diff --git a/bin/ansible-playbook b/bin/ansible-playbook
index d91e2d94847..4a8edad5eff 100755
--- a/bin/ansible-playbook
+++ b/bin/ansible-playbook
@@ -158,9 +158,6 @@ def main(args):
     # run all playbooks specified on the command line
     for playbook in args:
 
-        # let inventory know which playbooks are using so it can know the basedirs
-        inventory.set_playbook_basedir(os.path.dirname(playbook))
-
         stats = callbacks.AggregateStats()
         playbook_cb = callbacks.PlaybookCallbacks(verbose=utils.VERBOSITY)
         if options.step:
diff --git a/lib/ansible/inventory/__init__.py b/lib/ansible/inventory/__init__.py
index 06acf87e484..53cc0af5d88 100644
--- a/lib/ansible/inventory/__init__.py
+++ b/lib/ansible/inventory/__init__.py
@@ -57,7 +57,8 @@ class Inventory(object):
         self._groups_list    = {} 
         self._pattern_cache  = {}
 
-        # to be set by calling set_playbook_basedir by ansible-playbook
+        self._inventory_basedir = inventory.basedir()
+        # to be set by calling set_playbook_basedir by playbook code
         self._playbook_basedir = None
 
         # the inventory object holds a list of groups
diff --git a/lib/ansible/playbook/__init__.py b/lib/ansible/playbook/__init__.py
index f624be1b297..8b07a52c0ae 100644
--- a/lib/ansible/playbook/__init__.py
+++ b/lib/ansible/playbook/__init__.py
@@ -159,6 +159,10 @@ class PlayBook(object):
 
         self.basedir     = os.path.dirname(playbook) or '.'
         utils.plugins.push_basedir(self.basedir)
+
+        # let inventory know the playbook basedir so it can load more vars
+        self.inventory.set_playbook_basedir(self.basedir)
+
         vars = extra_vars.copy()
         vars['playbook_dir'] = self.basedir
         if self.inventory.basedir() is not None: