diff --git a/src/core/outlet_observer.ts b/src/core/outlet_observer.ts
index b0956f47..5de9fca2 100644
--- a/src/core/outlet_observer.ts
+++ b/src/core/outlet_observer.ts
@@ -95,7 +95,9 @@ export class OutletObserver implements AttributeObserverDelegate, SelectorObserv
     const hasOutletController = element.matches(`[${this.schema.controllerAttribute}~=${outletName}]`)
 
     if (selector) {
-      return hasOutlet && hasOutletController && element.matches(selector)
+      const matches =
+        element.matches(selector) || Array.from(this.context.element.querySelectorAll(selector)).includes(element)
+      return hasOutlet && hasOutletController && matches
     } else {
       return false
     }
diff --git a/src/core/outlet_set.ts b/src/core/outlet_set.ts
index b8ca77b4..f0135742 100644
--- a/src/core/outlet_set.ts
+++ b/src/core/outlet_set.ts
@@ -66,6 +66,8 @@ export class OutletSet {
 
   private matchesElement(element: Element, selector: string, outletName: string): boolean {
     const controllerAttribute = element.getAttribute(this.scope.schema.controllerAttribute) || ""
-    return element.matches(selector) && controllerAttribute.split(" ").includes(outletName)
+    const matches =
+      element.matches(selector) || Array.from(this.controllerElement.querySelectorAll(selector)).includes(element)
+    return matches && controllerAttribute.split(" ").includes(outletName)
   }
 }
diff --git a/src/mutation-observers/selector_observer.ts b/src/mutation-observers/selector_observer.ts
index 6321de64..33651fd9 100644
--- a/src/mutation-observers/selector_observer.ts
+++ b/src/mutation-observers/selector_observer.ts
@@ -61,13 +61,11 @@ export class SelectorObserver implements ElementObserverDelegate {
     const { selector } = this
 
     if (selector) {
-      const matches = element.matches(selector)
-
       if (this.delegate.selectorMatchElement) {
-        return matches && this.delegate.selectorMatchElement(element, this.details)
+        return this.delegate.selectorMatchElement(element, this.details)
       }
 
-      return matches
+      return element.matches(selector)
     } else {
       return false
     }
diff --git a/src/tests/controllers/outlet_controller.ts b/src/tests/controllers/outlet_controller.ts
index b382f80c..e7cb6546 100644
--- a/src/tests/controllers/outlet_controller.ts
+++ b/src/tests/controllers/outlet_controller.ts
@@ -12,7 +12,7 @@ class BaseOutletController extends Controller {
 
 export class OutletController extends BaseOutletController {
   static classes = ["connected", "disconnected"]
-  static outlets = ["beta", "gamma", "delta", "omega", "namespaced--epsilon"]
+  static outlets = ["beta", "gamma", "delta", "omega", "namespaced--epsilon", "zeta"]
 
   static values = {
     alphaOutletConnectedCallCount: Number,
diff --git a/src/tests/modules/core/outlet_tests.ts b/src/tests/modules/core/outlet_tests.ts
index fb87ba12..e85bc978 100644
--- a/src/tests/modules/core/outlet_tests.ts
+++ b/src/tests/modules/core/outlet_tests.ts
@@ -12,6 +12,8 @@ export default class OutletTests extends ControllerTestCase(OutletController) {
         <div id="beta3"></div>
         <div data-controller="beta" id="beta4"></div>
       </div>
+      
+      <div data-controller="zeta" class="zeta"></div>
 
       <div
         data-controller="${this.identifier}"
@@ -21,8 +23,10 @@ export default class OutletTests extends ControllerTestCase(OutletController) {
         data-${this.identifier}-beta-outlet=".beta"
         data-${this.identifier}-delta-outlet=".delta"
         data-${this.identifier}-namespaced--epsilon-outlet=".epsilon"
+        data-${this.identifier}-zeta-outlet=":scope .zeta"
       >
         <div data-controller="gamma" class="gamma" id="gamma2"></div>
+        <div data-controller="zeta" class="zeta" id="inner-zeta"></div>
       </div>
 
       <div data-controller="delta gamma" class="delta gamma" id="delta1">
@@ -36,8 +40,9 @@ export default class OutletTests extends ControllerTestCase(OutletController) {
       <div class="beta" id="beta5"></div>
     </div>
   `
+
   get identifiers() {
-    return ["test", "alpha", "beta", "gamma", "delta", "omega", "namespaced--epsilon"]
+    return ["test", "alpha", "beta", "gamma", "delta", "omega", "namespaced--epsilon", "zeta"]
   }
 
   "test OutletSet#find"() {
@@ -45,6 +50,7 @@ export default class OutletTests extends ControllerTestCase(OutletController) {
     this.assert.equal(this.controller.outlets.find("beta"), this.findElement("#beta1"))
     this.assert.equal(this.controller.outlets.find("delta"), this.findElement("#delta1"))
     this.assert.equal(this.controller.outlets.find("namespaced--epsilon"), this.findElement("#epsilon1"))
+    this.assert.equal(this.controller.outlets.find("zeta"), this.findElement("#inner-zeta"))
   }
 
   "test OutletSet#findAll"() {
@@ -54,12 +60,13 @@ export default class OutletTests extends ControllerTestCase(OutletController) {
       this.controller.outlets.findAll("namespaced--epsilon"),
       this.findElements("#epsilon1", "#epsilon2")
     )
+    this.assert.deepEqual(this.controller.outlets.findAll("zeta"), this.findElements("#inner-zeta"))
   }
 
   "test OutletSet#findAll with multiple arguments"() {
     this.assert.deepEqual(
-      this.controller.outlets.findAll("alpha", "beta", "namespaced--epsilon"),
-      this.findElements("#alpha1", "#alpha2", "#beta1", "#beta2", "#epsilon1", "#epsilon2")
+      this.controller.outlets.findAll("alpha", "beta", "namespaced--epsilon", "zeta"),
+      this.findElements("#alpha1", "#alpha2", "#beta1", "#beta2", "#epsilon1", "#epsilon2", "#inner-zeta")
     )
   }
 
@@ -70,6 +77,7 @@ export default class OutletTests extends ControllerTestCase(OutletController) {
     this.assert.equal(this.controller.outlets.has("delta"), true)
     this.assert.equal(this.controller.outlets.has("omega"), false)
     this.assert.equal(this.controller.outlets.has("namespaced--epsilon"), true)
+    this.assert.equal(this.controller.outlets.has("zeta"), true)
   }
 
   "test OutletSet#has when attribute gets added later"() {