diff --git a/terraform/graph_config_node_module.go b/terraform/graph_config_node_module.go
index 22ed3493f..cc6a87b2d 100644
--- a/terraform/graph_config_node_module.go
+++ b/terraform/graph_config_node_module.go
@@ -2,6 +2,7 @@ package terraform
 
 import (
 	"fmt"
+	"strings"
 
 	"github.com/hashicorp/terraform/config"
 	"github.com/hashicorp/terraform/config/module"
@@ -152,7 +153,75 @@ func (n *graphNodeModuleExpanded) EvalTree() EvalNode {
 	}
 }
 
+// GraphNodeFlattenable impl.
+func (n *graphNodeModuleExpanded) FlattenGraph() *Graph {
+	graph := n.Subgraph()
+
+	// Build the string that represents the path. We do this once here
+	// so that we only have to compute it once. The block below is in {}
+	// so that parts drops out of scope immediately.
+	var pathStr string
+	{
+		parts := make([]string, 0, len(graph.Path)*2)
+		for _, p := range graph.Path[1:] {
+			parts = append(parts, "module", p)
+		}
+
+		pathStr = strings.Join(parts, ".")
+	}
+
+	// Go over each vertex in the graph and wrap the configuration
+	// items so that the dependencies properly map to the modules.
+	// See the docs for graphNodeModuleWrappable for more info.
+	for _, v := range graph.Vertices() {
+		if sn, ok := v.(graphNodeModuleSkippable); ok && sn.FlattenSkip() {
+			graph.Remove(v)
+			continue
+		}
+
+		wn, ok := v.(graphNodeModuleWrappable)
+		if !ok {
+			panic("unwrappable node: " + dag.VertexName(v))
+		}
+
+		graph.Replace(v, &graphNodeModuleFlatWrap{
+			graphNodeModuleWrappable: wn,
+
+			Path:       graph.Path,
+			PathString: pathStr,
+		})
+	}
+
+	return graph
+}
+
 // GraphNodeSubgraph impl.
 func (n *graphNodeModuleExpanded) Subgraph() *Graph {
 	return n.Graph
 }
+
+// This interface can be implemented to be skipped/ignored when
+// flattening the module graph.
+type graphNodeModuleSkippable interface {
+	FlattenSkip() bool
+}
+
+// This is the interface that all nodes within a module graph must
+// implement to be wrapped for flattening.
+type graphNodeModuleWrappable interface {
+	graphNodeConfig
+}
+
+// graphNodeModuleFlatWrap wraps elements of the module graph
+// when they are flattened so that the dependency information is
+// correct.
+type graphNodeModuleFlatWrap struct {
+	graphNodeModuleWrappable
+
+	Path       []string
+	PathString string
+}
+
+func (n *graphNodeModuleFlatWrap) Name() string {
+	return fmt.Sprintf("%s.%s", n.PathString, n.graphNodeModuleWrappable.Name())
+}
diff --git a/terraform/graph_config_node_module_test.go b/terraform/graph_config_node_module_test.go
index f30f422a1..35c3cd7a2 100644
--- a/terraform/graph_config_node_module_test.go
+++ b/terraform/graph_config_node_module_test.go
@@ -39,3 +39,42 @@ func TestGraphNodeConfigModuleExpand(t *testing.T) {
 		t.Fatalf("bad:\n\n%s", actual)
 	}
 }
+
+func TestGraphNodeConfigModuleExpandFlatten(t *testing.T) {
+	mod := testModule(t, "graph-node-module-flatten")
+
+	node := &GraphNodeConfigModule{
+		Path:   []string{RootModuleName, "child"},
+		Module: &config.Module{},
+		Tree:   nil,
+	}
+
+	g, err := node.Expand(&BasicGraphBuilder{
+		Steps: []GraphTransformer{
+			&ConfigTransformer{Module: mod},
+		},
+	})
+	if err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	fg := g.(GraphNodeFlattenable)
+
+	actual := strings.TrimSpace(fg.FlattenGraph().String())
+	expected := strings.TrimSpace(testGraphNodeModuleExpandFlattenStr)
+	if actual != expected {
+		t.Fatalf("bad:\n\n%s", actual)
+	}
+}
+
+const testGraphNodeModuleExpandStr = `
+aws_instance.bar
+  aws_instance.foo
+aws_instance.foo
+  module inputs
+module inputs
+`
+
+const testGraphNodeModuleExpandFlattenStr = `
+module.child.aws_instance.foo
+`
diff --git a/terraform/graph_config_node_test.go b/terraform/graph_config_node_test.go
index 279313516..c2b016ece 100644
--- a/terraform/graph_config_node_test.go
+++ b/terraform/graph_config_node_test.go
@@ -113,11 +113,3 @@ func TestGraphNodeConfigVariable_impl(t *testing.T) {
 	var _ dag.NamedVertex = new(GraphNodeConfigVariable)
 	var _ graphNodeConfig = new(GraphNodeConfigVariable)
 }
-
-const testGraphNodeModuleExpandStr = `
-aws_instance.bar
-  aws_instance.foo
-aws_instance.foo
-  module inputs
-module inputs
-`
diff --git a/terraform/test-fixtures/graph-node-module-flatten/child/main.tf b/terraform/test-fixtures/graph-node-module-flatten/child/main.tf
new file mode 100644
index 000000000..919f140bb
--- /dev/null
+++ b/terraform/test-fixtures/graph-node-module-flatten/child/main.tf
@@ -0,0 +1 @@
+resource "aws_instance" "foo" {}
diff --git a/terraform/test-fixtures/graph-node-module-flatten/main.tf b/terraform/test-fixtures/graph-node-module-flatten/main.tf
new file mode 100644
index 000000000..0f6991c53
--- /dev/null
+++ b/terraform/test-fixtures/graph-node-module-flatten/main.tf
@@ -0,0 +1,3 @@
+module "child" {
+    source = "./child"
+}
diff --git a/terraform/transform_module.go b/terraform/transform_module.go
index 816ccc455..7733fe578 100644
--- a/terraform/transform_module.go
+++ b/terraform/transform_module.go
@@ -45,3 +45,8 @@ func (n *graphNodeModuleInput) Name() string {
 func (n *graphNodeModuleInput) EvalTree() EvalNode {
 	return &EvalSetVariables{Variables: n.Variables}
 }
+
+// graphNodeModuleSkippable impl.
+func (n *graphNodeModuleInput) FlattenSkip() bool {
+	return true
+}