diff --git a/command/init_test.go b/command/init_test.go
index d5f6f3c33d..1e95e12414 100644
--- a/command/init_test.go
+++ b/command/init_test.go
@@ -997,6 +997,71 @@ func TestInit_providerLockFile(t *testing.T) {
 	}
 }
 
+func TestInit_pluginDirReset(t *testing.T) {
+	td, err := ioutil.TempDir("", "tf")
+	if err != nil {
+		t.Fatal(err)
+	}
+	defer os.RemoveAll(td)
+	defer testChdir(t, td)()
+
+	ui := new(cli.MockUi)
+	c := &InitCommand{
+		Meta: Meta{
+			testingOverrides: metaOverridesForProvider(testProvider()),
+			Ui:               ui,
+		},
+		providerInstaller: &mockProviderInstaller{},
+	}
+
+	// make our vendor paths
+	pluginPath := []string{"a", "b", "c"}
+	for _, p := range pluginPath {
+		if err := os.MkdirAll(p, 0755); err != nil {
+			t.Fatal(err)
+		}
+	}
+
+	// run once and save the -plugin-dir
+	args := []string{"-plugin-dir", "a"}
+	if code := c.Run(args); code != 0 {
+		t.Fatalf("bad: \n%s", ui.ErrorWriter)
+	}
+
+	pluginDirs, err := c.loadPluginPath()
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	if len(pluginDirs) != 1 || pluginDirs[0] != "a" {
+		t.Fatalf(`expected plugin dir ["a"], got %q`, pluginDirs)
+	}
+
+	ui = new(cli.MockUi)
+	c = &InitCommand{
+		Meta: Meta{
+			testingOverrides: metaOverridesForProvider(testProvider()),
+			Ui:               ui,
+		},
+		providerInstaller: &mockProviderInstaller{},
+	}
+
+	// make sure we remove the plugin-dir record
+	args = []string{"-plugin-dir="}
+	if code := c.Run(args); code != 0 {
+		t.Fatalf("bad: \n%s", ui.ErrorWriter)
+	}
+
+	pluginDirs, err = c.loadPluginPath()
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	if len(pluginDirs) != 0 {
+		t.Fatalf("expected no plugin dirs got %q", pluginDirs)
+	}
+}
+
 // Test user-supplied -plugin-dir
 func TestInit_pluginDirProviders(t *testing.T) {
 	td := tempDir(t)
diff --git a/command/plugins.go b/command/plugins.go
index 12449da2ea..467279ec81 100644
--- a/command/plugins.go
+++ b/command/plugins.go
@@ -117,6 +117,17 @@ func (m *Meta) storePluginPath(pluginPath []string) error {
 		return nil
 	}
 
+	path := filepath.Join(m.DataDir(), PluginPathFile)
+
+	// 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
+		}
+		return nil
+	}
+
 	js, err := json.MarshalIndent(pluginPath, "", "  ")
 	if err != nil {
 		return err
@@ -125,7 +136,7 @@ func (m *Meta) storePluginPath(pluginPath []string) error {
 	// if this fails, so will WriteFile
 	os.MkdirAll(m.DataDir(), 0755)
 
-	return ioutil.WriteFile(filepath.Join(m.DataDir(), PluginPathFile), js, 0644)
+	return ioutil.WriteFile(path, js, 0644)
 }
 
 // Load the user-defined plugin search path into Meta.pluginPath if the file
diff --git a/website/docs/commands/init.html.markdown b/website/docs/commands/init.html.markdown
index 8c50b28e44..0916d40a82 100644
--- a/website/docs/commands/init.html.markdown
+++ b/website/docs/commands/init.html.markdown
@@ -133,7 +133,8 @@ The automatic plugin installation behavior can be overridden by extracting
 the desired providers into a local directory and using the additional option
 `-plugin-dir=PATH`. When this option is specified, _only_ the given directory
 is consulted, which prevents Terraform from making requests to the plugin
-repository or looking for plugins in other local directories.
+repository or looking for plugins in other local directories. Passing an empty
+string to `-plugin-dir` removes any previously recorded paths.
 
 Custom plugins can be used along with automatically installed plugins by
 placing them in `terraform.d/plugins/OS_ARCH/` inside the directory being