diff --git a/terraform/graph_builder_plan.go b/terraform/graph_builder_plan.go
index 9c7e4c1db..9d05d4a43 100644
--- a/terraform/graph_builder_plan.go
+++ b/terraform/graph_builder_plan.go
@@ -74,6 +74,9 @@ func (b *PlanGraphBuilder) Steps() []GraphTransformer {
 			Module:   b.Module,
 		},
 
+		// Add the local values
+		&LocalTransformer{Module: b.Module},
+
 		// Add the outputs
 		&OutputTransformer{Module: b.Module},
 
diff --git a/terraform/graph_builder_plan_test.go b/terraform/graph_builder_plan_test.go
index 25578ebaf..321ddbe3f 100644
--- a/terraform/graph_builder_plan_test.go
+++ b/terraform/graph_builder_plan_test.go
@@ -61,16 +61,22 @@ aws_load_balancer.weblb
   provider.aws
 aws_security_group.firewall
   provider.aws
+local.instance_id
+  aws_instance.web
 meta.count-boundary (count boundary fixup)
   aws_instance.web
   aws_load_balancer.weblb
   aws_security_group.firewall
+  local.instance_id
   openstack_floating_ip.random
+  output.instance_id
   provider.aws
   provider.openstack
   var.foo
 openstack_floating_ip.random
   provider.openstack
+output.instance_id
+  local.instance_id
 provider.aws
   openstack_floating_ip.random
 provider.aws (close)
diff --git a/terraform/graph_builder_refresh.go b/terraform/graph_builder_refresh.go
index 3d3e968fa..beb5a4a44 100644
--- a/terraform/graph_builder_refresh.go
+++ b/terraform/graph_builder_refresh.go
@@ -133,6 +133,9 @@ func (b *RefreshGraphBuilder) Steps() []GraphTransformer {
 		&ParentProviderTransformer{},
 		&AttachProviderConfigTransformer{Module: b.Module},
 
+		// Add the local values
+		&LocalTransformer{Module: b.Module},
+
 		// Add the outputs
 		&OutputTransformer{Module: b.Module},
 
diff --git a/terraform/node_local.go b/terraform/node_local.go
new file mode 100644
index 000000000..e6ae140a6
--- /dev/null
+++ b/terraform/node_local.go
@@ -0,0 +1,80 @@
+package terraform
+
+import (
+	"fmt"
+	"strings"
+
+	"github.com/hashicorp/terraform/config"
+)
+
+// NodeLocal represents a named local value in a particular module.
+//
+// Local value nodes only have one operation, common to all walk types:
+// evaluate the result and place it in state.
+type NodeLocal struct {
+	PathValue []string
+	Config    *config.Local
+}
+
+func (n *NodeLocal) Name() string {
+	result := fmt.Sprintf("local.%s", n.Config.Name)
+	if len(n.PathValue) > 1 {
+		result = fmt.Sprintf("%s.%s", modulePrefixStr(n.PathValue), result)
+	}
+
+	return result
+}
+
+// GraphNodeSubPath
+func (n *NodeLocal) Path() []string {
+	return n.PathValue
+}
+
+// RemovableIfNotTargeted
+func (n *NodeLocal) RemoveIfNotTargeted() bool {
+	return true
+}
+
+// GraphNodeReferenceable
+func (n *NodeLocal) ReferenceableName() []string {
+	name := fmt.Sprintf("local.%s", n.Config.Name)
+	return []string{name}
+}
+
+// GraphNodeReferencer
+func (n *NodeLocal) References() []string {
+	var result []string
+	result = append(result, ReferencesFromConfig(n.Config.RawConfig)...)
+	for _, v := range result {
+		split := strings.Split(v, "/")
+		for i, s := range split {
+			split[i] = s + ".destroy"
+		}
+
+		result = append(result, strings.Join(split, "/"))
+	}
+
+	return result
+}
+
+// GraphNodeEvalable
+func (n *NodeLocal) EvalTree() EvalNode {
+	return &EvalOpFilter{
+		Ops: []walkOperation{
+			walkInput,
+			walkValidate,
+			walkRefresh,
+			walkPlan,
+			walkApply,
+			walkDestroy,
+		},
+		Node: &EvalSequence{
+			Nodes: []EvalNode{
+			/*&EvalWriteLocal{
+				Name:  n.Config.Name,
+				Value: n.Config.RawConfig,
+			},*/
+			},
+		},
+	}
+}
diff --git a/terraform/test-fixtures/graph-builder-plan-basic/main.tf b/terraform/test-fixtures/graph-builder-plan-basic/main.tf
index a40802cc9..47cf9590b 100644
--- a/terraform/test-fixtures/graph-builder-plan-basic/main.tf
+++ b/terraform/test-fixtures/graph-builder-plan-basic/main.tf
@@ -22,3 +22,11 @@ resource "aws_instance" "web" {
 resource "aws_load_balancer" "weblb" {
     members = "${aws_instance.web.id_list}"
 }
+
+locals {
+  instance_id = "${aws_instance.web.id}"
+}
+
+output "instance_id" {
+  value = "${local.instance_id}"
+}
diff --git a/terraform/transform_local.go b/terraform/transform_local.go
new file mode 100644
index 000000000..95ecfc0a4
--- /dev/null
+++ b/terraform/transform_local.go
@@ -0,0 +1,40 @@
+package terraform
+
+import (
+	"github.com/hashicorp/terraform/config/module"
+)
+
+// LocalTransformer is a GraphTransformer that adds all the local values
+// from the configuration to the graph.
+type LocalTransformer struct {
+	Module *module.Tree
+}
+
+func (t *LocalTransformer) Transform(g *Graph) error {
+	return t.transformModule(g, t.Module)
+}
+
+func (t *LocalTransformer) transformModule(g *Graph, m *module.Tree) error {
+	if m == nil {
+		// Can't have any locals if there's no config
+		return nil
+	}
+
+	for _, local := range m.Config().Locals {
+		node := &NodeLocal{
+			PathValue: normalizeModulePath(m.Path()),
+			Config:    local,
+		}
+
+		g.Add(node)
+	}
+
+	// Also populate locals for child modules
+	for _, c := range m.Children() {
+		if err := t.transformModule(g, c); err != nil {
+			return err
+		}
+	}
+
+	return nil
+}
diff --git a/terraform/transform_reference.go b/terraform/transform_reference.go
index c5452354d..ce55e1d77 100644
--- a/terraform/transform_reference.go
+++ b/terraform/transform_reference.go
@@ -296,6 +296,8 @@ func ReferenceFromInterpolatedVar(v config.InterpolatedVariable) []string {
 		return []string{fmt.Sprintf("%s.%d/%s.N", id, idx, id)}
 	case *config.UserVariable:
 		return []string{fmt.Sprintf("var.%s", v.Name)}
+	case *config.LocalVariable:
+		return []string{fmt.Sprintf("local.%s", v.Name)}
 	default:
 		return nil
 	}