diff --git a/terraform/context_apply_test.go b/terraform/context_apply_test.go
index 91bf663b6e..74a30815c1 100644
--- a/terraform/context_apply_test.go
+++ b/terraform/context_apply_test.go
@@ -3929,3 +3929,74 @@ func TestContext2Apply_singleDestroy(t *testing.T) {
 		t.Fatalf("bad: %d", invokeCount)
 	}
 }
+
+// GH-5254
+func TestContext2Apply_issue5254(t *testing.T) {
+	// Create a provider. We use "template" here just to match the repro
+	// we got from the issue itself.
+	p := testProvider("template")
+	p.ResourcesReturn = append(p.ResourcesReturn, ResourceType{
+		Name: "template_file",
+	})
+
+	p.ApplyFn = testApplyFn
+	p.DiffFn = testDiffFn
+
+	// Apply cleanly step 0
+	t.Log("Applying Step 0")
+	ctx := testContext2(t, &ContextOpts{
+		Module: testModule(t, "issue-5254/step-0"),
+		Providers: map[string]ResourceProviderFactory{
+			"template": testProviderFuncFixed(p),
+		},
+	})
+
+	plan, err := ctx.Plan()
+	if err != nil {
+		t.Fatalf("err: %s", err)
+	}
+	t.Logf("Plan for Step 0: %s", plan)
+
+	state, err := ctx.Apply()
+	if err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	// Application success. Now make the modification and store a plan
+	t.Log("Planning Step 1")
+	ctx = testContext2(t, &ContextOpts{
+		Module: testModule(t, "issue-5254/step-1"),
+		State:  state,
+		Providers: map[string]ResourceProviderFactory{
+			"template": testProviderFuncFixed(p),
+		},
+	})
+
+	plan, err = ctx.Plan()
+	if err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	t.Logf("Plan for Step 1: %s", plan)
+
+	// Apply the plan
+	t.Log("Applying Step 1 (from plan)")
+	ctx = plan.Context(&ContextOpts{
+		Providers: map[string]ResourceProviderFactory{
+			"template": testProviderFuncFixed(p),
+		},
+	})
+
+	state, err = ctx.Apply()
+	if err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	/*
+		actual := strings.TrimSpace(state.String())
+		expected := strings.TrimSpace(testTerraformApplyProviderAliasStr)
+		if actual != expected {
+			t.Fatalf("bad: \n%s", actual)
+		}
+	*/
+}
diff --git a/terraform/context_test.go b/terraform/context_test.go
index 65f8405057..015ae1921e 100644
--- a/terraform/context_test.go
+++ b/terraform/context_test.go
@@ -52,6 +52,11 @@ func testDiffFn(
 			continue
 		}
 
+		// Ignore __-prefixed keys since they're used for magic
+		if k[0] == '_' && k[1] == '_' {
+			continue
+		}
+
 		if k == "nil" {
 			return nil, nil
 		}
@@ -100,6 +105,9 @@ func testDiffFn(
 		if k == "require_new" {
 			attrDiff.RequiresNew = true
 		}
+		if _, ok := c.Raw["__"+k+"_requires_new"]; ok {
+			attrDiff.RequiresNew = true
+		}
 		diff.Attributes[k] = attrDiff
 	}
 
diff --git a/terraform/test-fixtures/issue-5254/step-0/main.tf b/terraform/test-fixtures/issue-5254/step-0/main.tf
new file mode 100644
index 0000000000..14b39194e2
--- /dev/null
+++ b/terraform/test-fixtures/issue-5254/step-0/main.tf
@@ -0,0 +1,10 @@
+variable "c" { default = 1 }
+
+resource "template_file" "parent" {
+  count = "${var.c}"
+  template = "Hi"
+}
+
+resource "template_file" "child" {
+  template = "${join(",", template_file.parent.*.template)} ok"
+}
diff --git a/terraform/test-fixtures/issue-5254/step-1/main.tf b/terraform/test-fixtures/issue-5254/step-1/main.tf
new file mode 100644
index 0000000000..e1d3bbac9a
--- /dev/null
+++ b/terraform/test-fixtures/issue-5254/step-1/main.tf
@@ -0,0 +1,11 @@
+variable "c" { default = 1 }
+
+resource "template_file" "parent" {
+  count = "${var.c}"
+  template = "Hi"
+}
+
+resource "template_file" "child" {
+  template = "${join(",", template_file.parent.*.template)}"
+  __template_requires_new = 1
+}