diff --git a/addrs/module_instance.go b/addrs/module_instance.go
index 49cbf7863..75c69254a 100644
--- a/addrs/module_instance.go
+++ b/addrs/module_instance.go
@@ -414,9 +414,26 @@ func (m ModuleInstance) TargetContains(other Targetable) bool {
 		}
 		for i, ourStep := range m {
 			otherStep := to[i]
-			if ourStep != otherStep {
+
+			if ourStep.Name != otherStep.Name {
 				return false
 			}
+
+			// if this is our last step, because all targets are parsed as
+			// instances, this may be a ModuleInstance intended to be used as a
+			// Module.
+			if i == len(m)-1 {
+				if ourStep.InstanceKey == NoKey {
+					// If the other step is a keyed instance, then we contain that
+					// step, and if it isn't it's a match, which is true either way
+					return true
+				}
+			}
+
+			if ourStep.InstanceKey != otherStep.InstanceKey {
+				return false
+			}
+
 		}
 		return true
 
diff --git a/addrs/target_test.go b/addrs/target_test.go
index be54f9427..69792c974 100644
--- a/addrs/target_test.go
+++ b/addrs/target_test.go
@@ -20,13 +20,6 @@ func TestTargetContains(t *testing.T) {
 			mustParseTarget("module.foo"),
 			true,
 		},
-		{
-			// module.foo is an unkeyed module instance here, so it cannot
-			// contain another instance
-			mustParseTarget("module.foo"),
-			mustParseTarget("module.foo[0]"),
-			false,
-		},
 		{
 			RootModuleInstance,
 			mustParseTarget("module.foo"),
@@ -99,6 +92,11 @@ func TestTargetContains(t *testing.T) {
 			mustParseTarget("module.bar.test_resource.foo[0]"),
 			true,
 		},
+		{
+			mustParseTarget("module.bax"),
+			mustParseTarget("module.bax[0].test_resource.foo[0]"),
+			true,
+		},
 
 		// Config paths, while never returned from parsing a target, must still
 		// be targetable