diff --git a/command/init.go b/command/init.go
index 66b1c7028a..839d27e2db 100644
--- a/command/init.go
+++ b/command/init.go
@@ -306,7 +306,6 @@ func (c *InitCommand) getProviders(path string, state *terraform.State, upgrade
 	))
 
 	missing := c.missingPlugins(available, requirements)
-	internal := c.internalProviders()
 
 	var errs error
 	if c.getPlugins {
@@ -316,12 +315,6 @@ func (c *InitCommand) getProviders(path string, state *terraform.State, upgrade
 		}
 
 		for provider, reqd := range missing {
-			if _, isInternal := internal[provider]; isInternal {
-				// Ignore internal providers; they are not eligible for
-				// installation.
-				continue
-			}
-
 			_, err := c.providerInstaller.Get(provider, reqd.Versions)
 
 			if err != nil {
@@ -379,7 +372,10 @@ func (c *InitCommand) getProviders(path string, state *terraform.State, upgrade
 	// again. If anything changes, other commands that use providers will
 	// fail with an error instructing the user to re-run this command.
 	available = c.providerPluginSet() // re-discover to see newly-installed plugins
-	chosen := choosePlugins(available, internal, requirements)
+
+	// internal providers were already filtered out, since we don't need to get them.
+	chosen := choosePlugins(available, nil, requirements)
+
 	digests := map[string][]byte{}
 	for name, meta := range chosen {
 		digest, err := meta.SHA256()
diff --git a/command/init_test.go b/command/init_test.go
index b47936f057..cd611301b7 100644
--- a/command/init_test.go
+++ b/command/init_test.go
@@ -1063,3 +1063,27 @@ func TestInit_pluginDirProvidersDoesNotGet(t *testing.T) {
 		t.Fatalf("bad: \n%s", ui.OutputWriter)
 	}
 }
+
+// Verify that plugin-dir doesn't prevent discovery of internal providers
+func TestInit_pluginWithInternal(t *testing.T) {
+	td := tempDir(t)
+	copy.CopyDir(testFixturePath("init-internal"), td)
+	defer os.RemoveAll(td)
+	defer testChdir(t, td)()
+
+	ui := new(cli.MockUi)
+	m := Meta{
+		testingOverrides: metaOverridesForProvider(testProvider()),
+		Ui:               ui,
+	}
+
+	c := &InitCommand{
+		Meta: m,
+	}
+
+	args := []string{"-plugin-dir", "./"}
+	//args := []string{}
+	if code := c.Run(args); code != 0 {
+		t.Fatalf("error: %s", ui.ErrorWriter)
+	}
+}
diff --git a/command/internal_plugin.go b/command/internal_plugin.go
index 01d8c77b93..b26ba1df68 100644
--- a/command/internal_plugin.go
+++ b/command/internal_plugin.go
@@ -45,16 +45,6 @@ func (c *InternalPluginCommand) Run(args []string) int {
 	log.SetPrefix(fmt.Sprintf("%s-%s (internal) ", pluginName, pluginType))
 
 	switch pluginType {
-	case "provider":
-		pluginFunc, found := InternalProviders[pluginName]
-		if !found {
-			log.Printf("[ERROR] Could not load provider: %s", pluginName)
-			return 1
-		}
-		log.Printf("[INFO] Starting provider plugin %s", pluginName)
-		plugin.Serve(&plugin.ServeOpts{
-			ProviderFunc: pluginFunc,
-		})
 	case "provisioner":
 		pluginFunc, found := InternalProvisioners[pluginName]
 		if !found {
diff --git a/command/internal_plugin_list.go b/command/internal_plugin_list.go
index 7993e9a548..b7f998ebd4 100644
--- a/command/internal_plugin_list.go
+++ b/command/internal_plugin_list.go
@@ -14,8 +14,6 @@ import (
 	"github.com/hashicorp/terraform/plugin"
 )
 
-var InternalProviders = map[string]plugin.ProviderFunc{}
-
 var InternalProvisioners = map[string]plugin.ProvisionerFunc{
 	"chef":            chefprovisioner.Provisioner,
 	"file":            fileprovisioner.Provisioner,
diff --git a/command/internal_plugin_test.go b/command/internal_plugin_test.go
index 8f9338ddf3..f96b5feae2 100644
--- a/command/internal_plugin_test.go
+++ b/command/internal_plugin_test.go
@@ -2,15 +2,26 @@ package command
 
 import "testing"
 
-// providers are all external for now
-//func TestInternalPlugin_InternalProviders(t *testing.T) {
-//    // Note this is a randomish sample and does not check for all plugins
-//    for _, name := range []string{"atlas", "consul", "docker", "template"} {
-//        if _, ok := InternalProviders[name]; !ok {
-//            t.Errorf("Expected to find %s in InternalProviders", name)
-//        }
-//    }
-//}
+func TestInternalPlugin_InternalProviders(t *testing.T) {
+	m := new(Meta)
+	providers := m.internalProviders()
+	// terraform is the only provider moved back to internal
+	for _, name := range []string{"terraform"} {
+		pf, ok := providers[name]
+		if !ok {
+			t.Errorf("Expected to find %s in InternalProviders", name)
+		}
+
+		provider, err := pf()
+		if err != nil {
+			t.Fatal(err)
+		}
+
+		if provider == nil {
+			t.Fatal("provider factory returned a nil provider")
+		}
+	}
+}
 
 func TestInternalPlugin_InternalProvisioners(t *testing.T) {
 	for _, name := range []string{"chef", "file", "local-exec", "remote-exec", "salt-masterless"} {
diff --git a/command/plugins.go b/command/plugins.go
index be9cd17941..12449da2ea 100644
--- a/command/plugins.go
+++ b/command/plugins.go
@@ -279,13 +279,16 @@ func (m *Meta) internalProviders() map[string]terraform.ResourceProviderFactory
 func (m *Meta) missingPlugins(avail discovery.PluginMetaSet, reqd discovery.PluginRequirements) discovery.PluginRequirements {
 	missing := make(discovery.PluginRequirements)
 
-	for n, r := range reqd {
-		log.Printf("[DEBUG] plugin requirements: %q=%q", n, r.Versions)
-	}
-
 	candidates := avail.ConstrainVersions(reqd)
+	internal := m.internalProviders()
 
 	for name, versionSet := range reqd {
+		// internal providers can't be missing
+		if _, ok := internal[name]; ok {
+			continue
+		}
+
+		log.Printf("[DEBUG] plugin requirements: %q=%q", name, versionSet.Versions)
 		if metas := candidates[name]; metas.Count() == 0 {
 			missing[name] = versionSet
 		}
diff --git a/command/test-fixtures/init-internal/main.tf b/command/test-fixtures/init-internal/main.tf
new file mode 100644
index 0000000000..962d7114bd
--- /dev/null
+++ b/command/test-fixtures/init-internal/main.tf
@@ -0,0 +1 @@
+provider "terraform" {}