diff --git a/terraform/context_apply_test.go b/terraform/context_apply_test.go
index 337261616..bcec45cfc 100644
--- a/terraform/context_apply_test.go
+++ b/terraform/context_apply_test.go
@@ -1858,6 +1858,60 @@ func TestContext2Apply_moduleProviderCloseNested(t *testing.T) {
 	}
 }
 
+// Tests that variables used as module vars that reference data that
+// already exists in the state and requires no diff works properly. This
+// fixes an issue faced where module variables were pruned because they were
+// accessing "non-existent" resources (they existed, just not in the graph
+// cause they weren't in the diff).
+func TestContext2Apply_moduleVarRefExisting(t *testing.T) {
+	m := testModule(t, "apply-ref-existing")
+	p := testProvider("aws")
+	p.ApplyFn = testApplyFn
+	p.DiffFn = testDiffFn
+
+	state := &State{
+		Modules: []*ModuleState{
+			&ModuleState{
+				Path: rootModulePath,
+				Resources: map[string]*ResourceState{
+					"aws_instance.foo": &ResourceState{
+						Type: "aws_instance",
+						Primary: &InstanceState{
+							ID: "foo",
+							Attributes: map[string]string{
+								"foo": "bar",
+							},
+						},
+					},
+				},
+			},
+		},
+	}
+
+	ctx := testContext2(t, &ContextOpts{
+		Module: m,
+		Providers: map[string]ResourceProviderFactory{
+			"aws": testProviderFuncFixed(p),
+		},
+		State: state,
+	})
+
+	if _, err := ctx.Plan(); err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	state, err := ctx.Apply()
+	if err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	actual := strings.TrimSpace(state.String())
+	expected := strings.TrimSpace(testTerraformApplyModuleVarRefExistingStr)
+	if actual != expected {
+		t.Fatalf("bad: \n%s", actual)
+	}
+}
+
 func TestContext2Apply_moduleVarResourceCount(t *testing.T) {
 	m := testModule(t, "apply-module-var-resource-count")
 	p := testProvider("aws")
diff --git a/terraform/terraform_test.go b/terraform/terraform_test.go
index 23fe5aeeb..60b26b23b 100644
--- a/terraform/terraform_test.go
+++ b/terraform/terraform_test.go
@@ -494,6 +494,18 @@ module.child:
     provider = aws.eu
 `
 
+const testTerraformApplyModuleVarRefExistingStr = `
+aws_instance.foo:
+  ID = foo
+  foo = bar
+
+module.child:
+  aws_instance.foo:
+    ID = foo
+    type = aws_instance
+    value = bar
+`
+
 const testTerraformApplyOutputOrphanStr = `
 <no state>
 Outputs:
diff --git a/terraform/test-fixtures/apply-ref-existing/child/main.tf b/terraform/test-fixtures/apply-ref-existing/child/main.tf
new file mode 100644
index 000000000..cd1e56eec
--- /dev/null
+++ b/terraform/test-fixtures/apply-ref-existing/child/main.tf
@@ -0,0 +1,5 @@
+variable "var" {}
+
+resource "aws_instance" "foo" {
+    value = "${var.var}"
+}
diff --git a/terraform/test-fixtures/apply-ref-existing/main.tf b/terraform/test-fixtures/apply-ref-existing/main.tf
new file mode 100644
index 000000000..8aa356391
--- /dev/null
+++ b/terraform/test-fixtures/apply-ref-existing/main.tf
@@ -0,0 +1,7 @@
+resource "aws_instance" "foo" { foo = "bar" }
+
+module "child" {
+    source = "./child"
+
+    var = "${aws_instance.foo.foo}"
+}
diff --git a/terraform/transform_module_variable.go b/terraform/transform_module_variable.go
index 1e035107c..e685b918e 100644
--- a/terraform/transform_module_variable.go
+++ b/terraform/transform_module_variable.go
@@ -5,7 +5,6 @@ import (
 
 	"github.com/hashicorp/terraform/config"
 	"github.com/hashicorp/terraform/config/module"
-	"github.com/hashicorp/terraform/dag"
 )
 
 // ModuleVariableTransformer is a GraphTransformer that adds all the variables
@@ -68,9 +67,6 @@ func (t *ModuleVariableTransformer) transformSingle(g *Graph, parent, m *module.
 		return nil
 	}
 
-	// Build the reference map so we can determine if we're referencing things.
-	refMap := NewReferenceMap(g.Vertices())
-
 	// Add all variables here
 	for _, v := range vars {
 		// Determine the value of the variable. If it isn't in the
@@ -100,20 +96,6 @@ func (t *ModuleVariableTransformer) transformSingle(g *Graph, parent, m *module.
 			Module:    t.Module,
 		}
 
-		// If the node references something, then we check to make sure
-		// that the thing it references is in the graph. If it isn't, then
-		// we don't add it because we may not be able to compute the output.
-		//
-		// If the node references nothing, we always include it since there
-		// is no other clear time to compute it.
-		matches, missing := refMap.References(node)
-		if len(missing) > 0 {
-			log.Printf(
-				"[INFO] Not including %q in graph, matches: %v, missing: %s",
-				dag.VertexName(node), matches, missing)
-			continue
-		}
-
 		// Add it!
 		g.Add(node)
 	}