How to use RecyclerView inside NestedScrollView?

Replace your recyclerView with,

<android.support.v7.widget.RecyclerView
    android:id="@+id/conversation"
    app:layout_behavior="@string/appbar_scrolling_view_behavior"
    android:layout_width="match_parent"
    android:layout_height="wrap_content" />

here,

app:layout_behavior="@string/appbar_scrolling_view_behavior"

will manage the rest of things.

One more thing, no need to put your recyclerView inside NestedScrollView

UPDATE 1

Since Android Support Library 23.2.0 there were added method setAutoMeasureEnabled(true) for LayoutManagers. It makes RecyclerView to wrap it's content and works like a charm.
http://android-developers.blogspot.ru/2016/02/android-support-library-232.html

So just add something like this:

    LayoutManager layoutManager = new LinearLayoutManager(this);
    layoutManager.setAutoMeasureEnabled(true);
    recyclerView.setLayoutManager(layoutManager);
    recyclerView.setNestedScrollingEnabled(false);

UPDATE 2

Since 27.1.0 setAutoMeasureEnabled is deprecated, so you should provide custom implementation of LayoutManager with overridden method isAutoMeasureEnabled()

But after many cases of usage RecyclerView I strongly recommend not to use it in wrapping mode, cause this is not what it is intended for. Try to refactor whole your layout using normal single RecyclerView with several items' types. Or use approach with LinearLayout that I described below as last resort

Old answer (not recommended)

You can use RecyclerView inside NestedScrollView. First of all you should implement your own custom LinearLayoutManager, it makes your RecyclerView to wrap its content. For example:

public class WrappingLinearLayoutManager extends LinearLayoutManager
{

    public WrappingLinearLayoutManager(Context context) {
        super(context);
    }

    private int[] mMeasuredDimension = new int[2];

    @Override
    public boolean canScrollVertically() {
        return false;
    }

    @Override
    public void onMeasure(RecyclerView.Recycler recycler, RecyclerView.State state,
            int widthSpec, int heightSpec) {
        final int widthMode = View.MeasureSpec.getMode(widthSpec);
        final int heightMode = View.MeasureSpec.getMode(heightSpec);

        final int widthSize = View.MeasureSpec.getSize(widthSpec);
        final int heightSize = View.MeasureSpec.getSize(heightSpec);

        int width = 0;
        int height = 0;
        for (int i = 0; i < getItemCount(); i++) {
            if (getOrientation() == HORIZONTAL) {
                measureScrapChild(recycler, i,
                        View.MeasureSpec.makeMeasureSpec(0, View.MeasureSpec.UNSPECIFIED),
                        heightSpec,
                        mMeasuredDimension);

                width = width + mMeasuredDimension[0];
                if (i == 0) {
                    height = mMeasuredDimension[1];
                }
            } else {
                measureScrapChild(recycler, i,
                        widthSpec,
                        View.MeasureSpec.makeMeasureSpec(0, View.MeasureSpec.UNSPECIFIED),
                        mMeasuredDimension);

                height = height + mMeasuredDimension[1];
                if (i == 0) {
                    width = mMeasuredDimension[0];
                }
            }
        }

        switch (widthMode) {
            case View.MeasureSpec.EXACTLY:
                width = widthSize;
            case View.MeasureSpec.AT_MOST:
            case View.MeasureSpec.UNSPECIFIED:
        }

        switch (heightMode) {
            case View.MeasureSpec.EXACTLY:
                height = heightSize;
            case View.MeasureSpec.AT_MOST:
            case View.MeasureSpec.UNSPECIFIED:
        }

        setMeasuredDimension(width, height);
    }

    private void measureScrapChild(RecyclerView.Recycler recycler, int position, int widthSpec,
            int heightSpec, int[] measuredDimension) {

        View view = recycler.getViewForPosition(position);
        if (view.getVisibility() == View.GONE) {
            measuredDimension[0] = 0;
            measuredDimension[1] = 0;
            return;
        }
        // For adding Item Decor Insets to view
        super.measureChildWithMargins(view, 0, 0);
        RecyclerView.LayoutParams p = (RecyclerView.LayoutParams) view.getLayoutParams();
        int childWidthSpec = ViewGroup.getChildMeasureSpec(
                widthSpec,
                getPaddingLeft() + getPaddingRight() + getDecoratedLeft(view) + getDecoratedRight(view),
                p.width);
        int childHeightSpec = ViewGroup.getChildMeasureSpec(
                heightSpec,
                getPaddingTop() + getPaddingBottom() + getDecoratedTop(view) + getDecoratedBottom(view),
                p.height);
        view.measure(childWidthSpec, childHeightSpec);

        // Get decorated measurements
        measuredDimension[0] = getDecoratedMeasuredWidth(view) + p.leftMargin + p.rightMargin;
        measuredDimension[1] = getDecoratedMeasuredHeight(view) + p.bottomMargin + p.topMargin;
        recycler.recycleView(view);
    }
}

After that use this LayoutManager for your RecyclerView

recyclerView.setLayoutManager(new WrappingLinearLayoutManager(getContext()));

But you also should call those two methods:

recyclerView.setNestedScrollingEnabled(false);
recyclerView.setHasFixedSize(false);

Here setNestedScrollingEnabled(false) disable scrolling for RecyclerView, so it doesn't intercept scrolling event from NestedScrollView. And setHasFixedSize(false) determine that changes in adapter content can change the size of the RecyclerView

Important note: This solution is little buggy in some cases and has problems with perfomance, so if you have a lot of items in your RecyclerView I'd recommend to use custom LinearLayout-based implementation of list view, create analogue of Adapter for it and make it behave like ListView or RecyclerView

1. You need to use support library 23.2.0 (or) above

2. and RecyclerView height will be wrap_content.

3. recyclerView.setNestedScrollingEnabled(false)

But by doing this the recycler pattern doesn't work. (i.e all the views will be loaded at once because wrap_content needs the height of complete RecyclerView so it will draw all child Views at once. No view will be recycled). Try not to use this pattern unless it is really required. Try to use viewType and add all other views that need to scroll to RecyclerView rather than using RecyclerView in Scrollview. The performance impact will be very high.

To make it simple "it just acts as LinearLayout with all the child views"

You can use android:fillViewport="true" to make NestedScrollView measure the RecyclerView. The RecyclerView will fill the remaining height. so if you want to scroll the NestScrollView, you can set the RecyclerView's minHeight.