diff --git a/backend/local/backend.go b/backend/local/backend.go
index 5956832580..02152c17c6 100644
--- a/backend/local/backend.go
+++ b/backend/local/backend.go
@@ -8,6 +8,7 @@ import (
 	"os"
 	"path/filepath"
 	"sort"
+	"strings"
 	"sync"
 
 	"github.com/hashicorp/terraform/backend"
@@ -407,3 +408,24 @@ func (b *Local) stateWorkspaceDir() string {
 
 	return DefaultWorkspaceDir
 }
+
+func (b *Local) pluginInitRequired(providerErr *terraform.ResourceProviderError) {
+	b.CLI.Output(b.Colorize().Color(fmt.Sprintf(
+		strings.TrimSpace(errPluginInit)+"\n",
+		"Could not satisfy plugin requirements",
+		providerErr)))
+}
+
+const errPluginInit = `
+[reset][bold][yellow]Plugin reinitialization required. Please run "terraform init".[reset]
+[yellow]Reason: %s
+
+Plugins are external binaries that Terraform uses to access and manipulate
+resources. If this message is showing up, it means that the configuration you
+have references plugins which can't be located, don't satisfy the version
+constraints, or are otherwise incompatible.
+
+The errors encountered discovering plugins are:
+
+%s
+`
diff --git a/backend/local/backend_local.go b/backend/local/backend_local.go
index 7e5c872a14..0b829b6117 100644
--- a/backend/local/backend_local.go
+++ b/backend/local/backend_local.go
@@ -1,6 +1,7 @@
 package local
 
 import (
+	"errors"
 	"fmt"
 	"log"
 	"strings"
@@ -57,6 +58,15 @@ func (b *Local) context(op *backend.Operation) (*terraform.Context, state.State,
 	} else {
 		tfCtx, err = terraform.NewContext(&opts)
 	}
+
+	// any errors resolving plugins returns this
+	if rpe, ok := err.(*terraform.ResourceProviderError); ok {
+		b.pluginInitRequired(rpe)
+		// we wrote the full UI error here, so return a generic error for flow
+		// control in the command.
+		return nil, nil, errors.New("error satisfying plugin requirements")
+	}
+
 	if err != nil {
 		return nil, nil, err
 	}
diff --git a/terraform/resource_provider.go b/terraform/resource_provider.go
index 37d59e4806..7d78f67ef9 100644
--- a/terraform/resource_provider.go
+++ b/terraform/resource_provider.go
@@ -1,10 +1,9 @@
 package terraform
 
 import (
-	"bytes"
-	"errors"
 	"fmt"
 
+	multierror "github.com/hashicorp/go-multierror"
 	"github.com/hashicorp/terraform/plugin/discovery"
 )
 
@@ -162,6 +161,18 @@ type ResourceProvider interface {
 	ReadDataApply(*InstanceInfo, *InstanceDiff) (*InstanceState, error)
 }
 
+// ResourceProviderError may be returned when creating a Context if the
+// required providers cannot be satisfied. This error can then be used to
+// format a more useful message for the user.
+type ResourceProviderError struct {
+	Errors []error
+}
+
+func (e *ResourceProviderError) Error() string {
+	// use multierror to format the default output
+	return multierror.Append(nil, e.Errors...).Error()
+}
+
 // ResourceProviderCloser is an interface that providers that can close
 // connections that aren't needed anymore must implement.
 type ResourceProviderCloser interface {
@@ -265,13 +276,9 @@ func ProviderHasDataSource(p ResourceProvider, n string) bool {
 func resourceProviderFactories(resolver ResourceProviderResolver, reqd discovery.PluginRequirements) (map[string]ResourceProviderFactory, error) {
 	ret, errs := resolver.ResolveProviders(reqd)
 	if errs != nil {
-		errBuf := &bytes.Buffer{}
-		errBuf.WriteString("Can't satisfy provider requirements with currently-installed plugins:\n\n")
-		for _, err := range errs {
-			fmt.Fprintf(errBuf, "* %s\n", err)
+		return nil, &ResourceProviderError{
+			Errors: errs,
 		}
-		errBuf.WriteString("\nRun 'terraform init' to install the necessary provider plugins.\n")
-		return nil, errors.New(errBuf.String())
 	}
 
 	return ret, nil