diff --git a/test/units/TestPlayVarsFiles.py b/test/units/TestPlayVarsFiles.py
new file mode 100644
index 00000000000..cdfa48fe557
--- /dev/null
+++ b/test/units/TestPlayVarsFiles.py
@@ -0,0 +1,415 @@
+#!/usr/bin/env python
+
+import os
+import shutil
+from tempfile import mkstemp
+from tempfile import mkdtemp
+from ansible.playbook.play import Play
+import ansible
+
+import unittest
+from nose.plugins.skip import SkipTest
+
+
+class FakeCallBacks(object):
+    def __init__(self):
+        pass
+    def on_vars_prompt(self):
+        pass
+    def on_import_for_host(self, host, filename):
+        pass
+
+class FakeInventory(object):
+    def __init__(self):
+        self.hosts = {}
+    def basedir(self):
+        return "."        
+    def get_variables(self, host, vault_password=None):
+        if host in self.hosts:
+            return self.hosts[host]        
+        else:
+            return {}            
+
+class FakePlayBook(object):
+    def __init__(self):
+        self.extra_vars = {}
+        self.remote_user = None
+        self.remote_port = None
+        self.sudo = None
+        self.sudo_user = None
+        self.su = None
+        self.su_user = None
+        self.transport = None
+        self.only_tags = None
+        self.skip_tags = None
+        self.VARS_CACHE = {}
+        self.SETUP_CACHE = {}
+        self.inventory = FakeInventory()
+        self.callbacks = FakeCallBacks()
+
+        self.VARS_CACHE['localhost'] = {}
+
+
+class TestMe(unittest.TestCase):
+
+    ########################################
+    # BASIC FILE LOADING BEHAVIOR TESTS
+    ########################################
+
+    def test_play_constructor(self):
+        # __init__(self, playbook, ds, basedir, vault_password=None)
+        playbook = FakePlayBook()
+        ds = { "hosts": "localhost"}
+        basedir = "."
+        play = Play(playbook, ds, basedir)
+
+    def test_vars_file(self):
+
+        # make a vars file
+        fd, temp_path = mkstemp()
+        f = open(temp_path, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # create a play with a vars_file
+        playbook = FakePlayBook()
+        ds = { "hosts": "localhost",
+               "vars_files": [temp_path]}
+        basedir = "."
+        play = Play(playbook, ds, basedir)
+        os.remove(temp_path)
+
+        # make sure the variable was loaded
+        assert 'foo' in play.vars, "vars_file was not loaded into play.vars"
+        assert play.vars['foo'] == 'bar', "foo was not set to bar in play.vars"
+
+    def test_vars_file_nonlist_error(self):
+
+        # make a vars file
+        fd, temp_path = mkstemp()
+        f = open(temp_path, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # create a play with a string for vars_files
+        playbook = FakePlayBook()
+        ds = { "hosts": "localhost",
+               "vars_files": temp_path}
+        basedir = "."
+        error_hit = False
+        try:
+            play = Play(playbook, ds, basedir)
+        except:
+            error_hit = True
+        os.remove(temp_path)
+
+        assert error_hit == True, "no error was thrown when vars_files was not a list"
+
+
+    def test_multiple_vars_files(self):
+
+        # make a vars file
+        fd, temp_path = mkstemp()
+        f = open(temp_path, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # make a second vars file
+        fd, temp_path2 = mkstemp()
+        f = open(temp_path2, "wb")
+        f.write("baz: bang\n")
+        f.close()
+
+
+        # create a play with two vars_files
+        playbook = FakePlayBook()
+        ds = { "hosts": "localhost",
+               "vars_files": [temp_path, temp_path2]}
+        basedir = "."
+        play = Play(playbook, ds, basedir)
+        os.remove(temp_path)
+        os.remove(temp_path2)
+
+        # make sure the variables were loaded
+        assert 'foo' in play.vars, "vars_file was not loaded into play.vars"
+        assert play.vars['foo'] == 'bar', "foo was not set to bar in play.vars"
+        assert 'baz' in play.vars, "vars_file2 was not loaded into play.vars"
+        assert play.vars['baz'] == 'bang', "baz was not set to bang in play.vars"
+
+    def test_vars_files_first_found(self):
+
+        # make a vars file
+        fd, temp_path = mkstemp()
+        f = open(temp_path, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # get a random file path        
+        fd, temp_path2 = mkstemp()
+        # make sure this file doesn't exist
+        os.remove(temp_path2)
+
+        # create a play
+        playbook = FakePlayBook()
+        ds = { "hosts": "localhost",
+               "vars_files": [[temp_path2, temp_path]]}
+        basedir = "."
+        play = Play(playbook, ds, basedir)
+        os.remove(temp_path)
+
+        # make sure the variable was loaded
+        assert 'foo' in play.vars, "vars_file was not loaded into play.vars"
+        assert play.vars['foo'] == 'bar', "foo was not set to bar in play.vars"
+
+    def test_vars_files_multiple_found(self):
+
+        # make a vars file
+        fd, temp_path = mkstemp()
+        f = open(temp_path, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # make a second vars file
+        fd, temp_path2 = mkstemp()
+        f = open(temp_path2, "wb")
+        f.write("baz: bang\n")
+        f.close()
+
+        # create a play
+        playbook = FakePlayBook()
+        ds = { "hosts": "localhost",
+               "vars_files": [[temp_path, temp_path2]]}
+        basedir = "."
+        play = Play(playbook, ds, basedir)
+        os.remove(temp_path)
+        os.remove(temp_path2)
+
+        # make sure the variables were loaded
+        assert 'foo' in play.vars, "vars_file was not loaded into play.vars"
+        assert play.vars['foo'] == 'bar', "foo was not set to bar in play.vars"
+        assert 'baz' not in play.vars, "vars_file2 was loaded after vars_file1 was loaded"
+
+    def test_vars_files_assert_all_found(self):
+
+        # make a vars file
+        fd, temp_path = mkstemp()
+        f = open(temp_path, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # make a second vars file
+        fd, temp_path2 = mkstemp()
+        # make sure it doesn't exist
+        os.remove(temp_path2)
+
+        # create a play
+        playbook = FakePlayBook()
+        ds = { "hosts": "localhost",
+               "vars_files": [temp_path, temp_path2]}
+        basedir = "."
+
+        error_hit = False
+        error_msg = None
+
+        try:
+            play = Play(playbook, ds, basedir)
+        except ansible.errors.AnsibleError, e:
+            error_hit = True
+            error_msg = e
+
+        os.remove(temp_path)
+        assert error_hit == True, "no error was thrown for missing vars_file"
+
+
+    ########################################
+    # VARIABLE PRECEDENCE TESTS
+    ########################################
+
+    # On the first run vars_files are loaded into play.vars by host == None
+    #   * only files with vars from host==None will work here
+    # On the secondary run(s), a host is given and the vars_files are loaded into VARS_CACHE
+    #   * this only occurs if host is not None, filename2 has vars in the name, and filename3 does not
+
+    # filename  -- the original string
+    # filename2 -- filename templated with play vars
+    # filename3 -- filename2 template with inject (hostvars + setup_cache + vars_cache)
+    # filename4 -- path_dwim(filename3)
+
+    def test_vars_files_for_host(self):
+
+        # host != None
+        # vars in filename2
+        # no vars in filename3
+
+        # make a vars file
+        fd, temp_path = mkstemp()
+        f = open(temp_path, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # build play attributes
+        playbook = FakePlayBook()
+        ds = { "hosts": "localhost",
+               "vars_files": ["{{ temp_path }}"]}
+        basedir = "."
+        playbook.VARS_CACHE['localhost']['temp_path'] = temp_path
+
+        # create play and do first run        
+        play = Play(playbook, ds, basedir)
+
+        # the second run is started by calling update_vars_files        
+        play.update_vars_files(['localhost'])
+        os.remove(temp_path)
+
+        assert 'foo' in play.playbook.VARS_CACHE['localhost'], "vars_file vars were not loaded into vars_cache"
+        assert play.playbook.VARS_CACHE['localhost']['foo'] == 'bar', "foo does not equal bar"
+
+    def test_vars_files_for_host_with_extra_vars(self):
+
+        # host != None
+        # vars in filename2
+        # no vars in filename3
+
+        # make a vars file
+        fd, temp_path = mkstemp()
+        f = open(temp_path, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # build play attributes
+        playbook = FakePlayBook()
+        ds = { "hosts": "localhost",
+               "vars_files": ["{{ temp_path }}"]}
+        basedir = "."
+        playbook.VARS_CACHE['localhost']['temp_path'] = temp_path
+        playbook.extra_vars = {"foo": "extra"}
+
+        # create play and do first run        
+        play = Play(playbook, ds, basedir)
+
+        # the second run is started by calling update_vars_files        
+        play.update_vars_files(['localhost'])
+        os.remove(temp_path)
+
+        assert 'foo' in play.vars, "extra vars were not set in play.vars"
+        assert 'foo' in play.playbook.VARS_CACHE['localhost'], "vars_file vars were not loaded into vars_cache"
+        assert play.playbook.VARS_CACHE['localhost']['foo'] == 'extra', "extra vars did not overwrite vars_files vars"
+
+
+    ########################################
+    # COMPLEX FILENAME TEMPLATING TESTS
+    ########################################
+
+    def test_vars_files_two_vars_in_name(self):
+
+        # self.vars = ds['vars']
+        # self.vars += _get_vars() ... aka extra_vars
+
+        # make a temp dir
+        temp_dir = mkdtemp()
+
+        # make a temp file
+        fd, temp_file = mkstemp(dir=temp_dir)
+        f = open(temp_file, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # build play attributes
+        playbook = FakePlayBook()
+        ds = { "hosts": "localhost",
+               "vars": { "temp_dir": os.path.dirname(temp_file),
+                         "temp_file": os.path.basename(temp_file) },
+               "vars_files": ["{{ temp_dir + '/' + temp_file }}"]}
+        basedir = "."
+
+        # create play and do first run        
+        play = Play(playbook, ds, basedir)
+
+        # cleanup
+        shutil.rmtree(temp_dir)
+
+        assert 'foo' in play.vars, "double var templated vars_files filename not loaded"
+    
+    def test_vars_files_two_vars_different_scope(self):
+
+        #
+        # Use a play var and an inventory var to create the filename
+        #
+
+        # self.playbook.inventory.get_variables(host)
+        #   {'group_names': ['ungrouped'], 'inventory_hostname': 'localhost', 
+        #   'ansible_ssh_user': 'root', 'inventory_hostname_short': 'localhost'}
+
+        # make a temp dir
+        temp_dir = mkdtemp()
+
+        # make a temp file
+        fd, temp_file = mkstemp(dir=temp_dir)
+        f = open(temp_file, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # build play attributes
+        playbook = FakePlayBook()
+        playbook.inventory.hosts['localhost'] = {'inventory_hostname': os.path.basename(temp_file)}
+        ds = { "hosts": "localhost",
+               "vars": { "temp_dir": os.path.dirname(temp_file)},
+               "vars_files": ["{{ temp_dir + '/' + inventory_hostname }}"]}
+        basedir = "."
+
+        # create play and do first run        
+        play = Play(playbook, ds, basedir)
+
+        # do the host run        
+        play.update_vars_files(['localhost'])
+
+        # cleanup
+        shutil.rmtree(temp_dir)
+
+        assert 'foo' not in play.vars, \
+            "mixed scope vars_file loaded into play vars"
+        assert 'foo' in play.playbook.VARS_CACHE['localhost'], \
+            "differently scoped templated vars_files filename not loaded"
+        assert play.playbook.VARS_CACHE['localhost']['foo'] == 'bar', \
+            "foo is not bar"    
+
+    def test_vars_files_two_vars_different_scope_first_found(self):
+
+        #
+        # Use a play var and an inventory var to create the filename
+        #
+
+        # make a temp dir
+        temp_dir = mkdtemp()
+
+        # make a temp file
+        fd, temp_file = mkstemp(dir=temp_dir)
+        f = open(temp_file, "wb")
+        f.write("foo: bar\n")
+        f.close()
+
+        # build play attributes
+        playbook = FakePlayBook()
+        playbook.inventory.hosts['localhost'] = {'inventory_hostname': os.path.basename(temp_file)}
+        ds = { "hosts": "localhost",
+               "vars": { "temp_dir": os.path.dirname(temp_file)},
+               "vars_files": [["{{ temp_dir + '/' + inventory_hostname }}"]]}
+        basedir = "."
+
+        # create play and do first run        
+        play = Play(playbook, ds, basedir)
+
+        # do the host run        
+        play.update_vars_files(['localhost'])
+
+        # cleanup
+        shutil.rmtree(temp_dir)
+
+        assert 'foo' not in play.vars, \
+            "mixed scope vars_file loaded into play vars"
+        assert 'foo' in play.playbook.VARS_CACHE['localhost'], \
+            "differently scoped templated vars_files filename not loaded"
+        assert play.playbook.VARS_CACHE['localhost']['foo'] == 'bar', \
+            "foo is not bar"    
+    
+