TreeView, HierarchicalDataTemplate and recursive Data

You should only have to declare the HierarchicalDataTemplate for NodeViewModel as this is the only thing showing in the TreeView, and bind the actual ItemSource to the TreeView

<TreeView ItemsSource="{Binding Items}">
    <TreeView.Resources>
        <HierarchicalDataTemplate DataType="{x:Type local:NodeViewModel}" ItemsSource="{Binding Children}">
            <TextBlock Text="{Binding Name}"></TextBlock>
        </HierarchicalDataTemplate>
    </TreeView.Resources>
</TreeView>

Full Example

Xaml:

<Window x:Class="WpfApplication13.MainWindow"
        xmlns="http://schemas.microsoft.com/winfx/2006/xaml/presentation"
        xmlns:x="http://schemas.microsoft.com/winfx/2006/xaml"
        xmlns:local="clr-namespace:WpfApplication13"
        Title="MainWindow" x:Name="UI" Width="343" Height="744.625" >

    <TreeView DataContext="{Binding ElementName=UI, Path=TreeModel}" ItemsSource="{Binding Items}">
        <TreeView.Resources>
            <HierarchicalDataTemplate DataType="{x:Type local:NodeViewModel}" ItemsSource="{Binding Children}">
                <TextBlock Text="{Binding Name}"></TextBlock>
            </HierarchicalDataTemplate>
        </TreeView.Resources>
    </TreeView>

</Window>

Code:

public partial class MainWindow : Window
{

    public MainWindow()
    {
        InitializeComponent();
    }

    public TreeViewModel TreeModel
    {
        get
        {
            return new TreeViewModel
            {
                Items = new ObservableCollection<NodeViewModel>{
                           new NodeViewModel { Name = "Root", Children =  new ObservableCollection<NodeViewModel> {
                              new NodeViewModel { Name = "Level1" ,  Children = new ObservableCollection<NodeViewModel>{ 
                                  new NodeViewModel{ Name = "Level2"}}} } }}
            };
        }
    }
}

public class TreeViewModel
{
    public ObservableCollection<NodeViewModel> Items { get; set; }
}

public class NodeViewModel
{
    public string Id { get; set; }
    public string Name { get; set; }
    public ObservableCollection<NodeViewModel> Children { get; set; }
}

Result: