diff --git a/lib/vagrant/environment.rb b/lib/vagrant/environment.rb
index e98c8f397..5f936c0fe 100644
--- a/lib/vagrant/environment.rb
+++ b/lib/vagrant/environment.rb
@@ -157,13 +157,19 @@ module Vagrant
       end
 
       # Setup the local data directory. If a configuration path is given,
-      # then it is expanded relative to the working directory. Otherwise,
-      # we use the default which is expanded relative to the root path.
-      opts[:local_data_path] ||= ENV["VAGRANT_DOTFILE_PATH"] if !opts[:child]
-      opts[:local_data_path] ||= root_path.join(DEFAULT_LOCAL_DATA) if !root_path.nil?
+      # it is expanded relative to the root path. Otherwise, we use the
+      # default (which is also expanded relative to the root path).
+      if !root_path.nil?
+        if !(ENV["VAGRANT_DOTFILE_PATH"] or "").empty? && !opts[:child]
+          opts[:local_data_path] ||= root_path.join(ENV["VAGRANT_DOTFILE_PATH"])
+        else
+          opts[:local_data_path] ||= root_path.join(DEFAULT_LOCAL_DATA)
+        end
+      end
       if opts[:local_data_path]
         @local_data_path = Pathname.new(File.expand_path(opts[:local_data_path], @cwd))
       end
+      @logger.debug("Effective local data path: #{@local_data_path}")
 
       # If we have a root path, load the ".vagrantplugins" file.
       if root_path
diff --git a/test/unit/vagrant/environment_test.rb b/test/unit/vagrant/environment_test.rb
index ba3466c9b..f2c9cf9bc 100644
--- a/test/unit/vagrant/environment_test.rb
+++ b/test/unit/vagrant/environment_test.rb
@@ -921,6 +921,84 @@ VF
       end
     end
 
+    context "with environmental variable VAGRANT_DOTFILE_PATH set to the empty string" do
+      it "is set to the default, from the work directory" do
+        with_temp_env("VAGRANT_DOTFILE_PATH" => "") do
+          instance = env.create_vagrant_env
+          expect(instance.cwd).to eq(env.workdir)
+          expect(instance.local_data_path.to_s).to eq(File.join(env.workdir, ".vagrant"))
+        end
+      end
+
+      it "is set to the default, from a sub-directory of the work directory" do
+        Dir.mktmpdir("sub-directory", env.workdir) do |temp_dir|
+          with_temp_env("VAGRANT_DOTFILE_PATH" => "") do
+            instance = env.create_vagrant_env(cwd: temp_dir)
+            expect(instance.cwd.to_s).to eq(temp_dir)
+            expect(instance.local_data_path.to_s).to eq(File.join(env.workdir, ".vagrant"))
+          end
+        end
+      end
+    end
+
+    context "with environmental variable VAGRANT_DOTFILE_PATH set to an absolute path" do
+      it "is set to VAGRANT_DOTFILE_PATH from the work directory" do
+        Dir.mktmpdir("sub-directory", env.workdir) do |temp_dir|
+          dotfile_path = File.join(temp_dir, ".vagrant-custom")
+
+          with_temp_env("VAGRANT_DOTFILE_PATH" => dotfile_path) do
+            instance = env.create_vagrant_env
+            expect(instance.cwd).to eq(env.workdir)
+            expect(instance.local_data_path.to_s).to eq(dotfile_path)
+          end
+        end
+      end
+
+      it "is set to VAGRANT_DOTFILE_PATH from a sub-directory of the work directory" do
+        Dir.mktmpdir("sub-directory", env.workdir) do |temp_dir|
+          dotfile_path = File.join(temp_dir, ".vagrant-custom")
+
+          with_temp_env("VAGRANT_DOTFILE_PATH" => dotfile_path) do
+            instance = env.create_vagrant_env(cwd: temp_dir)
+            expect(instance.cwd.to_s).to eq(temp_dir)
+            expect(instance.local_data_path.to_s).to eq(dotfile_path)
+          end
+        end
+      end
+    end
+
+    context "with environmental variable VAGRANT_DOTFILE_PATH set to a relative path" do
+      it "is set relative to the the work directory, from the work directory" do
+        Dir.mktmpdir("sub-directory", env.workdir) do |temp_dir|
+          with_temp_env("VAGRANT_DOTFILE_PATH" => ".vagrant-custom") do
+            instance = env.create_vagrant_env
+            expect(instance.cwd).to eq(env.workdir)
+            expect(instance.local_data_path.to_s).to eq(File.join(env.workdir, ".vagrant-custom"))
+          end
+        end
+      end
+
+      it "is set relative to the the work directory, from a sub-directory of the work directory" do
+        Dir.mktmpdir("sub-directory", env.workdir) do |temp_dir|
+          with_temp_env("VAGRANT_DOTFILE_PATH" => ".vagrant-custom") do
+            instance = env.create_vagrant_env(cwd: temp_dir)
+            expect(instance.cwd.to_s).to eq(temp_dir)
+            expect(instance.local_data_path.to_s).to eq(File.join(env.workdir, ".vagrant-custom"))
+          end
+        end
+      end
+
+      it "is set to the empty string when there is no valid work directory" do
+        Dir.mktmpdir("out-of-tree-directory") do |temp_dir|
+          with_temp_env("VAGRANT_DOTFILE_PATH" => ".vagrant-custom") do
+            instance = env.create_vagrant_env(cwd: temp_dir)
+            expect(instance.cwd.to_s).to eq(temp_dir)
+            expect(instance.local_data_path.to_s).to eq("")
+          end
+        end
+      end
+    end
+
     describe "upgrading V1 dotfiles" do
       let(:v1_dotfile_tempfile) do
         Tempfile.new("vagrant-upgrade-dotfile").tap do |f|