diff --git a/config/config.go b/config/config.go
index adacf5ec9..99f2a66cb 100644
--- a/config/config.go
+++ b/config/config.go
@@ -283,13 +283,18 @@ func (r *Resource) mergerMerge(m merger) merger {
 
 // DefaultsMap returns a map of default values for this variable.
 func (v *Variable) DefaultsMap() map[string]string {
+	n := fmt.Sprintf("var.%s", v.Name)
+
 	switch v.Type() {
 	case VariableTypeString:
-		return map[string]string{v.Name: v.Default.(string)}
+		return map[string]string{n: v.Default.(string)}
 	case VariableTypeMap:
-		return flatmap.Flatten(map[string]interface{}{
-			v.Name: v.Default.(map[string]string),
+		result := flatmap.Flatten(map[string]interface{}{
+			n: v.Default.(map[string]string),
 		})
+		result[n] = v.Name
+
+		return result
 	default:
 		return nil
 	}
diff --git a/config/config_test.go b/config/config_test.go
index 40f54b5c7..3fe651743 100644
--- a/config/config_test.go
+++ b/config/config_test.go
@@ -104,7 +104,7 @@ func TestVariableDefaultsMap(t *testing.T) {
 	}{
 		{
 			"foo",
-			map[string]string{"foo": "foo"},
+			map[string]string{"var.foo": "foo"},
 		},
 
 		{
@@ -113,8 +113,9 @@ func TestVariableDefaultsMap(t *testing.T) {
 				"bar": "baz",
 			},
 			map[string]string{
-				"foo.foo": "bar",
-				"foo.bar": "baz",
+				"var.foo":     "foo",
+				"var.foo.foo": "bar",
+				"var.foo.bar": "baz",
 			},
 		},
 	}
diff --git a/config/loader_libucl.go b/config/loader_libucl.go
index 176c588bd..cd14774fd 100644
--- a/config/loader_libucl.go
+++ b/config/loader_libucl.go
@@ -51,6 +51,20 @@ func (t *libuclConfigurable) Config() (*Config, error) {
 	if len(rawConfig.Variable) > 0 {
 		config.Variables = make([]*Variable, 0, len(rawConfig.Variable))
 		for k, v := range rawConfig.Variable {
+			// Defaults turn into a slice of map[string]interface{} and
+			// we need to make sure to convert that down into the
+			// proper type for Config.
+			if ms, ok := v.Default.([]map[string]interface{}); ok {
+				def := make(map[string]interface{})
+				for _, m := range ms {
+					for k, v := range m {
+						def[k] = v
+					}
+				}
+
+				v.Default = def
+			}
+
 			newVar := &Variable{
 				Name:        k,
 				Default:     v.Default,
diff --git a/terraform/context.go b/terraform/context.go
index 1fa95ae0d..5555f2e98 100644
--- a/terraform/context.go
+++ b/terraform/context.go
@@ -30,6 +30,7 @@ type Context struct {
 	providers    map[string]ResourceProviderFactory
 	provisioners map[string]ResourceProvisionerFactory
 	variables    map[string]string
+	defaultVars  map[string]string
 
 	l     sync.Mutex    // Lock acquired during any task
 	parCh chan struct{} // Semaphore used to limit parallelism
@@ -72,6 +73,14 @@ func NewContext(opts *ContextOpts) *Context {
 	}
 	parCh := make(chan struct{}, par)
 
+	// Calculate all the default variables
+	defaultVars := make(map[string]string)
+	for _, v := range opts.Config.Variables {
+		for k, val := range v.DefaultsMap() {
+			defaultVars[k] = val
+		}
+	}
+
 	return &Context{
 		config:       opts.Config,
 		diff:         opts.Diff,
@@ -80,6 +89,7 @@ func NewContext(opts *ContextOpts) *Context {
 		providers:    opts.Providers,
 		provisioners: opts.Provisioners,
 		variables:    opts.Variables,
+		defaultVars:  defaultVars,
 
 		parCh: parCh,
 		sh:    sh,
@@ -296,8 +306,13 @@ func (c *Context) computeVars(raw *config.RawConfig) error {
 		return nil
 	}
 
-	// Go through each variable and find it
+	// Start building up the variables. First, defaults
 	vs := make(map[string]string)
+	for k, v := range c.defaultVars {
+		vs[k] = v
+	}
+
+	// Next, the actual computed variables
 	for n, rawV := range raw.Variables {
 		switch v := rawV.(type) {
 		case *config.ResourceVariable:
@@ -314,7 +329,10 @@ func (c *Context) computeVars(raw *config.RawConfig) error {
 
 			vs[n] = attr
 		case *config.UserVariable:
-			vs[n] = c.variables[v.Name]
+			val, ok := c.variables[v.Name]
+			if ok {
+				vs[n] = val
+			}
 		}
 	}
 
diff --git a/terraform/context_test.go b/terraform/context_test.go
index 40143f36d..504941b64 100644
--- a/terraform/context_test.go
+++ b/terraform/context_test.go
@@ -1045,7 +1045,7 @@ func TestContextApply_vars(t *testing.T) {
 			"aws": testProviderFuncFixed(p),
 		},
 		Variables: map[string]string{
-			"foo": "bar",
+			"foo": "us-west-2",
 		},
 	})
 
diff --git a/terraform/terraform_test.go b/terraform/terraform_test.go
index 635148d93..ac452148f 100644
--- a/terraform/terraform_test.go
+++ b/terraform/terraform_test.go
@@ -221,7 +221,8 @@ aws_instance.foo:
 const testTerraformApplyVarsStr = `
 aws_instance.bar:
   ID = foo
-  foo = bar
+  bar = foo
+  foo = us-west-2
   type = aws_instance
 aws_instance.foo:
   ID = foo
diff --git a/terraform/test-fixtures/apply-vars/main.tf b/terraform/test-fixtures/apply-vars/main.tf
index f5c9c684f..986954562 100644
--- a/terraform/test-fixtures/apply-vars/main.tf
+++ b/terraform/test-fixtures/apply-vars/main.tf
@@ -1,7 +1,15 @@
+variable "amis" {
+    default = {
+        "us-east-1": "foo",
+        "us-west-2": "foo",
+    }
+}
+
 resource "aws_instance" "foo" {
     num = "2"
 }
 
 resource "aws_instance" "bar" {
     foo = "${var.foo}"
+    bar = "${lookup(var.amis, var.foo)}"
 }