diff --git a/addrs/module_call.go b/addrs/module_call.go
index c496cdc46..02163ef7d 100644
--- a/addrs/module_call.go
+++ b/addrs/module_call.go
@@ -80,6 +80,15 @@ type AbsModuleCallOutput struct {
 	Name string
 }
 
+// ModuleCallOutput returns the referenceable ModuleCallOutput for this
+// particular instance.
+func (co AbsModuleCallOutput) ModuleCallOutput() ModuleCallOutput {
+	return ModuleCallOutput{
+		Call: co.Call.Call,
+		Name: co.Name,
+	}
+}
+
 func (co AbsModuleCallOutput) String() string {
 	return fmt.Sprintf("%s.%s", co.Call.String(), co.Name)
 }
diff --git a/states/state_string.go b/states/state_string.go
index 1c326ece9..680acf7a4 100644
--- a/states/state_string.go
+++ b/states/state_string.go
@@ -55,9 +55,7 @@ func (s *State) String() string {
 			buf.WriteByte('.')
 			buf.WriteString(step.Name)
 			if step.InstanceKey != addrs.NoKey {
-				buf.WriteByte('[')
 				buf.WriteString(step.InstanceKey.String())
-				buf.WriteByte(']')
 			}
 		}
 		buf.WriteString(":\n")
diff --git a/terraform/context_apply_test.go b/terraform/context_apply_test.go
index 98014080b..e2add81e4 100644
--- a/terraform/context_apply_test.go
+++ b/terraform/context_apply_test.go
@@ -10940,3 +10940,78 @@ func TestContext2Apply_ProviderMeta_refreshdata_setInvalid(t *testing.T) {
 		t.Errorf("Expected unsupported argument error, none received")
 	}
 }
+
+func TestContext2Apply_expandModuleVariables(t *testing.T) {
+	m := testModuleInline(t, map[string]string{
+		"main.tf": `
+module "mod1" {
+  for_each = toset(["a"])
+  source = "./mod"
+}
+
+module "mod2" {
+  source = "./mod"
+  in = module.mod1["a"].out
+}
+`,
+		"mod/main.tf": `
+resource "aws_instance" "foo" {
+  foo = var.in
+}
+
+variable "in" {
+  type = string
+  default = "default"
+}
+
+output "out" {
+  value = aws_instance.foo.id
+}
+`,
+	})
+
+	p := testProvider("aws")
+	p.ApplyFn = testApplyFn
+	p.DiffFn = testDiffFn
+	ctx := testContext2(t, &ContextOpts{
+		Config: m,
+		Providers: map[addrs.Provider]providers.Factory{
+			addrs.NewDefaultProvider("aws"): testProviderFuncFixed(p),
+		},
+	})
+
+	_, diags := ctx.Plan()
+	if diags.HasErrors() {
+		t.Fatal(diags.ErrWithWarnings())
+	}
+
+	state, diags := ctx.Apply()
+	if diags.HasErrors() {
+		t.Fatal(diags.ErrWithWarnings())
+	}
+
+	expected := `<no state>
+module.mod1["a"]:
+  aws_instance.foo:
+    ID = foo
+    provider = provider["registry.terraform.io/hashicorp/aws"]
+    foo = default
+    type = aws_instance
+
+  Outputs:
+
+  out = foo
+module.mod2:
+  aws_instance.foo:
+    ID = foo
+    provider = provider["registry.terraform.io/hashicorp/aws"]
+    foo = foo
+    type = aws_instance
+
+    Dependencies:
+      module.mod1.aws_instance.foo`
+
+	if state.String() != expected {
+		t.Fatalf("expected:\n%s\ngot:\n%s\n", expected, state)
+	}
+}
diff --git a/terraform/transform_reference.go b/terraform/transform_reference.go
index 74df6628a..ef64eb2c1 100644
--- a/terraform/transform_reference.go
+++ b/terraform/transform_reference.go
@@ -262,6 +262,11 @@ func (m *ReferenceMap) References(v dag.Vertex) []dag.Vertex {
 				subject = ri.ContainingResource()
 			case addrs.ResourceInstancePhase:
 				subject = ri.ContainingResource()
+			case addrs.AbsModuleCallOutput:
+				subject = ri.ModuleCallOutput()
+			default:
+				log.Printf("[WARN] ReferenceTransformer: reference not found: %q", subject)
+				continue
 			}
 			key = m.referenceMapKey(v, subject)
 		}