diff --git a/terraform/context_validate_test.go b/terraform/context_validate_test.go
index f9c22d9213..087de1a2ec 100644
--- a/terraform/context_validate_test.go
+++ b/terraform/context_validate_test.go
@@ -1250,6 +1250,46 @@ resource "aws_instance" "foo" {
 	}
 }
 
+func TestContext2Validate_invalidSensitiveModuleOutput(t *testing.T) {
+	m := testModuleInline(t, map[string]string{
+		"child/main.tf": `
+variable "foo" {
+  default = "xyz"
+  sensitive = true
+}
+
+output "out" {
+  value = var.foo
+}`,
+		"main.tf": `
+module "child" {
+  source = "./child"
+}
+
+resource "aws_instance" "foo" {
+  foo = module.child.out
+}`,
+	})
+
+	p := testProvider("aws")
+	ctx := testContext2(t, &ContextOpts{
+		Config: m,
+		Providers: map[addrs.Provider]providers.Factory{
+			addrs.NewDefaultProvider("aws"): testProviderFuncFixed(p),
+		},
+	})
+
+	diags := ctx.Validate()
+	if !diags.HasErrors() {
+		t.Fatal("succeeded; want errors")
+	}
+	// Should get this error:
+	// Output refers to sensitive values: Expressions used in outputs can only refer to sensitive values if the sensitive attribute is true.
+	if got, want := diags.Err().Error(), "Output refers to sensitive values"; strings.Index(got, want) == -1 {
+		t.Fatalf("wrong error:\ngot:  %s\nwant: message containing %q", got, want)
+	}
+}
+
 func TestContext2Validate_legacyResourceCount(t *testing.T) {
 	m := testModuleInline(t, map[string]string{
 		"main.tf": `
diff --git a/terraform/evaluate.go b/terraform/evaluate.go
index 3fd02772d6..4c87e55d58 100644
--- a/terraform/evaluate.go
+++ b/terraform/evaluate.go
@@ -260,6 +260,10 @@ func (d *evaluationStateData) GetInputVariable(addr addrs.InputVariable, rng tfd
 	// being liberal in what it accepts because the subsequent plan walk has
 	// more information available and so can be more conservative.
 	if d.Operation == walkValidate {
+		// Ensure variable sensitivity is captured in the validate walk
+		if config.Sensitive {
+			return cty.UnknownVal(wantType).Mark("sensitive"), diags
+		}
 		return cty.UnknownVal(wantType), diags
 	}