diff --git a/command/init_test.go b/command/init_test.go
index fcf0e2ec0..fdda26ea6 100644
--- a/command/init_test.go
+++ b/command/init_test.go
@@ -976,7 +976,8 @@ func TestInit_pluginDirReset(t *testing.T) {
 	}
 
 	// make sure we remove the plugin-dir record
-	if code := c.Run(nil); code != 0 {
+	args = []string{"-plugin-dir="}
+	if code := c.Run(args); code != 0 {
 		t.Fatalf("bad: \n%s", ui.ErrorWriter)
 	}
 
diff --git a/command/plugins.go b/command/plugins.go
index 2dce2510f..29fb0c5cc 100644
--- a/command/plugins.go
+++ b/command/plugins.go
@@ -113,9 +113,14 @@ func (r *multiVersionProviderResolver) ResolveProviders(
 
 // store the user-supplied path for plugin discovery
 func (m *Meta) storePluginPath(pluginPath []string) error {
+	if len(pluginPath) == 0 {
+		return nil
+	}
+
 	path := filepath.Join(m.DataDir(), PluginPathFile)
 
-	if len(pluginPath) == 0 {
+	// remove the plugin dir record if the path was set to an empty string
+	if len(pluginPath) == 1 && (pluginPath[0] == "") {
 		err := os.Remove(path)
 		if !os.IsNotExist(err) {
 			return err