diff --git a/terraform/context_test.go b/terraform/context_test.go
index 0cb256168..999730bd6 100644
--- a/terraform/context_test.go
+++ b/terraform/context_test.go
@@ -6593,6 +6593,48 @@ module.child:
 	`)
 }
 
+// GH-1858
+func TestContext2Apply_targetedModuleDep(t *testing.T) {
+	m := testModule(t, "apply-targeted-module-dep")
+	p := testProvider("aws")
+	p.ApplyFn = testApplyFn
+	p.DiffFn = testDiffFn
+	ctx := testContext2(t, &ContextOpts{
+		Module: m,
+		Providers: map[string]ResourceProviderFactory{
+			"aws": testProviderFuncFixed(p),
+		},
+		Targets: []string{"aws_instance.foo"},
+	})
+
+	if _, err := ctx.Plan(); err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	state, err := ctx.Apply()
+	if err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	checkStateString(t, state, `
+aws_instance.foo:
+  ID = foo
+  foo = foo
+  type = aws_instance
+
+  Dependencies:
+    module.child
+
+module.child:
+  aws_instance.mod:
+    ID = foo
+
+  Outputs:
+
+  output = foo
+	`)
+}
+
 func TestContext2Apply_targetedModuleResource(t *testing.T) {
 	m := testModule(t, "apply-targeted-module-resource")
 	p := testProvider("aws")
diff --git a/terraform/graph_builder.go b/terraform/graph_builder.go
index 1fbeb7399..a4475372e 100644
--- a/terraform/graph_builder.go
+++ b/terraform/graph_builder.go
@@ -140,10 +140,6 @@ func (b *BuiltinGraphBuilder) Steps(path []string) []GraphTransformer {
 		// Make sure all the connections that are proxies are connected through
 		&ProxyTransformer{},
 
-		// Optionally reduces the graph to a user-specified list of targets and
-		// their dependencies.
-		&TargetsTransformer{Targets: b.Targets, Destroy: b.Destroy},
-
 		// Make sure we have a single root
 		&RootTransformer{},
 	}
@@ -152,6 +148,10 @@ func (b *BuiltinGraphBuilder) Steps(path []string) []GraphTransformer {
 	// We don't do the following for modules.
 	if len(path) <= 1 {
 		steps = append(steps,
+			// Optionally reduces the graph to a user-specified list of targets and
+			// their dependencies.
+			&TargetsTransformer{Targets: b.Targets, Destroy: b.Destroy},
+
 			// Prune the providers and provisioners. This must happen
 			// only once because flattened modules might depend on empty
 			// providers.
diff --git a/terraform/test-fixtures/apply-targeted-module-dep/child/main.tf b/terraform/test-fixtures/apply-targeted-module-dep/child/main.tf
new file mode 100644
index 000000000..90a7c407b
--- /dev/null
+++ b/terraform/test-fixtures/apply-targeted-module-dep/child/main.tf
@@ -0,0 +1,5 @@
+resource "aws_instance" "mod" { }
+
+output "output" {
+  value = "${aws_instance.mod.id}"
+}
diff --git a/terraform/test-fixtures/apply-targeted-module-dep/main.tf b/terraform/test-fixtures/apply-targeted-module-dep/main.tf
new file mode 100644
index 000000000..754219c3e
--- /dev/null
+++ b/terraform/test-fixtures/apply-targeted-module-dep/main.tf
@@ -0,0 +1,7 @@
+module "child" {
+    source = "./child"
+}
+
+resource "aws_instance" "foo" {
+    foo = "${module.child.output}"
+}