diff --git a/CHANGES.rst b/CHANGES.rst
index d115533a8a..cf8bcaf90a 100644
--- a/CHANGES.rst
+++ b/CHANGES.rst
@@ -6,6 +6,10 @@ In development
 --------------
 
 * #733: Do not search excluded directories for packages.
+  This introduced a backwards incompatible change in ``find_packages()``
+  so that ``find_packages(exclude=['foo']) == []``, excluding subpackages of ``foo``.
+  Previously, ``find_packages(exclude=['foo']) == ['foo.bar']``,
+  even though the parent ``foo`` package was excluded.
 
 v27.3.0
 -------
diff --git a/setuptools/tests/test_find_packages.py b/setuptools/tests/test_find_packages.py
index df51b04fd1..9d31ccd7a2 100644
--- a/setuptools/tests/test_find_packages.py
+++ b/setuptools/tests/test_find_packages.py
@@ -98,6 +98,15 @@ def test_exclude(self):
         packages = find_packages(self.dist_dir, exclude=('pkg.*',))
         assert packages == ['pkg']
 
+    def test_exclude_recursive(self):
+        """
+        Excluding a parent package should exclude all child packages as well.
+        """
+        self._touch('__init__.py', self.pkg_dir)
+        self._touch('__init__.py', self.sub_pkg_dir)
+        packages = find_packages(self.dist_dir, exclude=('pkg',))
+        assert packages == []
+
     def test_include_excludes_other(self):
         """
         If include is specified, other packages should be excluded.