diff --git a/lib/modules.nix b/lib/modules.nix
index e9fc1007fc20..79d54e4a5387 100644
--- a/lib/modules.nix
+++ b/lib/modules.nix
@@ -151,8 +151,7 @@ rec {
           };
 
           _module.freeformType = mkOption {
-            # Disallow merging for now, but could be implemented nicely with a `types.optionType`
-            type = types.nullOr (types.uniq types.attrs);
+            type = types.nullOr types.optionType;
             internal = true;
             default = null;
             description = ''
diff --git a/lib/tests/modules.sh b/lib/tests/modules.sh
index a1c592cf4ef0..e4bb7ad21900 100755
--- a/lib/tests/modules.sh
+++ b/lib/tests/modules.sh
@@ -240,6 +240,11 @@ checkConfigOutput '^"24"$' config.foo ./freeform-attrsOf.nix ./freeform-str-dep-
 checkConfigError 'infinite recursion encountered' config.foo ./freeform-attrsOf.nix ./freeform-unstr-dep-str.nix
 checkConfigError 'The option .* is used but not defined' config.foo ./freeform-lazyAttrsOf.nix ./freeform-unstr-dep-str.nix
 checkConfigOutput '^"24"$' config.foo ./freeform-lazyAttrsOf.nix ./freeform-unstr-dep-str.nix ./define-value-string.nix
+# submodules in freeformTypes should have their locations annotated
+checkConfigOutput '/freeform-submodules.nix"$' config.fooDeclarations.0 ./freeform-submodules.nix
+# freeformTypes can get merged using `types.type`, including submodules
+checkConfigOutput '^10$' config.free.xxx.foo ./freeform-submodules.nix
+checkConfigOutput '^10$' config.free.yyy.bar ./freeform-submodules.nix
 
 ## types.anything
 # Check that attribute sets are merged recursively
@@ -299,6 +304,13 @@ checkConfigOutput "10" config.processedToplevel ./raw.nix
 checkConfigError "The option .multiple. is defined multiple times" config.multiple ./raw.nix
 checkConfigOutput "bar" config.priorities ./raw.nix
 
+# Test that types.optionType merges types correctly
+checkConfigOutput '^10$' config.theOption.int ./optionTypeMerging.nix
+checkConfigOutput '^"hello"$' config.theOption.str ./optionTypeMerging.nix
+
+# Test that types.optionType correctly annotates option locations
+checkConfigError 'The option .theOption.nested. in .other.nix. is already declared in .optionTypeFile.nix.' config.theOption.nested ./optionTypeFile.nix
+
 cat <<EOF
 ====== module tests ======
 $pass Pass
diff --git a/lib/tests/modules/freeform-submodules.nix b/lib/tests/modules/freeform-submodules.nix
new file mode 100644
index 000000000000..3910435a7b5c
--- /dev/null
+++ b/lib/tests/modules/freeform-submodules.nix
@@ -0,0 +1,22 @@
+{ lib, options, ... }: with lib.types; {
+
+  options.fooDeclarations = lib.mkOption {
+    default = (options.free.type.getSubOptions [])._freeformOptions.foo.declarations;
+  };
+
+  options.free = lib.mkOption {
+    type = submodule {
+      config._module.freeformType = lib.mkMerge [
+        (attrsOf (submodule {
+          options.foo = lib.mkOption {};
+        }))
+        (attrsOf (submodule {
+          options.bar = lib.mkOption {};
+        }))
+      ];
+    };
+  };
+
+  config.free.xxx.foo = 10;
+  config.free.yyy.bar = 10;
+}
diff --git a/lib/tests/modules/optionTypeFile.nix b/lib/tests/modules/optionTypeFile.nix
new file mode 100644
index 000000000000..6015d59a72c9
--- /dev/null
+++ b/lib/tests/modules/optionTypeFile.nix
@@ -0,0 +1,28 @@
+{ config, lib, ... }: {
+
+  _file = "optionTypeFile.nix";
+
+  options.theType = lib.mkOption {
+    type = lib.types.optionType;
+  };
+
+  options.theOption = lib.mkOption {
+    type = config.theType;
+    default = {};
+  };
+
+  config.theType = lib.mkMerge [
+    (lib.types.submodule {
+      options.nested = lib.mkOption {
+        type = lib.types.int;
+      };
+    })
+    (lib.types.submodule {
+      _file = "other.nix";
+      options.nested = lib.mkOption {
+        type = lib.types.str;
+      };
+    })
+  ];
+
+}
diff --git a/lib/tests/modules/optionTypeMerging.nix b/lib/tests/modules/optionTypeMerging.nix
new file mode 100644
index 000000000000..74a620c4620c
--- /dev/null
+++ b/lib/tests/modules/optionTypeMerging.nix
@@ -0,0 +1,27 @@
+{ config, lib, ... }: {
+
+  options.theType = lib.mkOption {
+    type = lib.types.optionType;
+  };
+
+  options.theOption = lib.mkOption {
+    type = config.theType;
+  };
+
+  config.theType = lib.mkMerge [
+    (lib.types.submodule {
+      options.int = lib.mkOption {
+        type = lib.types.int;
+        default = 10;
+      };
+    })
+    (lib.types.submodule {
+      options.str = lib.mkOption {
+        type = lib.types.str;
+      };
+    })
+  ];
+
+  config.theOption.str = "hello";
+
+}
diff --git a/lib/types.nix b/lib/types.nix
index c47a35cd0d67..acc7eac104ee 100644
--- a/lib/types.nix
+++ b/lib/types.nix
@@ -61,7 +61,11 @@ let
     boolToString
     ;
 
-  inherit (lib.modules) mergeDefinitions;
+  inherit (lib.modules)
+    mergeDefinitions
+    fixupOptionType
+    mergeOptionDecls
+    ;
   outer_types =
 rec {
   isType = type: x: (x._type or "") == type;
@@ -525,6 +529,31 @@ rec {
       modules = toList modules;
     };
 
+    # The type of a type!
+    optionType = mkOptionType {
+      name = "optionType";
+      description = "optionType";
+      check = value: value._type or null == "option-type";
+      merge = loc: defs:
+        let
+          # Prepares the type definitions for mergeOptionDecls, which
+          # annotates submodules types with file locations
+          optionModules = map ({ value, file }:
+            {
+              _file = file;
+              # There's no way to merge types directly from the module system,
+              # but we can cheat a bit by just declaring an option with the type
+              options = lib.mkOption {
+                type = value;
+              };
+            }
+          ) defs;
+          # Merges all the types into a single one, including submodule merging.
+          # This also propagates file information to all submodules
+          mergedOption = fixupOptionType loc (mergeOptionDecls loc optionModules);
+        in mergedOption.type;
+    };
+
     submoduleWith =
       { modules
       , specialArgs ? {}
diff --git a/nixos/doc/manual/development/option-types.section.md b/nixos/doc/manual/development/option-types.section.md
index 78ace62e8f17..071e7751eb67 100644
--- a/nixos/doc/manual/development/option-types.section.md
+++ b/nixos/doc/manual/development/option-types.section.md
@@ -74,6 +74,13 @@ merging is handled.
     should only be used when checking, merging and nested evaluation are not
     desirable.
 
+`types.optionType`
+
+:   The type of an option's type. Its merging operation ensures that nested
+    options have the correct file location annotated, and that if possible,
+    multiple option definitions are correctly merged together. The main use
+    case is as the type of the `_module.freeformType` option.
+
 `types.attrs`
 
 :   A free-form attribute set.
diff --git a/nixos/doc/manual/from_md/development/option-types.section.xml b/nixos/doc/manual/from_md/development/option-types.section.xml
index 90ef05a24e77..50a3da0ef5bb 100644
--- a/nixos/doc/manual/from_md/development/option-types.section.xml
+++ b/nixos/doc/manual/from_md/development/option-types.section.xml
@@ -111,6 +111,20 @@
           </para>
         </listitem>
       </varlistentry>
+      <varlistentry>
+        <term>
+          <literal>types.optionType</literal>
+        </term>
+        <listitem>
+          <para>
+            The type of an option’s type. Its merging operation ensures
+            that nested options have the correct file location
+            annotated, and that if possible, multiple option definitions
+            are correctly merged together. The main use case is as the
+            type of the <literal>_module.freeformType</literal> option.
+          </para>
+        </listitem>
+      </varlistentry>
       <varlistentry>
         <term>
           <literal>types.attrs</literal>