diff --git a/lib/ansible/template/__init__.py b/lib/ansible/template/__init__.py
index a296da1959b..1841560abba 100644
--- a/lib/ansible/template/__init__.py
+++ b/lib/ansible/template/__init__.py
@@ -22,6 +22,7 @@ __metaclass__ = type
 import re
 
 from jinja2 import Environment
+from jinja2.loaders import FileSystemLoader
 from jinja2.exceptions import TemplateSyntaxError, UndefinedError
 from jinja2.utils import concat as j2_concat
 from jinja2.runtime import StrictUndefined
@@ -71,7 +72,13 @@ class Templar:
         self._fail_on_filter_errors    = True
         self._fail_on_undefined_errors = C.DEFAULT_UNDEFINED_VAR_BEHAVIOR
 
-        self.environment = Environment(trim_blocks=True, undefined=StrictUndefined, extensions=self._get_extensions(), finalize=self._finalize)
+        self.environment = Environment(
+            trim_blocks=True,
+            undefined=StrictUndefined,
+            extensions=self._get_extensions(),
+            finalize=self._finalize,
+            loader=FileSystemLoader('.'),
+        )
         self.environment.template_class = AnsibleJ2Template
 
         self.SINGLE_VAR = re.compile(r"^%s\s*(\w*)\s*%s$" % (self.environment.variable_start_string, self.environment.variable_end_string))
diff --git a/lib/ansible/template/vars.py b/lib/ansible/template/vars.py
index 3c0bb61ecb0..16efe9bff54 100644
--- a/lib/ansible/template/vars.py
+++ b/lib/ansible/template/vars.py
@@ -19,6 +19,7 @@
 from __future__ import (absolute_import, division, print_function)
 __metaclass__ = type
 
+from jinja2.utils import missing
 
 __all__ = ['AnsibleJ2Vars']
 
@@ -33,7 +34,7 @@ class AnsibleJ2Vars:
     To facilitate using builtin jinja2 things like range, globals are also handled here.
     '''
 
-    def __init__(self, templar, globals, *extras):
+    def __init__(self, templar, globals, locals=dict(), *extras):
         '''
         Initializes this object with a valid Templar() object, as
         well as several dictionaries of variables representing
@@ -43,10 +44,17 @@ class AnsibleJ2Vars:
         self._templar = templar
         self._globals = globals
         self._extras  = extras
+        self._locals  = dict()
+        if isinstance(locals, dict):
+            for key, val in locals.iteritems():
+                if key[:2] == 'l_' and val is not missing:
+                    self._locals[key[2:]] = val
 
     def __contains__(self, k):
         if k in self._templar._available_variables:
             return True
+        if k in self._locals:
+            return True
         for i in self._extras:
             if k in i:
                 return True
@@ -59,6 +67,8 @@ class AnsibleJ2Vars:
         #from ansible.runner import HostVars
 
         if varname not in self._templar._available_variables:
+            if varname in self._locals:
+                return self._locals[varname]
             for i in self._extras:
                 if varname in i:
                     return i[varname]
@@ -84,5 +94,5 @@ class AnsibleJ2Vars:
         '''
         if locals is None:
             return self
-        return AnsibleJ2Vars(self._templar, self._globals, locals, *self._extras)
+        return AnsibleJ2Vars(self._templar, self._globals, locals=locals, *self._extras)