diff --git a/hadoop-yarn-project/CHANGES.txt b/hadoop-yarn-project/CHANGES.txt
index 800f5964091..df1221f1d95 100644
--- a/hadoop-yarn-project/CHANGES.txt
+++ b/hadoop-yarn-project/CHANGES.txt
@@ -592,6 +592,9 @@ Release 2.8.0 - UNRELEASED
     YARN-3930. FileSystemNodeLabelsStore should make sure edit log file closed when 
     exception is thrown. (Dian Fu via wangda)
 
+    YARN-3885. ProportionalCapacityPreemptionPolicy doesn't preempt if queue is 
+    more than 2 level. (Ajith S via wangda)
+
 Release 2.7.2 - UNRELEASED
 
   INCOMPATIBLE CHANGES
diff --git a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/main/java/org/apache/hadoop/yarn/server/resourcemanager/monitor/capacity/ProportionalCapacityPreemptionPolicy.java b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/main/java/org/apache/hadoop/yarn/server/resourcemanager/monitor/capacity/ProportionalCapacityPreemptionPolicy.java
index 6e661d4b670..1152cef3778 100644
--- a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/main/java/org/apache/hadoop/yarn/server/resourcemanager/monitor/capacity/ProportionalCapacityPreemptionPolicy.java
+++ b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/main/java/org/apache/hadoop/yarn/server/resourcemanager/monitor/capacity/ProportionalCapacityPreemptionPolicy.java
@@ -896,8 +896,10 @@ public class ProportionalCapacityPreemptionPolicy implements SchedulingEditPolic
           ret.untouchableExtra = Resource.newInstance(0, 0);
         } else {
           ret.untouchableExtra =
-                Resources.subtractFrom(extra, childrensPreemptable);
+                Resources.subtract(extra, childrensPreemptable);
         }
+        ret.preemptableExtra = Resources.min(
+            rc, partitionResource, childrensPreemptable, extra);
       }
     }
     addTempQueuePartition(ret);
@@ -1127,4 +1129,8 @@ public class ProportionalCapacityPreemptionPolicy implements SchedulingEditPolic
     }
   }
 
+  @VisibleForTesting
+  public Map<String, Map<String, TempQueuePerPartition>> getQueuePartitions() {
+    return queueToPartitions;
+  }
 }
diff --git a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/test/java/org/apache/hadoop/yarn/server/resourcemanager/monitor/capacity/TestProportionalCapacityPreemptionPolicy.java b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/test/java/org/apache/hadoop/yarn/server/resourcemanager/monitor/capacity/TestProportionalCapacityPreemptionPolicy.java
index 305736030fb..bc4d0dc9d05 100644
--- a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/test/java/org/apache/hadoop/yarn/server/resourcemanager/monitor/capacity/TestProportionalCapacityPreemptionPolicy.java
+++ b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/test/java/org/apache/hadoop/yarn/server/resourcemanager/monitor/capacity/TestProportionalCapacityPreemptionPolicy.java
@@ -63,6 +63,7 @@ import org.apache.hadoop.yarn.event.EventHandler;
 import org.apache.hadoop.yarn.server.resourcemanager.MockRM;
 import org.apache.hadoop.yarn.server.resourcemanager.RMContext;
 import org.apache.hadoop.yarn.server.resourcemanager.monitor.SchedulingMonitor;
+import org.apache.hadoop.yarn.server.resourcemanager.monitor.capacity.ProportionalCapacityPreemptionPolicy.TempQueuePerPartition;
 import org.apache.hadoop.yarn.server.resourcemanager.nodelabels.RMNodeLabelsManager;
 import org.apache.hadoop.yarn.server.resourcemanager.resource.Priority;
 import org.apache.hadoop.yarn.server.resourcemanager.rmcontainer.RMContainer;
@@ -898,6 +899,37 @@ public class TestProportionalCapacityPreemptionPolicy {
     verify(mDisp, times(5)).handle(argThat(new IsPreemptionRequestFor(appA)));
   }
 
+  @Test
+  public void testHierarchicalLarge3Levels() {
+    int[][] qData = new int[][] {
+      //  /    A                      F               I
+      //            B    C                  G    H          J    K
+      //                    D    E
+      { 400, 200,  60, 140, 100, 40,  100,  70,  30, 100,  10,  90 },  // abs
+      { 400, 400, 400, 400, 400, 400, 400, 400, 400, 400, 400, 400 },  // maxCap
+      { 400, 210,  60, 150, 100, 50,  100,  50,  50,  90,  10,   80 },  // used
+      {  10,   0,   0,   0,  0,   0,   0,   0,   0,   0,   0,  10 },  // pending
+      {   0,   0,   0,   0,  0,   0,   0,   0,   0,   0,   0,   0 },  // reserved
+      //          appA     appB appC   appD appE      appF appG
+      {   7,   3,   1,   2,   1,   1,  2,   1,   1,   2,   1,   1 },  // apps
+      {  -1,  -1,   1,   -1,  1,   1,  -1,   1,   1,  -1,   1,   1 },  // req granularity
+      {   3,   2,   0,   2,   0,   0,   2,   0,   0,   2,   0,   0 },  // subqueues
+    };
+    ProportionalCapacityPreemptionPolicy policy = buildPolicy(qData);
+    policy.editSchedule();
+    // XXX note: compensating for rounding error in Resources.multiplyTo
+    // which is likely triggered since we use small numbers for readability
+    //run with Logger.getRootLogger().setLevel(Level.DEBUG);
+    verify(mDisp, times(9)).handle(argThat(new IsPreemptionRequestFor(appC)));
+    assertEquals(10, policy.getQueuePartitions().get("queueE").get("").preemptableExtra.getMemory());
+    //2nd level child(E) preempts 10, but parent A has only 9 extra
+    //check the parent can prempt only the extra from > 2 level child
+    TempQueuePerPartition tempQueueAPartition = policy.getQueuePartitions().get("queueA").get("");
+    assertEquals(0, tempQueueAPartition.untouchableExtra.getMemory());
+    int extraForQueueA = tempQueueAPartition.current.getMemory()- tempQueueAPartition.guaranteed.getMemory();
+    assertEquals(extraForQueueA,tempQueueAPartition.preemptableExtra.getMemory());
+  }
+
   static class IsPreemptionRequestFor
       extends ArgumentMatcher<ContainerPreemptEvent> {
     private final ApplicationAttemptId appAttId;