Here, below is the example of binding nested list in WPF. In below example, I am using nested item controls and WPF Expander to show nested list.  On click of first item, it display sub list of selected item.

In these example , I bind itemscontrol using XmlDataProvider.

In given XML example, I have two  types of list. First is groups list and second is particular group images list.

XML:

<?xml version="1.0"?>
<Groups>
  <Group>
    <Id>1</Id>
    <Name>Group 1</Name>
    <Images>
      <ImageName>Image1</ImageName>
      <ImageName>Image2</ImageName>
      <ImageName>Image3</ImageName>
    </Images>
  </Group>
  <Group>
    <Id>2</Id>
    <Name>Group 2</Name>
    <Images>
      <ImageName>Image4</ImageName>
      <ImageName>Image5</ImageName>
      <ImageName>Image6</ImageName>
      <ImageName>Image7</ImageName>
    </Images>
  </Group>
  <Group>
    <Id>3</Id>
    <Name>Group 3</Name>
    <Images>
      <ImageName>Image8</ImageName>
      <ImageName>Image9</ImageName>
    </Images>
  </Group>
  <Group>
    <Id>4</Id>
    <Name>Group 4</Name>
    <Images>
      <ImageName>Image10</ImageName>
      <ImageName>Image11</ImageName>
      <ImageName>Image12</ImageName>
      <ImageName>Image13</ImageName>
      <ImageName>Image14</ImageName>
      <ImageName>Image15</ImageName>
      <ImageName>Image16</ImageName>
    </Images>
  </Group>
</Groups>

In XAML:

First we have to provide the resources for grid if any. I use XmlDataProvider to bind xml data with ItemsControl.

  <Grid.Resources>
            <XmlDataProvider x:Key="groupConfigurationXmlDataProvider" Source="XmlFiles/ImagesConfiguration.xml" XPath="/Groups"  />
  </Grid.Resources>

In Grid, I use 2 items control one for main list and other for sub list and also use WPF Expander to show sub list. 

 <Grid>
	<ItemsControl x:Name="GroupMenu" Grid.Column="0" Grid.Row="0"  VerticalAlignment="Stretch"  ItemsSource="{Binding Source={StaticResource groupConfigurationXmlDataProvider},XPath=Group}">
		<ItemsControl.ItemsPanel>
			<ItemsPanelTemplate>
				<StackPanel VerticalAlignment="Stretch" HorizontalAlignment="Stretch"></StackPanel>
			</ItemsPanelTemplate>
		</ItemsControl.ItemsPanel>
		<ItemsControl.ItemTemplate>
			<DataTemplate>
				<Grid>
					<Expander Template="{StaticResource SimpleExpanderTemp}" Name="NameExpander"  OverridesDefaultStyle="True" Header="{Binding XPath=Name}" HorizontalAlignment="Left" VerticalAlignment="Top">

						<ItemsControl ItemsSource="{Binding XPath=Images/ImageName}" Grid.Column="0" Grid.Row="1" >
							<ItemsControl.ItemTemplate>
								<DataTemplate>
									<Grid>
										<Border BorderThickness="25,0,0,0" BorderBrush="#009147">
											<Button Content="{Binding XPath=.}" Style="{StaticResource ListButtonStyle}" HorizontalAlignment="Stretch" VerticalAlignment="Center" Click="Image_Click"/>
										</Border>
									</Grid>
								</DataTemplate>
							</ItemsControl.ItemTemplate>
						</ItemsControl>
					</Expander>

				</Grid>

			</DataTemplate>
		</ItemsControl.ItemTemplate>
	</ItemsControl>
 </Grid>

Creating template for Expander that I use above

 <ControlTemplate x:Key="SimpleExpanderTemp" TargetType="{x:Type Expander}">
            <DockPanel >
                <ToggleButton x:Name="ExpanderButton" 
                              DockPanel.Dock="Top"
                              Template="{StaticResource SimpleExpanderButtonTemp}"
                              Content="{TemplateBinding Header}"
                              IsChecked="{Binding Path=IsExpanded, RelativeSource={RelativeSource TemplatedParent}}"
                              OverridesDefaultStyle="True" 
                              Padding="0,0" Height="70" FontSize="30" FontWeight="Light"  Click="GroupToggleButton_Click" Tag="{Binding}" >
                </ToggleButton>
                <ContentPresenter x:Name="ExpanderContent"
                                  Grid.Row="1" 
                                  Visibility="Collapsed"
                                  DockPanel.Dock="Bottom"/>
            </DockPanel>
            <ControlTemplate.Triggers>
                <Trigger Property="IsExpanded" Value="True">
                    <Setter TargetName="ExpanderContent" Property="Visibility" Value="Visible"/>
                    <Setter TargetName="ExpanderButton" Property="Foreground" Value="#009147"/>
                </Trigger>
            </ControlTemplate.Triggers>
        </ControlTemplate>

In Button, I use Content="{Binding XPath=.}" to display ImageName on button content because I have to show the same property that I provide in XPath.

Hope, this sample will help you. Thanks