally
+          throw ''
+            nixvim: `nixpkgs.pkgs` is not defined. In the future, this option will be optional.
+            Currently a pkgs instance must be evaluated externally and assigned to `nixpkgs.pkgs` option.
+          '';
+    in
+    {
       # We explicitly set the default override priority, so that we do not need
       # to evaluate finalPkgs in case an override is placed on `_module.args.pkgs`.
       # After all, to determine a definition priority, we need to evaluate `._type`,
       # which is somewhat costly for Nixpkgs. With an explicit priority, we only
       # evaluate the wrapper to find out that the priority is lower, and then we
       # don't need to evaluate `finalPkgs`.
-      pkgs = lib.mkOverride lib.modules.defaultOverridePriority cfg.pkgs.__splicedPackages;
+      _module.args.pkgs = lib.mkOverride lib.modules.defaultOverridePriority finalPkgs.__splicedPackages;
     };
-
-    assertions = [
-      {
-        # TODO: Remove or rephrase once pkgs can be constructed internally
-        assertion = config._module.args ? pkgs;
-        message = ''
-          `nixpkgs.pkgs` is not defined. In the future, this option will be optional.
-          Currently a pkgs instance must be evaluated externally and assigned to `nixpkgs.pkgs` option.
-        '';
-      }
-    ];
-  };
 }
diff --git a/tests/main.nix b/tests/main.nix
index e2c2de1ba4..a205b450c9 100644
--- a/tests/main.nix
+++ b/tests/main.nix
@@ -7,6 +7,8 @@
   linkFarm,
   pkgs,
   pkgsUnfree,
+  self,
+  system,
 }:
 let
   fetchTests = callTest ./fetch-tests.nix { };
@@ -20,6 +22,11 @@ let
       module = {
         _file = file;
         imports = [ module ];
+        _module.args = {
+          # Give tests access to the flake
+          inherit self system;
+          inherit (self) inputs;
+        };
       };
       pkgs = pkgsUnfree;
     };
diff --git a/tests/test-sources/modules/nixpkgs.nix b/tests/test-sources/modules/nixpkgs.nix
new file mode 100644
index 0000000000..6efce76a93
--- /dev/null
+++ b/tests/test-sources/modules/nixpkgs.nix
@@ -0,0 +1,74 @@
+{
+  # TODO: expect not setting `nixpkgs.pkgs` to throw
+
+  overlays =
+    { pkgs, ... }:
+    {
+      test.runNvim = false;
+
+      nixpkgs.overlays = [
+        (final: prev: {
+          foobar = "foobar";
+        })
+      ];
+
+      assertions = [
+        {
+          assertion = pkgs.foobar or null == "foobar";
+          message = ''
+            Expected `pkgs.foobar` to be "foobar"
+          '';
+        }
+      ];
+    };
+
+  # Test that overlays from both `nixpkgs.pkgs` _and_ `nixpkgs.overlays` are applied
+  stacked_overlays =
+    {
+      inputs,
+      system,
+      pkgs,
+      ...
+    }:
+    {
+      test.runNvim = false;
+
+      nixpkgs.pkgs = import inputs.nixpkgs {
+        inherit system;
+        overlays = [
+          (final: prev: {
+            foobar = "foobar";
+            conflict = "a";
+          })
+        ];
+      };
+
+      nixpkgs.overlays = [
+        (final: prev: {
+          hello = "world";
+          conflict = "b";
+        })
+      ];
+
+      assertions = [
+        {
+          assertion = pkgs.foobar or null == "foobar";
+          message = ''
+            Expected `pkgs.foobar` to be "foobar"
+          '';
+        }
+        {
+          assertion = pkgs.hello or null == "world";
+          message = ''
+            Expected `pkgs.hello` to be "world"
+          '';
+        }
+        {
+          assertion = pkgs.conflict or null == "b";
+          message = ''
+            Expected `pkgs.conflict` to be "b"
+          '';
+        }
+      ];
+    };
+}