diff --git a/terraform/resource.go b/terraform/resource.go
new file mode 100644
index 000000000..3efa11c69
--- /dev/null
+++ b/terraform/resource.go
@@ -0,0 +1,12 @@
+package terraform
+
+// Resource encapsulates a resource, its configuration, its provider,
+// its current state, and potentially a desired diff from the state it
+// wants to reach.
+type Resource struct {
+	Id       string
+	Config   *ResourceConfig
+	Diff     *ResourceDiff
+	Provider ResourceProvider
+	State    *ResourceState
+}
diff --git a/terraform/resource_provider.go b/terraform/resource_provider.go
index dfbed2940..b435142b1 100644
--- a/terraform/resource_provider.go
+++ b/terraform/resource_provider.go
@@ -37,7 +37,9 @@ type ResourceProvider interface {
 	//
 	// If the resource state given has an empty ID, then a new resource
 	// is expected to be created.
-	//Apply(ResourceState, ResourceDiff) (ResourceState, error)
+	Apply(
+		*ResourceState,
+		*ResourceDiff) (*ResourceState, error)
 
 	// Diff diffs a resource versus a desired state and returns
 	// a diff.
diff --git a/terraform/resource_provider_mock.go b/terraform/resource_provider_mock.go
index a973f7927..1e4174cc3 100644
--- a/terraform/resource_provider_mock.go
+++ b/terraform/resource_provider_mock.go
@@ -6,6 +6,12 @@ type MockResourceProvider struct {
 	// Anything you want, in case you need to store extra data with the mock.
 	Meta interface{}
 
+	ApplyCalled          bool
+	ApplyState           *ResourceState
+	ApplyDiff            *ResourceDiff
+	ApplyFn              func(*ResourceState, *ResourceDiff) (*ResourceState, error)
+	ApplyReturn          *ResourceState
+	ApplyReturnError     error
 	ConfigureCalled      bool
 	ConfigureConfig      *ResourceConfig
 	ConfigureReturnError error
@@ -35,6 +41,19 @@ func (p *MockResourceProvider) Configure(c *ResourceConfig) error {
 	return p.ConfigureReturnError
 }
 
+func (p *MockResourceProvider) Apply(
+	state *ResourceState,
+	diff *ResourceDiff) (*ResourceState, error) {
+	p.ApplyCalled = true
+	p.ApplyState = state
+	p.ApplyDiff = diff
+	if p.ApplyFn != nil {
+		return p.ApplyFn(state, diff)
+	}
+
+	return p.ApplyReturn, p.ApplyReturnError
+}
+
 func (p *MockResourceProvider) Diff(
 	state *ResourceState,
 	desired *ResourceConfig) (*ResourceDiff, error) {
diff --git a/terraform/state.go b/terraform/state.go
index 6f56b85af..ba591449a 100644
--- a/terraform/state.go
+++ b/terraform/state.go
@@ -10,13 +10,14 @@ import (
 // can use to keep track of what real world resources it is actually
 // managing.
 type State struct {
-	resources map[string]*ResourceState
-	once      sync.Once
+	Resources map[string]*ResourceState
+
+	once sync.Once
 }
 
 func (s *State) init() {
 	s.once.Do(func() {
-		s.resources = make(map[string]*ResourceState)
+		s.Resources = make(map[string]*ResourceState)
 	})
 }
 
diff --git a/terraform/terraform.go b/terraform/terraform.go
index edff33a99..fae41e5d3 100644
--- a/terraform/terraform.go
+++ b/terraform/terraform.go
@@ -27,6 +27,10 @@ type terraformProvider struct {
 	sync.Once
 }
 
+// This is a function type used to implement a walker for the resource
+// tree internally on the Terraform structure.
+type genericWalkFunc func(*Resource) (map[string]string, error)
+
 // Config is the configuration that must be given to instantiate
 // a Terraform structure.
 type Config struct {
@@ -99,8 +103,14 @@ func New(c *Config) (*Terraform, error) {
 	}, nil
 }
 
-func (t *Terraform) Apply(*State, *Diff) (*State, error) {
-	return nil, nil
+func (t *Terraform) Apply(s *State, d *Diff) (*State, error) {
+	result := new(State)
+	err := t.graph.Walk(t.applyWalkFn(s, d, result))
+	if err != nil {
+		return nil, err
+	}
+
+	return result, nil
 }
 
 func (t *Terraform) Diff(s *State) (*Diff, error) {
@@ -117,13 +127,80 @@ func (t *Terraform) Refresh(*State) (*State, error) {
 	return nil, nil
 }
 
+func (t *Terraform) applyWalkFn(
+	state *State,
+	diff *Diff,
+	result *State) depgraph.WalkFunc {
+	var l sync.Mutex
+
+	// Initialize the result
+	result.init()
+
+	cb := func(r *Resource) (map[string]string, error) {
+		rs, err := r.Provider.Apply(r.State, r.Diff)
+		if err != nil {
+			return nil, err
+		}
+
+		// Update the resulting diff
+		l.Lock()
+		result.Resources[r.Id] = rs
+		l.Unlock()
+
+		// Determine the new state and update variables
+		vars := make(map[string]string)
+		for ak, av := range rs.Attributes {
+			vars[fmt.Sprintf("%s.%s", r.Id, ak)] = av
+		}
+
+		return vars, nil
+	}
+
+	return t.genericWalkFn(state, diff, cb)
+}
+
 func (t *Terraform) diffWalkFn(
 	state *State, result *Diff) depgraph.WalkFunc {
-	var l sync.RWMutex
+	var l sync.Mutex
 
 	// Initialize the result diff so we can write to it
 	result.init()
 
+	cb := func(r *Resource) (map[string]string, error) {
+		diff, err := r.Provider.Diff(r.State, r.Config)
+		if err != nil {
+			return nil, err
+		}
+
+		// If there were no diff items, return right away
+		if diff == nil || len(diff.Attributes) == 0 {
+			return nil, nil
+		}
+
+		// Update the resulting diff
+		l.Lock()
+		result.Resources[r.Id] = diff
+		l.Unlock()
+
+		// Determine the new state and update variables
+		vars := make(map[string]string)
+		rs := r.State.MergeDiff(diff.Attributes)
+		for ak, av := range rs.Attributes {
+			vars[fmt.Sprintf("%s.%s", r.Id, ak)] = av
+		}
+
+		return vars, nil
+	}
+
+	return t.genericWalkFn(state, nil, cb)
+}
+
+func (t *Terraform) genericWalkFn(
+	state *State,
+	diff *Diff,
+	cb genericWalkFunc) depgraph.WalkFunc {
+	var l sync.Mutex
+
 	// Initialize the variables for application
 	vars := make(map[string]string)
 	for k, v := range t.variables {
@@ -157,12 +234,17 @@ func (t *Terraform) diffWalkFn(
 			return err
 		}
 
-		l.RLock()
+		// Get the resource state
 		var rs *ResourceState
 		if state != nil {
-			rs = state.resources[r.Id()]
+			rs = state.Resources[r.Id()]
+		}
+
+		// Get the resource diff
+		var rd *ResourceDiff
+		if diff != nil {
+			rd = diff.Resources[r.Id()]
 		}
-		l.RUnlock()
 
 		if len(vars) > 0 {
 			if err := r.RawConfig.Interpolate(vars); err != nil {
@@ -177,30 +259,30 @@ func (t *Terraform) diffWalkFn(
 		}
 		rs.Type = r.Type
 
-		diff, err := p.Provider.Diff(rs, &ResourceConfig{
-			ComputedKeys: r.RawConfig.UnknownKeys(),
-			Raw:          r.RawConfig.Config(),
+		// Call the callack
+		newVars, err := cb(&Resource{
+			Id: r.Id(),
+			Config: &ResourceConfig{
+				ComputedKeys: r.RawConfig.UnknownKeys(),
+				Raw:          r.RawConfig.Config(),
+			},
+			Diff:     rd,
+			Provider: p.Provider,
+			State:    rs,
 		})
 		if err != nil {
 			return err
 		}
 
-		// If there were no diff items, return right away
-		if diff == nil || len(diff.Attributes) == 0 {
-			return nil
-		}
+		if len(newVars) > 0 {
+			// Acquire a lock since this function is called in parallel
+			l.Lock()
+			defer l.Unlock()
 
-		// Acquire a lock since this function is called in parallel
-		l.Lock()
-		defer l.Unlock()
-
-		// Update the resulting diff
-		result.Resources[r.Id()] = diff
-
-		// Determine the new state and update variables
-		rs = rs.MergeDiff(diff.Attributes)
-		for ak, av := range rs.Attributes {
-			vars[fmt.Sprintf("%s.%s", r.Id(), ak)] = av
+			// Update variables
+			for k, v := range newVars {
+				vars[k] = v
+			}
 		}
 
 		return nil
diff --git a/terraform/terraform_test.go b/terraform/terraform_test.go
index 860da2daf..9dcfbaf3c 100644
--- a/terraform/terraform_test.go
+++ b/terraform/terraform_test.go
@@ -203,6 +203,22 @@ func TestNew_variables(t *testing.T) {
 	}
 }
 
+func TestTerraformApply(t *testing.T) {
+	tf := testTerraform(t, "apply-good")
+
+	s := &State{}
+	d := &Diff{}
+
+	state, err := tf.Apply(s, d)
+	if err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	if len(state.Resources) < 2 {
+		t.Fatalf("bad: %#v", state.Resources)
+	}
+}
+
 func TestTerraformDiff(t *testing.T) {
 	tf := testTerraform(t, "diff-good")
 
@@ -291,6 +307,14 @@ func testProviderFunc(n string, rs []string) ResourceProviderFactory {
 	}
 
 	return func() (ResourceProvider, error) {
+		applyFn := func(
+			s *ResourceState,
+			d *ResourceDiff) (*ResourceState, error) {
+			return &ResourceState{
+				ID: "foo",
+			}, nil
+		}
+
 		diffFn := func(
 			s *ResourceState,
 			c *ResourceConfig) (*ResourceDiff, error) {
@@ -343,6 +367,7 @@ func testProviderFunc(n string, rs []string) ResourceProviderFactory {
 
 		result := &MockResourceProvider{
 			Meta:            n,
+			ApplyFn:         applyFn,
 			DiffFn:          diffFn,
 			ResourcesReturn: resources,
 		}
diff --git a/terraform/test-fixtures/apply-good/main.tf b/terraform/test-fixtures/apply-good/main.tf
new file mode 100644
index 000000000..94ed55478
--- /dev/null
+++ b/terraform/test-fixtures/apply-good/main.tf
@@ -0,0 +1,7 @@
+resource "aws_instance" "foo" {
+    num = "2"
+}
+
+resource "aws_instance" "bar" {
+    foo = "${aws_instance.foo.num}"
+}