diff --git a/lib/ansible/inventory.py b/lib/ansible/inventory.py
index a9d1aec26a..8ddf2c3d2c 100644
--- a/lib/ansible/inventory.py
+++ b/lib/ansible/inventory.py
@@ -32,11 +32,15 @@ class Inventory(object):
     systems, or a script that will be called with --list or --host.
     """
 
-    def __init__(self, host_list=C.DEFAULT_HOST_LIST):
+    def __init__(self, host_list=C.DEFAULT_HOST_LIST, global_host_vars={}):
 
         self._restriction = None
         self._variables = {}
-
+        self._global_host_vars = global_host_vars # lets us pass in a global var list
+                                                 # that each host gets
+                                                 # after we have set up the inventory
+                                                 # to get all group variables
+        
         if type(host_list) == list:
             self.host_list = host_list
             self.groups = dict(ungrouped=host_list)
@@ -98,6 +102,9 @@ class Inventory(object):
 
         return variables
 
+    def get_global_vars(self):
+        return self._global_host_vars
+        
     # *****************************************************
 
     def _parse_from_file(self):
@@ -177,9 +184,24 @@ class Inventory(object):
 
         hosts = []
         groups = {}
-
         ungrouped = []
 
+        
+        # go through once and grab up the global_host_vars from the 'all' group
+        for item in data:
+            if type(item) == dict:
+                if "group" in item and 'all' == item["group"]:
+                    if "vars" in item:
+                        variables = item['vars']
+                        if type(variables) == list:
+                            for variable in variables:
+                                if len(variable) != 1:
+                                    raise errors.AnsibleError("Only one item expected in %s"%(variable))
+                                k, v = variable.items()[0]
+                                self._global_host_vars[k] = utils.template(v, self._global_host_vars, {})
+                        elif type(variables) == dict:
+                            self._global_host_vars.update(variables)
+
         for item in data:
             if type(item) == dict:
                 if "group" in item:
@@ -187,7 +209,7 @@ class Inventory(object):
 
                     group_vars = []
                     if "vars" in item:
-                        group_vars = item["vars"]
+                        group_vars.extend(item["vars"])
 
                     group_hosts = []
                     if "hosts" in item:
diff --git a/lib/ansible/playbook.py b/lib/ansible/playbook.py
index 507db625f1..bba7e1f1bd 100644
--- a/lib/ansible/playbook.py
+++ b/lib/ansible/playbook.py
@@ -103,16 +103,20 @@ class PlayBook(object):
         self.sudo             = sudo
         self.sudo_pass        = sudo_pass
         self.extra_vars       = extra_vars
-
-        self.basedir          = os.path.dirname(playbook)
-        self.playbook         = self._parse_playbook(playbook)
+        self.global_vars      = {}
 
         if override_hosts is not None:
             if type(override_hosts) != list:
                 raise errors.AnsibleError("override hosts must be a list")
+            self.global_vars.update(ansible.inventory.Inventory(host_list).get_global_vars())
             self.inventory = ansible.inventory.Inventory(override_hosts)
+
         else:
             self.inventory = ansible.inventory.Inventory(host_list)
+            self.global_vars.update(ansible.inventory.Inventory(host_list).get_global_vars())
+
+        self.basedir          = os.path.dirname(playbook)
+        self.playbook         = self._parse_playbook(playbook)
 
     # *****************************************************
 
@@ -123,7 +127,7 @@ class PlayBook(object):
             play['vars'] = {}
         if type(play['vars']) not in [dict, list]:
             raise errors.AnsibleError("'vars' section must contain only key/value pairs")
-        vars = {}
+        vars = self.global_vars
         
         # translate a list of vars into a dict
         if type(play['vars']) == list:
@@ -151,9 +155,9 @@ class PlayBook(object):
         ''' load tasks included from external files. '''
 
         # include: some.yml a=2 b=3 c=4
-        include_tokens = task['include'].split()
-        path = utils.path_dwim(dirname, include_tokens[0])
         play_vars = self._get_vars(play, dirname)
+        include_tokens = utils.template(task['include'], play_vars, SETUP_CACHE).split()
+        path = utils.path_dwim(dirname, include_tokens[0])
         include_vars = {}
         for i,x in enumerate(include_tokens):
             if x.find("=") != -1: