Abstract We present the concepts of real-time nested transactions and priority propagation for a distributed transaction processing environment. Real-time nested transactions incorporate the deadline requirements in the hierarchical structure of nested transactions. Priority propagation addresses issues related to transaction aborts in real-time nested transaction processing. The notion of priority ceiling has been used to avoid the priority inversion problem. The proposed protocols exhibit freedom from deadlock and have tightly bounded waiting periods. Both of these properties make them very suitable for distributed real-time transaction processing environments.