--- org-latex.el	2010-08-20 15:58:28.000000000 +0200
+++ org-latex.mod.el	2010-08-20 16:06:26.000000000 +0200
@@ -1795,8 +1795,24 @@
 
 (defun org-export-latex-fontify ()
   "Convert fontification to LaTeX."
+  ;; max recursive level set to 2, 
+  ;; so one level of nested emphasis works
+  (org-export-latex-fontify-recursive 2)
+)
+
+(defun org-export-latex-fontify-recursive (reclevel)
+  "Convert fontification to LaTeX, recursive part."
   (goto-char (point-min))
   (while (re-search-forward org-emph-re nil t)
+    (if (> reclevel 1)
+        (let ((mdata (match-data)))
+          (unwind-protect
+              ;; now it is ok to change the original match data.
+              (save-excursion
+                (save-restriction
+                  (narrow-to-region (match-beginning 4) (match-end 4))
+                  (org-export-latex-fontify-recursive (1- reclevel))))
+            (set-match-data mdata))))
     ;; The match goes one char after the *string*, except at the end of a line
     (let ((emph (assoc (match-string 3)
 		       org-export-latex-emphasis-alist))