diff --git a/terraform/context_apply_test.go b/terraform/context_apply_test.go
index fc45c6ac03..c22e87a1c6 100644
--- a/terraform/context_apply_test.go
+++ b/terraform/context_apply_test.go
@@ -8809,3 +8809,110 @@ module.child:
 		t.Fatalf("wrong final state\ngot:\n%s\nwant:\n%s", got, want)
 	}
 }
+
+func TestContext2Apply_destroyWithLocals(t *testing.T) {
+	m := testModule(t, "apply-destroy-with-locals")
+	p := testProvider("aws")
+	p.ApplyFn = testApplyFn
+	p.DiffFn = func(info *InstanceInfo, s *InstanceState, c *ResourceConfig) (*InstanceDiff, error) {
+		d, err := testDiffFn(info, s, c)
+		fmt.Println("DIFF:", d)
+		return d, err
+	}
+
+	s := &State{
+		Modules: []*ModuleState{
+			&ModuleState{
+				Path: rootModulePath,
+				Outputs: map[string]*OutputState{
+					"name": &OutputState{
+						Type:  "string",
+						Value: "test-bar",
+					},
+				},
+				Resources: map[string]*ResourceState{
+					"aws_instance.foo": &ResourceState{
+						Type: "aws_instance",
+						Primary: &InstanceState{
+							ID: "foo",
+						},
+					},
+				},
+			},
+		},
+	}
+
+	ctx := testContext2(t, &ContextOpts{
+		Module: m,
+		ProviderResolver: ResourceProviderResolverFixed(
+			map[string]ResourceProviderFactory{
+				"aws": testProviderFuncFixed(p),
+			},
+		),
+		State:   s,
+		Destroy: true,
+	})
+
+	if _, err := ctx.Plan(); err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	state, err := ctx.Apply()
+	if err != nil {
+		t.Fatalf("error during apply: %s", err)
+	}
+
+	got := strings.TrimSpace(state.String())
+	want := strings.TrimSpace(`<no state>`)
+	if got != want {
+		t.Fatalf("wrong final state\ngot:\n%s\nwant:\n%s", got, want)
+	}
+}
+
+func TestContext2Apply_providerWithLocals(t *testing.T) {
+	m := testModule(t, "provider-with-locals")
+	p := testProvider("aws")
+	p.DiffFn = testDiffFn
+	p.ApplyFn = testApplyFn
+	ctx := testContext2(t, &ContextOpts{
+		Module: m,
+		ProviderResolver: ResourceProviderResolverFixed(
+			map[string]ResourceProviderFactory{
+				"aws": testProviderFuncFixed(p),
+			},
+		),
+	})
+
+	if _, err := ctx.Plan(); err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	state, err := ctx.Apply()
+	if err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	ctx = testContext2(t, &ContextOpts{
+		Module: m,
+		ProviderResolver: ResourceProviderResolverFixed(
+			map[string]ResourceProviderFactory{
+				"aws": testProviderFuncFixed(p),
+			},
+		),
+		State:   state,
+		Destroy: true,
+	})
+
+	if _, err = ctx.Plan(); err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	state, err = ctx.Apply()
+	if err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	if state.HasResources() {
+		t.Fatal("expected no state, got:", state)
+	}
+}
diff --git a/terraform/eval_local.go b/terraform/eval_local.go
index 1b63bf4f4f..a4b2a50598 100644
--- a/terraform/eval_local.go
+++ b/terraform/eval_local.go
@@ -56,3 +56,31 @@ func (n *EvalLocal) Eval(ctx EvalContext) (interface{}, error) {
 
 	return nil, nil
 }
+
+// EvalDeleteLocal is an EvalNode implementation that deletes a Local value
+// from the state. Locals aren't persisted, but we don't need to evaluate them
+// during destroy.
+type EvalDeleteLocal struct {
+	Name string
+}
+
+func (n *EvalDeleteLocal) Eval(ctx EvalContext) (interface{}, error) {
+	state, lock := ctx.State()
+	if state == nil {
+		return nil, nil
+	}
+
+	// Get a write lock so we can access this instance
+	lock.Lock()
+	defer lock.Unlock()
+
+	// Look for the module state. If we don't have one, create it.
+	mod := state.ModuleByPath(ctx.Path())
+	if mod == nil {
+		return nil, nil
+	}
+
+	delete(mod.Locals, n.Name)
+
+	return nil, nil
+}
diff --git a/terraform/node_local.go b/terraform/node_local.go
index da1564e390..e58f1f987d 100644
--- a/terraform/node_local.go
+++ b/terraform/node_local.go
@@ -59,20 +59,36 @@ func (n *NodeLocal) References() []string {
 
 // GraphNodeEvalable
 func (n *NodeLocal) EvalTree() EvalNode {
-	return &EvalOpFilter{
-		Ops: []walkOperation{
-			walkInput,
-			walkValidate,
-			walkRefresh,
-			walkPlan,
-			walkApply,
-			walkDestroy,
-		},
-		Node: &EvalSequence{
-			Nodes: []EvalNode{
-				&EvalLocal{
-					Name:  n.Config.Name,
-					Value: n.Config.RawConfig,
+	return &EvalSequence{
+		Nodes: []EvalNode{
+			&EvalOpFilter{
+				Ops: []walkOperation{
+					walkInput,
+					walkValidate,
+					walkRefresh,
+					walkPlan,
+					walkApply,
+				},
+				Node: &EvalSequence{
+					Nodes: []EvalNode{
+						&EvalLocal{
+							Name:  n.Config.Name,
+							Value: n.Config.RawConfig,
+						},
+					},
+				},
+			},
+			&EvalOpFilter{
+				Ops: []walkOperation{
+					walkPlanDestroy,
+					walkDestroy,
+				},
+				Node: &EvalSequence{
+					Nodes: []EvalNode{
+						&EvalDeleteLocal{
+							Name: n.Config.Name,
+						},
+					},
 				},
 			},
 		},
diff --git a/terraform/test-fixtures/apply-destroy-with-locals/main.tf b/terraform/test-fixtures/apply-destroy-with-locals/main.tf
new file mode 100644
index 0000000000..1ab7518715
--- /dev/null
+++ b/terraform/test-fixtures/apply-destroy-with-locals/main.tf
@@ -0,0 +1,8 @@
+locals {
+  name = "test-${aws_instance.foo.id}"
+}
+resource "aws_instance" "foo" {}
+
+output "name" {
+  value = "${local.name}"
+}
diff --git a/terraform/test-fixtures/provider-with-locals/main.tf b/terraform/test-fixtures/provider-with-locals/main.tf
new file mode 100644
index 0000000000..44b6d46b37
--- /dev/null
+++ b/terraform/test-fixtures/provider-with-locals/main.tf
@@ -0,0 +1,11 @@
+provider "aws" {
+	alias = "${local.foo}"
+}
+
+locals {
+	foo = "bar"
+}
+
+resource "aws_instance" "foo" {
+    value = "${local.foo}"
+}