In this paper, a new array geometry is proposed which is capable of performing underdetermined Direction-Of-Arrival (DOA) estimation for the circular array configuration. DOA estimation is a classical problem and one of the most important techniques in array signal processing as it has applications in wireless and mobile communications, acoustics, and seismic sensing. We consider the problem of estimating DOAs in the case when we have more sources than the number of physical sensors where the resolution must be maintained. The proposed array geometry called Nested Sparse Circular Array (NSCA) is an extension of the two level nested linear array obtained by nesting two sub-circular arrays and one element is placed at the origin. In order to extend the array aperture, a Khatri-Rao (KR) approach is applied to the proposed NSCA which yields the virtual array structure. To utilize the increase in the degrees of freedom (DOFs) that this new array provides, a subspace based approach (MUSIC) for DOA estimation and l₁-based optimization approach is extended to estimate DOAs using NSCA. Simulations show that better performance for underdetermined DOA estimation is achieved using the proposed array geometry.