diff --git a/command/apply_test.go b/command/apply_test.go
index a01ff03a4..ca0816ba7 100644
--- a/command/apply_test.go
+++ b/command/apply_test.go
@@ -1326,6 +1326,59 @@ func TestApply_disableBackup(t *testing.T) {
 	}
 }
 
+// -state-out wasn't taking effect when a plan is supplied. GH-7264
+func TestApply_stateOutWithPlan(t *testing.T) {
+	p := testProvider()
+	ui := new(cli.MockUi)
+
+	tmpDir := testTempDir(t)
+	defer os.RemoveAll(tmpDir)
+
+	statePath := filepath.Join(tmpDir, "state.tfstate")
+	planPath := filepath.Join(tmpDir, "terraform.tfplan")
+
+	args := []string{
+		"-state", statePath,
+		"-out", planPath,
+		testFixturePath("plan"),
+	}
+
+	// Run plan first to get a current plan file
+	pc := &PlanCommand{
+		Meta: Meta{
+			ContextOpts: testCtxConfig(p),
+			Ui:          ui,
+		},
+	}
+	if code := pc.Run(args); code != 0 {
+		t.Fatalf("bad: %d\n\n%s", code, ui.ErrorWriter.String())
+	}
+
+	// now run apply with the generated plan
+	stateOutPath := filepath.Join(tmpDir, "state-new.tfstate")
+
+	args = []string{
+		"-state", statePath,
+		"-state-out", stateOutPath,
+		planPath,
+	}
+
+	ac := &ApplyCommand{
+		Meta: Meta{
+			ContextOpts: testCtxConfig(p),
+			Ui:          ui,
+		},
+	}
+	if code := ac.Run(args); code != 0 {
+		t.Fatalf("bad: %d\n\n%s", code, ui.ErrorWriter.String())
+	}
+
+	// now make sure we wrote out our new state
+	if _, err := os.Stat(stateOutPath); err != nil {
+		t.Fatalf("missing new state file: %s", err)
+	}
+}
+
 func testHttpServer(t *testing.T) net.Listener {
 	ln, err := net.Listen("tcp", "127.0.0.1:0")
 	if err != nil {
diff --git a/command/meta.go b/command/meta.go
index f54fca13d..ddc9606f1 100644
--- a/command/meta.go
+++ b/command/meta.go
@@ -109,14 +109,18 @@ func (m *Meta) Context(copts contextOpts) (*terraform.Context, bool, error) {
 		f.Close()
 		if err == nil {
 			// Setup our state
-			state, statePath, err := StateFromPlan(m.statePath, plan)
+			state, statePath, err := StateFromPlan(m.statePath, m.stateOutPath, plan)
 			if err != nil {
 				return nil, false, fmt.Errorf("Error loading plan: %s", err)
 			}
 
 			// Set our state
 			m.state = state
-			m.stateOutPath = statePath
+
+			// this is used for printing the saved location later
+			if m.stateOutPath == "" {
+				m.stateOutPath = statePath
+			}
 
 			if len(m.variables) > 0 {
 				return nil, false, fmt.Errorf(
diff --git a/command/state.go b/command/state.go
index c9a4ef7f8..b4ff0e583 100644
--- a/command/state.go
+++ b/command/state.go
@@ -169,7 +169,8 @@ func State(opts *StateOpts) (*StateResult, error) {
 
 // StateFromPlan gets our state from the plan.
 func StateFromPlan(
-	localPath string, plan *terraform.Plan) (state.State, string, error) {
+	localPath, outPath string,
+	plan *terraform.Plan) (state.State, string, error) {
 	var result state.State
 	resultPath := localPath
 	if plan != nil && plan.State != nil &&
@@ -186,7 +187,10 @@ func StateFromPlan(
 	}
 
 	if result == nil {
-		local := &state.LocalState{Path: resultPath}
+		local := &state.LocalState{
+			Path:    resultPath,
+			PathOut: outPath,
+		}
 		local.SetState(plan.State)
 		result = local
 	}