diff --git a/bin/ansible b/bin/ansible
index 9c90b3a79ab..1704a458693 100755
--- a/bin/ansible
+++ b/bin/ansible
@@ -34,6 +34,7 @@ import ansible.runner
 import ansible.playbook
 import ansible.constants as C
 from ansible.utils import *
+from ansible.errors import *
 
 ########################################################
 
@@ -193,7 +194,11 @@ class Cli(object):
 if __name__ == '__main__':
     cli = Cli()
     (options, args) = cli.parse()
-    (runner, results) = cli.run(options, args)
-    cli.output(runner, results, options, args)
-    
-
+    try:
+        (runner, results) = cli.run(options, args)
+    except AnsibleError as e:
+        # Generic handler for ansible specific errors
+        print e
+        sys.exit(1)
+    else:
+        cli.output(runner, results, options, args)
diff --git a/bin/ansible-playbook b/bin/ansible-playbook
index c91a17bac58..6e2a65b9ef3 100755
--- a/bin/ansible-playbook
+++ b/bin/ansible-playbook
@@ -96,15 +96,14 @@ def main(args):
             remote_pass=sshpass,
             callbacks=PlaybookCallbacks()
         )
-        pb.run()
+        try:
+            pb.run()
+        except AnsibleError as e:
+            print e
+            return 1
 
     return 0
 
 
 if __name__ == "__main__":
     sys.exit(main(sys.argv[1:]))
-
-
-
-
-
diff --git a/lib/ansible/errors.py b/lib/ansible/errors.py
new file mode 100644
index 00000000000..e055c093454
--- /dev/null
+++ b/lib/ansible/errors.py
@@ -0,0 +1,37 @@
+# (c) 2012, Michael DeHaan <michael.dehaan@gmail.com>
+#
+# This file is part of Ansible
+#
+# Ansible is free software: you can redistribute it and/or modify
+# it under the terms of the GNU General Public License as published by
+# the Free Software Foundation, either version 3 of the License, or
+# (at your option) any later version.
+#
+# Ansible is distributed in the hope that it will be useful,
+# but WITHOUT ANY WARRANTY; without even the implied warranty of
+# MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+# GNU General Public License for more details.
+#
+# You should have received a copy of the GNU General Public License
+# along with Ansible.  If not, see <http://www.gnu.org/licenses/>.
+
+
+class AnsibleError(Exception):
+    """
+    The base Ansible exception from which all others should subclass.
+    """
+    pass
+
+
+class AnsibleInventoryNotFoundError(AnsibleError):
+    """
+    Exception raised when the default or provided host inventory file
+    does not exist.
+    """
+    def __init__(self, inventory):
+        self.inventory = inventory
+        self.msg = "Unable to continue, inventory file not found: %s" %\
+            self.inventory
+
+    def __str__(self):
+        return self.msg
diff --git a/lib/ansible/runner.py b/lib/ansible/runner.py
index 3b44b51bf8d..f0cabc30584 100755
--- a/lib/ansible/runner.py
+++ b/lib/ansible/runner.py
@@ -39,6 +39,8 @@ import random
 import jinja2
 import time
 from ansible.utils import *
+from ansible.errors import AnsibleInventoryNotFoundError
+
     
 ################################################
 
@@ -127,6 +129,10 @@ class Runner(object):
             return (host_list, {})
 
         host_list = os.path.expanduser(host_list)
+
+        if not os.path.exists(host_list):
+            raise AnsibleInventoryNotFoundError(host_list)
+
         lines = file(host_list).read().split("\n")
         groups     = {}
         groups['ungrouped'] = []