diff --git a/command/test-fixtures/var-arg/fuit_builder.pkr.hcl b/command/test-fixtures/var-arg/fruit_builder.pkr.hcl
similarity index 67%
rename from command/test-fixtures/var-arg/fuit_builder.pkr.hcl
rename to command/test-fixtures/var-arg/fruit_builder.pkr.hcl
index 8aff9951d..63ece8a56 100644
--- a/command/test-fixtures/var-arg/fuit_builder.pkr.hcl
+++ b/command/test-fixtures/var-arg/fruit_builder.pkr.hcl
@@ -3,6 +3,10 @@ variable "fruit" {
     type = string
 }
 
+locals {
+    fruit = var.fruit
+}
+
 source "null" "builder" {
     communicator = "none"
 }
@@ -13,6 +17,6 @@ build {
     ]
 
     provisioner "shell-local" {
-        inline = ["echo ${var.fruit} > ${var.fruit}.txt"]
+        inline = ["echo ${local.fruit} > ${local.fruit}.txt"]
     }
 }
diff --git a/hcl2template/parser.go b/hcl2template/parser.go
index d7d2591ba..5ea9a18a5 100644
--- a/hcl2template/parser.go
+++ b/hcl2template/parser.go
@@ -94,18 +94,17 @@ func (p *Parser) parse(filename string, varFiles []string, argVars map[string]st
 
 	// Decode variable blocks so that they are available later on. Here locals
 	// can use input variables so we decode them firsthand.
+	var locals []*Local
 	{
 		for _, file := range files {
 			diags = append(diags, cfg.decodeInputVariables(file)...)
 		}
 
-		var locals []*Local
 		for _, file := range files {
 			moreLocals, morediags := cfg.parseLocalVariables(file)
 			diags = append(diags, morediags...)
 			locals = append(locals, moreLocals...)
 		}
-		diags = append(diags, cfg.evaluateLocalVariables(locals)...)
 	}
 
 	// parse var files
@@ -151,6 +150,7 @@ func (p *Parser) parse(filename string, varFiles []string, argVars map[string]st
 	diags = append(diags, moreDiags...)
 	_, moreDiags = cfg.LocalVariables.Values()
 	diags = append(diags, moreDiags...)
+	diags = append(diags, cfg.evaluateLocalVariables(locals)...)
 
 	// decode the actual content
 	for _, file := range files {