diff --git a/README.md b/README.md
index 704fa4a..bab0674 100644
--- a/README.md
+++ b/README.md
@@ -88,7 +88,7 @@ flowchart TB
   OutEnc["#106 output encodings: complete"]:::done
   StreamVal["#107 streaming validation: DTD, RELAX NG, XSD"]:::done
   MoreEnc["#108 encodings: ISO-2022-JP, EUC-TW"]:::done
-  Depth["Tier 2 conformance corpora; Tier 3 DTD PE depth (C14N 1.1, EXSLT done); frontier #104"]:::todo
+  Depth["Tier 3 done (C14N 1.1, EXSLT, DTD PE depth); Tier 2 conformance corpora; frontier #104"]:::todo
   Epic105 --> OutEnc
   OutEnc --> StreamVal
   StreamVal --> MoreEnc
@@ -99,7 +99,7 @@ flowchart TB
 
 PureXML is a working, dependency-free XML library today: parse, emit, validate,
 query, and stream documents on macOS, Linux, Windows, and WASM. The test suite
-currently runs **801 tests in 123 suites** (`swift test`).
+currently runs **805 tests in 124 suites** (`swift test`).
 
 ### Shipped (libxml2-aligned surface)
 
diff --git a/Tests/DTDParameterEntityDepthTests.swift b/Tests/DTDParameterEntityDepthTests.swift
new file mode 100644
index 0000000..0c92067
--- /dev/null
+++ b/Tests/DTDParameterEntityDepthTests.swift
@@ -0,0 +1,61 @@
+@testable import PureXML
+import Testing
+
+@Suite("DTD parameter-entity and external-subset depth")
+struct DTDParameterEntityDepthTests {
+    private let dtdAllowed = PureXML.Parsing.Limits(allowDoctype: true)
+
+    private func documentType(_ xml: String, resolver: PureXML.Parsing.EntityResolver = .refusing) throws -> PureXML.Parsing.DocumentType {
+        try PureXML.Parsing.Parser().parseWithDocumentType(xml, limits: dtdAllowed, resolver: resolver).documentType
+    }
+
+    private func rootText(_ node: PureXML.Model.Node) -> String {
+        guard case let .document(children) = node else { return "" }
+        for case let .element(element) in children {
+            return element.text
+        }
+        return ""
+    }
+
+    @Test("A parameter entity expands within an element-model declaration")
+    func test_parameterEntityInElementModel() throws {
+        let dtd = try documentType("<!DOCTYPE r [<!ENTITY % m \"(a|b)\"><!ELEMENT r %m;>]><r/>")
+        #expect(dtd.elementModels["r"] == "(a|b)")
+    }
+
+    @Test("A parameter entity expands within an attribute-list declaration")
+    func test_parameterEntityInAttlist() throws {
+        let xml = "<!DOCTYPE r [<!ELEMENT r EMPTY><!ENTITY % atts \"code CDATA #REQUIRED\"><!ATTLIST r %atts;>]><r/>"
+        // The attribute is declared via the PE, so a missing required code is caught.
+        let errors = try PureXML.validateAgainstInternalDTD(xml)
+        #expect(errors.contains { $0.reason.contains("code") })
+    }
+
+    @Test("Deeply nested parameter entities compose fully")
+    func test_deepNesting() throws {
+        let xml = """
+        <!DOCTYPE r [
+        <!ENTITY % a "1">
+        <!ENTITY % b "%a;2">
+        <!ENTITY % c "%b;3">
+        <!ENTITY % d "%c;4">
+        <!ENTITY e "%d;5">
+        ]><r>&e;</r>
+        """
+        try #expect(rootText(PureXML.parse(xml, limits: dtdAllowed)) == "12345")
+    }
+
+    @Test("An external subset can itself load a further external parameter entity")
+    func test_recursiveExternalLoading() throws {
+        let resolver = PureXML.Parsing.EntityResolver(resolveExternalSubset: { id in
+            switch id.systemID {
+            case "a.dtd": "<!ENTITY % inner SYSTEM \"b.dtd\">%inner;<!ELEMENT r (#PCDATA)>"
+            case "b.dtd": "<!ENTITY deep \"found\">"
+            default: nil
+            }
+        })
+        let xml = "<!DOCTYPE r [<!ENTITY % ext SYSTEM \"a.dtd\">%ext;]><r>&deep;</r>"
+        let node = try PureXML.parse(xml, limits: dtdAllowed, resolver: resolver)
+        #expect(rootText(node) == "found")
+    }
+}