diff --git a/lib/ansible/inventory/__init__.py b/lib/ansible/inventory/__init__.py
index 076bc70876..1dbf6cc5ff 100644
--- a/lib/ansible/inventory/__init__.py
+++ b/lib/ansible/inventory/__init__.py
@@ -80,17 +80,20 @@ class Inventory(object):
                     all.add_host(Host(tokens[0], tokens[1]))
                 else:
                     all.add_host(Host(x))
-        elif utils.is_executable(host_list):
-            self._is_script = True
-            self.parser = InventoryScript(filename=host_list)
-            self.groups = self.parser.groups.values()
-        else:
-            data = file(host_list).read()
-            if not data.startswith("---"):
-                self.parser = InventoryParser(filename=host_list)
+        elif os.path.exists(host_list):
+            if utils.is_executable(host_list):
+                self._is_script = True
+                self.parser = InventoryScript(filename=host_list)
                 self.groups = self.parser.groups.values()
             else:
-                raise errors.AnsibleError("YAML inventory support is deprecated in 0.6 and removed in 0.7, see the migration script in examples/scripts in the git checkout")
+                data = file(host_list).read()
+                if not data.startswith("---"):
+                    self.parser = InventoryParser(filename=host_list)
+                    self.groups = self.parser.groups.values()
+                else:
+                    raise errors.AnsibleError("YAML inventory support is deprecated in 0.6 and removed in 0.7, see the migration script in examples/scripts in the git checkout")
+        else:
+            raise errors.AnsibleError("No valid hosts inventory file found")
 
     def _match(self, str, pattern_str):
         if pattern_str.startswith('~'):