By invoking a divide-and-conquer strategy, subsystem DFT dramatically reduces the computational cost of large-scale, ab-initio electronic structure simulations of molecules and materials. The central ingredient setting subsystem DFT apart from Kohn-Sham DFT is the non-additive kinetic energy functional (NAKE). Currently employed NAKEs are at most semilocal (i.e., they only depend on the electron density and its gradient), and as a result of this approximation, so far only systems composed of weakly interacting subsystems have been successfully tackled. In this work, we advance the state-of-the-art by introducing fully nonlocal NAKEs in subsystem DFT simulations for the first time. A benchmark analysis based on the S22-5 test set shows that nonlocal NAKEs considerably improve the computed interaction energies and electron density compared to commonly employed GGA NAKEs, especially when the inter-subsystem electron density overlap is high. Most importantly, we resolve the long standing problem of too attractive interaction energy curves typically resulting from the use of GGA NAKEs.