diff --git a/_py/test/plugin/pytest_nose.py b/_py/test/plugin/pytest_nose.py
index bc46e6caa..4ea8306d3 100644
--- a/_py/test/plugin/pytest_nose.py
+++ b/_py/test/plugin/pytest_nose.py
@@ -66,7 +66,9 @@ def pytest_runtest_setup(item):
                 if isinstance(gen.parent, py.test.collect.Instance):
                     call_optional(gen.parent.obj, 'setup')
                 gen._nosegensetup = True
-        call_optional(item.obj, 'setup')
+        if not call_optional(item.obj, 'setup'):
+            # call module level setup if there is no object level one
+            call_optional(item.parent.obj, 'setup')
 
 def pytest_runtest_teardown(item):
     if isinstance(item, py.test.collect.Function):
@@ -83,3 +85,6 @@ def call_optional(obj, name):
     method = getattr(obj, name, None)
     if method:
         method()
+        return True
+    else:
+        return False
diff --git a/testing/pytest/plugin/test_pytest_nose.py b/testing/pytest/plugin/test_pytest_nose.py
index 4950095dd..aba8f3cc6 100644
--- a/testing/pytest/plugin/test_pytest_nose.py
+++ b/testing/pytest/plugin/test_pytest_nose.py
@@ -85,3 +85,17 @@ def test_nose_test_generator_fixtures(testdir):
     ])
 
 
+
+def test_module_level_setup(testdir):
+    testdir.makepyfile("""
+        items = {}
+        def setup():
+            items[1]=1
+
+        def test_setup_changed_stuff():
+            assert items
+    """)
+    result = testdir.runpytest('-p', 'nose')
+    result.stdout.fnmatch_lines([
+        "*1 passed*",
+    ])