diff --git a/terraform/context_test.go b/terraform/context_test.go
index 46dce5f5a..cabc77203 100644
--- a/terraform/context_test.go
+++ b/terraform/context_test.go
@@ -44,6 +44,25 @@ func TestContext2Validate_badVar(t *testing.T) {
 	}
 }
 
+func TestContext2Validate_countNegative(t *testing.T) {
+	p := testProvider("aws")
+	m := testModule(t, "validate-count-negative")
+	c := testContext2(t, &ContextOpts{
+		Module: m,
+		Providers: map[string]ResourceProviderFactory{
+			"aws": testProviderFuncFixed(p),
+		},
+	})
+
+	w, e := c.Validate()
+	if len(w) > 0 {
+		t.Fatalf("bad: %#v", w)
+	}
+	if len(e) == 0 {
+		t.Fatalf("bad: %#v", e)
+	}
+}
+
 func TestContext2Validate_moduleBadOutput(t *testing.T) {
 	p := testProvider("aws")
 	m := testModule(t, "validate-bad-module-output")
@@ -263,25 +282,6 @@ func TestContext2Validate_selfRefMultiAll(t *testing.T) {
 }
 
 /*
-func TestContextValidate_countNegative(t *testing.T) {
-	p := testProvider("aws")
-	m := testModule(t, "validate-count-negative")
-	c := testContext(t, &ContextOpts{
-		Module: m,
-		Providers: map[string]ResourceProviderFactory{
-			"aws": testProviderFuncFixed(p),
-		},
-	})
-
-	w, e := c.Validate()
-	if len(w) > 0 {
-		t.Fatalf("bad: %#v", w)
-	}
-	if len(e) == 0 {
-		t.Fatalf("bad: %#v", e)
-	}
-}
-
 func TestContextValidate_countVariable(t *testing.T) {
 	p := testProvider("aws")
 	m := testModule(t, "apply-count-variable")
diff --git a/terraform/eval_context.go b/terraform/eval_context.go
index 7ae383f0a..4c8806987 100644
--- a/terraform/eval_context.go
+++ b/terraform/eval_context.go
@@ -6,6 +6,9 @@ import (
 
 // EvalContext is the interface that is given to eval nodes to execute.
 type EvalContext interface {
+	// Path is the current module path.
+	Path() []string
+
 	// InitProvider initializes the provider with the given name and
 	// returns the implementation of the resource provider or an error.
 	//
@@ -41,6 +44,9 @@ type MockEvalContext struct {
 	InterpolateResource     *Resource
 	InterpolateConfigResult *ResourceConfig
 	InterpolateError        error
+
+	PathCalled bool
+	PathPath   []string
 }
 
 func (c *MockEvalContext) InitProvider(n string) (ResourceProvider, error) {
@@ -62,3 +68,8 @@ func (c *MockEvalContext) Interpolate(
 	c.InterpolateResource = resource
 	return c.InterpolateConfigResult, c.InterpolateError
 }
+
+func (c *MockEvalContext) Path() []string {
+	c.PathCalled = true
+	return c.PathPath
+}
diff --git a/terraform/eval_context_builtin.go b/terraform/eval_context_builtin.go
index 2a1a298c6..dbd1dc02b 100644
--- a/terraform/eval_context_builtin.go
+++ b/terraform/eval_context_builtin.go
@@ -10,7 +10,7 @@ import (
 // BuiltinEvalContext is an EvalContext implementation that is used by
 // Terraform by default.
 type BuiltinEvalContext struct {
-	Path         []string
+	PathValue    []string
 	Interpolater *Interpolater
 	Providers    map[string]ResourceProviderFactory
 
@@ -48,7 +48,7 @@ func (ctx *BuiltinEvalContext) Interpolate(
 	cfg *config.RawConfig, r *Resource) (*ResourceConfig, error) {
 	if cfg != nil {
 		scope := &InterpolationScope{
-			Path:     ctx.Path,
+			Path:     ctx.Path(),
 			Resource: r,
 		}
 		vs, err := ctx.Interpolater.Values(scope, cfg.Variables)
@@ -67,6 +67,10 @@ func (ctx *BuiltinEvalContext) Interpolate(
 	return result, nil
 }
 
+func (ctx *BuiltinEvalContext) Path() []string {
+	return ctx.PathValue
+}
+
 func (ctx *BuiltinEvalContext) init() {
 	// We nil-check the things below because they're meant to be configured,
 	// and we just default them to non-nil.
diff --git a/terraform/graph.go b/terraform/graph.go
index 539150772..36b19b797 100644
--- a/terraform/graph.go
+++ b/terraform/graph.go
@@ -135,10 +135,10 @@ func (g *Graph) walk(walker GraphWalker) {
 	ctx := walker.EnterGraph(g)
 	defer walker.ExitGraph(g)
 
-	// Walk the graph
-	g.AcyclicGraph.Walk(func(v dag.Vertex) {
+	// Walk the graph.
+	var walkFn func(v dag.Vertex)
+	walkFn = func(v dag.Vertex) {
 		walker.EnterVertex(v)
-		defer walker.ExitVertex(v)
 
 		// If the node is eval-able, then evaluate it.
 		if ev, ok := v.(GraphNodeEvalable); ok {
@@ -154,7 +154,24 @@ func (g *Graph) walk(walker GraphWalker) {
 			output, err := Eval(tree, ctx)
 			walker.ExitEvalTree(v, output, err)
 		}
-	})
+
+		// If the node is dynamically expanded, then expand it
+		if ev, ok := v.(GraphNodeDynamicExpandable); ok {
+			g, err := ev.DynamicExpand(ctx)
+			if err != nil {
+				walker.ExitVertex(v, err)
+				return
+			}
+
+			// Walk the subgraph
+			g.walk(walker)
+		}
+
+		// Exit the vertex
+		walker.ExitVertex(v, nil)
+	}
+
+	g.AcyclicGraph.Walk(walkFn)
 }
 
 // GraphNodeDependable is an interface which says that a node can be
diff --git a/terraform/graph_config_node.go b/terraform/graph_config_node.go
index f5de5833e..da14549b3 100644
--- a/terraform/graph_config_node.go
+++ b/terraform/graph_config_node.go
@@ -98,6 +98,7 @@ func (n *GraphNodeConfigResource) DependableName() []string {
 	return []string{n.Resource.Id()}
 }
 
+// GraphNodeDependent impl.
 func (n *GraphNodeConfigResource) DependentOn() []string {
 	result := make([]string, len(n.Resource.DependsOn),
 		len(n.Resource.RawCount.Variables)+
@@ -122,17 +123,17 @@ func (n *GraphNodeConfigResource) Name() string {
 	return n.Resource.Id()
 }
 
-// GraphNodeEvalable impl.
-func (n *GraphNodeConfigResource) EvalTree() EvalNode {
-	return &EvalSequence{
-		Nodes: []EvalNode{
-			&EvalValidateResource{
-				Provider:     &EvalGetProvider{Name: n.ProvidedBy()},
-				Config:       &EvalInterpolate{Config: n.Resource.RawConfig},
-				ProviderType: n.ProvidedBy(),
-			},
+// GraphNodeDynamicExpandable impl.
+func (n *GraphNodeConfigResource) DynamicExpand(ctx EvalContext) (*Graph, error) {
+	// Build the graph
+	b := &BasicGraphBuilder{
+		Steps: []GraphTransformer{
+			&ResourceCountTransformer{Resource: n.Resource},
+			&RootTransformer{},
 		},
 	}
+
+	return b.Build(ctx.Path())
 }
 
 // GraphNodeProviderConsumer
diff --git a/terraform/graph_walk.go b/terraform/graph_walk.go
index 0eba6df09..13b169559 100644
--- a/terraform/graph_walk.go
+++ b/terraform/graph_walk.go
@@ -10,7 +10,7 @@ type GraphWalker interface {
 	EnterGraph(*Graph) EvalContext
 	ExitGraph(*Graph)
 	EnterVertex(dag.Vertex)
-	ExitVertex(dag.Vertex)
+	ExitVertex(dag.Vertex, error)
 	EnterEvalTree(dag.Vertex, EvalNode) EvalNode
 	ExitEvalTree(dag.Vertex, interface{}, error)
 }
@@ -23,6 +23,6 @@ type NullGraphWalker struct{}
 func (NullGraphWalker) EnterGraph(*Graph) EvalContext                   { return nil }
 func (NullGraphWalker) ExitGraph(*Graph)                                {}
 func (NullGraphWalker) EnterVertex(dag.Vertex)                          {}
-func (NullGraphWalker) ExitVertex(dag.Vertex)                           {}
+func (NullGraphWalker) ExitVertex(dag.Vertex, error)                    {}
 func (NullGraphWalker) EnterEvalTree(v dag.Vertex, n EvalNode) EvalNode { return n }
 func (NullGraphWalker) ExitEvalTree(dag.Vertex, interface{}, error)     {}
diff --git a/terraform/graph_walk_context.go b/terraform/graph_walk_context.go
index d018c4a88..d576375eb 100644
--- a/terraform/graph_walk_context.go
+++ b/terraform/graph_walk_context.go
@@ -27,7 +27,7 @@ type ContextGraphWalker struct {
 
 func (w *ContextGraphWalker) EnterGraph(g *Graph) EvalContext {
 	return &BuiltinEvalContext{
-		Path:      g.Path,
+		PathValue: g.Path,
 		Providers: w.Context.providers,
 		Interpolater: &Interpolater{
 			Operation: w.Operation,
diff --git a/terraform/test-fixtures/transform-resource-count-basic/main.tf b/terraform/test-fixtures/transform-resource-count-basic/main.tf
new file mode 100644
index 000000000..83bdd56e6
--- /dev/null
+++ b/terraform/test-fixtures/transform-resource-count-basic/main.tf
@@ -0,0 +1,4 @@
+resource "aws_instance" "foo" {
+    count = 3
+    value = "${aws_instance.foo.0.value}"
+}
diff --git a/terraform/test-fixtures/transform-resource-count-negative/main.tf b/terraform/test-fixtures/transform-resource-count-negative/main.tf
new file mode 100644
index 000000000..267e20086
--- /dev/null
+++ b/terraform/test-fixtures/transform-resource-count-negative/main.tf
@@ -0,0 +1,4 @@
+resource "aws_instance" "foo" {
+    count = -5
+    value = "${aws_instance.foo.0.value}"
+}
diff --git a/terraform/transform_expand.go b/terraform/transform_expand.go
index ada9775f2..def09ce27 100644
--- a/terraform/transform_expand.go
+++ b/terraform/transform_expand.go
@@ -13,6 +13,14 @@ type GraphNodeExpandable interface {
 	Expand(GraphBuilder) (*Graph, error)
 }
 
+// GraphNodeDynamicExpandable is an interface that nodes can implement
+// to signal that they can be expanded at eval-time (hence dynamic).
+// These nodes are given the eval context and are expected to return
+// a new subgraph.
+type GraphNodeDynamicExpandable interface {
+	DynamicExpand(EvalContext) (*Graph, error)
+}
+
 // GraphNodeSubgraph is an interface a node can implement if it has
 // a larger subgraph that should be walked.
 type GraphNodeSubgraph interface {
diff --git a/terraform/transform_resource.go b/terraform/transform_resource.go
new file mode 100644
index 000000000..49ef0fc6e
--- /dev/null
+++ b/terraform/transform_resource.go
@@ -0,0 +1,90 @@
+package terraform
+
+import (
+	"fmt"
+
+	"github.com/hashicorp/terraform/config"
+	"github.com/hashicorp/terraform/dag"
+)
+
+// ResourceCountTransformer is a GraphTransformer that expands the count
+// out for a specific resource.
+type ResourceCountTransformer struct {
+	Resource *config.Resource
+}
+
+func (t *ResourceCountTransformer) Transform(g *Graph) error {
+	// Expand the resource count
+	count, err := t.Resource.Count()
+	if err != nil {
+		return err
+	}
+
+	// Don't allow the count to be negative
+	if count < 0 {
+		return fmt.Errorf("negative count: %d", count)
+	}
+
+	// For each count, build and add the node
+	nodes := make([]dag.Vertex, count)
+	for i := 0; i < count; i++ {
+		// Save the node for later so we can do connections
+		nodes[i] = &graphNodeExpandedResource{
+			Index:    i,
+			Resource: t.Resource,
+		}
+
+		// Add the node now
+		g.Add(nodes[i])
+	}
+
+	// Make the dependency connections
+	for _, n := range nodes {
+		// Connect the dependents. We ignore the return value for missing
+		// dependents since that should've been caught at a higher level.
+		g.ConnectDependent(n)
+	}
+
+	return nil
+}
+
+type graphNodeExpandedResource struct {
+	Index    int
+	Resource *config.Resource
+}
+
+func (n *graphNodeExpandedResource) Name() string {
+	return fmt.Sprintf("%s #%d", n.Resource.Id(), n.Index)
+}
+
+// GraphNodeDependable impl.
+func (n *graphNodeExpandedResource) DependableName() []string {
+	return []string{
+		n.Resource.Id(),
+		fmt.Sprintf("%s.%d", n.Resource.Id(), n.Index),
+	}
+}
+
+// GraphNodeDependent impl.
+func (n *graphNodeExpandedResource) DependentOn() []string {
+	config := &GraphNodeConfigResource{Resource: n.Resource}
+	return config.DependentOn()
+}
+
+// GraphNodeProviderConsumer
+func (n *graphNodeExpandedResource) ProvidedBy() string {
+	return resourceProvider(n.Resource.Type)
+}
+
+// GraphNodeEvalable impl.
+func (n *graphNodeExpandedResource) EvalTree() EvalNode {
+	return &EvalSequence{
+		Nodes: []EvalNode{
+			&EvalValidateResource{
+				Provider:     &EvalGetProvider{Name: n.ProvidedBy()},
+				Config:       &EvalInterpolate{Config: n.Resource.RawConfig},
+				ProviderType: n.ProvidedBy(),
+			},
+		},
+	}
+}
diff --git a/terraform/transform_resource_test.go b/terraform/transform_resource_test.go
new file mode 100644
index 000000000..15c29d43e
--- /dev/null
+++ b/terraform/transform_resource_test.go
@@ -0,0 +1,47 @@
+package terraform
+
+import (
+	"strings"
+	"testing"
+)
+
+func TestResourceCountTransformer(t *testing.T) {
+	cfg := testModule(t, "transform-resource-count-basic").Config()
+	resource := cfg.Resources[0]
+
+	g := Graph{Path: RootModulePath}
+	{
+		tf := &ResourceCountTransformer{Resource: resource}
+		if err := tf.Transform(&g); err != nil {
+			t.Fatalf("err: %s", err)
+		}
+	}
+
+	actual := strings.TrimSpace(g.String())
+	expected := strings.TrimSpace(testResourceCountTransformStr)
+	if actual != expected {
+		t.Fatalf("bad:\n\n%s", actual)
+	}
+}
+
+func TestResourceCountTransformer_countNegative(t *testing.T) {
+	cfg := testModule(t, "transform-resource-count-negative").Config()
+	resource := cfg.Resources[0]
+
+	g := Graph{Path: RootModulePath}
+	{
+		tf := &ResourceCountTransformer{Resource: resource}
+		if err := tf.Transform(&g); err == nil {
+			t.Fatal("should error")
+		}
+	}
+}
+
+const testResourceCountTransformStr = `
+aws_instance.foo #0
+  aws_instance.foo #2
+aws_instance.foo #1
+  aws_instance.foo #2
+aws_instance.foo #2
+  aws_instance.foo #2
+`