diff --git a/internal/terraform/context_apply_test.go b/internal/terraform/context_apply_test.go
index 545cf2e133..6bf712078b 100644
--- a/internal/terraform/context_apply_test.go
+++ b/internal/terraform/context_apply_test.go
@@ -11381,33 +11381,7 @@ locals {
 // Ensure that we can destroy when a provider references a resource that will
 // also be destroyed
 func TestContext2Apply_destroyProviderReference(t *testing.T) {
-	m := testModuleInline(t, map[string]string{
-		"main.tf": `
-provider "null" {
-  value = ""
-}
-
-module "mod" {
-  source = "./mod"
-}
-
-provider "test" {
-  value = module.mod.output
-}
-
-resource "test_instance" "bar" {
-}
-`,
-		"mod/main.tf": `
-data "null_data_source" "foo" {
-       count = 1
-}
-
-
-output "output" {
-  value = data.null_data_source.foo[0].output
-}
-`})
+	m, snap := testModuleWithSnapshot(t, "apply-destroy-provisider-refs")
 
 	schemaFn := func(name string) *ProviderSchema {
 		return &ProviderSchema{
@@ -11506,11 +11480,12 @@ output "output" {
 		t.Fatalf("apply errors: %s", diags.Err())
 	}
 
+	providers := map[addrs.Provider]providers.Factory{
+		addrs.NewDefaultProvider("test"): testProviderFuncFixed(testP),
+		addrs.NewDefaultProvider("null"): testProviderFuncFixed(nullP),
+	}
 	ctx = testContext2(t, &ContextOpts{
-		Providers: map[addrs.Provider]providers.Factory{
-			addrs.NewDefaultProvider("test"): testProviderFuncFixed(testP),
-			addrs.NewDefaultProvider("null"): testProviderFuncFixed(nullP),
-		},
+		Providers: providers,
 	})
 
 	plan, diags = ctx.Plan(m, state, &PlanOpts{
@@ -11518,6 +11493,19 @@ output "output" {
 	})
 	assertNoErrors(t, diags)
 
+	// We'll marshal and unmarshal the plan here, to ensure that we have
+	// a clean new context as would be created if we separately ran
+	// terraform plan -out=tfplan && terraform apply tfplan
+	ctxOpts, m, plan, err := contextOptsForPlanViaFile(t, snap, plan)
+	if err != nil {
+		t.Fatal(err)
+	}
+	ctxOpts.Providers = providers
+	ctx, diags = NewContext(ctxOpts)
+
+	if diags.HasErrors() {
+		t.Fatalf("failed to create context for plan: %s", diags.Err())
+	}
 	if _, diags := ctx.Apply(plan, m); diags.HasErrors() {
 		t.Fatalf("destroy apply errors: %s", diags.Err())
 	}
diff --git a/internal/terraform/node_output.go b/internal/terraform/node_output.go
index 315cb738a7..0a8c72e557 100644
--- a/internal/terraform/node_output.go
+++ b/internal/terraform/node_output.go
@@ -108,10 +108,6 @@ func (n *nodeExpandOutput) DynamicExpand(ctx EvalContext) (*Graph, error) {
 				Planning: n.Planning,
 			}
 
-		case n.Destroying:
-			// nothing is done here for non-root outputs
-			continue
-
 		default:
 			node = &NodeApplyableOutput{
 				Addr:         absAddr,
diff --git a/internal/terraform/testdata/apply-destroy-provisider-refs/main.tf b/internal/terraform/testdata/apply-destroy-provisider-refs/main.tf
new file mode 100644
index 0000000000..e7ef6f0b5d
--- /dev/null
+++ b/internal/terraform/testdata/apply-destroy-provisider-refs/main.tf
@@ -0,0 +1,15 @@
+provider "null" {
+  value = ""
+}
+
+module "mod" {
+  source = "./mod"
+}
+
+provider "test" {
+  value = module.mod.output
+}
+
+resource "test_instance" "bar" {
+}
+
diff --git a/internal/terraform/testdata/apply-destroy-provisider-refs/mod/main.tf b/internal/terraform/testdata/apply-destroy-provisider-refs/mod/main.tf
new file mode 100644
index 0000000000..c9ecec002b
--- /dev/null
+++ b/internal/terraform/testdata/apply-destroy-provisider-refs/mod/main.tf
@@ -0,0 +1,9 @@
+data "null_data_source" "foo" {
+       count = 1
+}
+
+
+output "output" {
+  value = data.null_data_source.foo[0].output
+}
+