diff --git a/lib/ansible/utils.py b/lib/ansible/utils.py
index 92c7aea7c1..8385280407 100644
--- a/lib/ansible/utils.py
+++ b/lib/ansible/utils.py
@@ -198,7 +198,19 @@ def parse_json(data):
             return { "failed" : True, "parsed" : False, "msg" : data }
         return results
 
-_KEYCRE = re.compile(r"\$(\w+)")
+def varLookup(name, vars):
+    ''' find the contents of a possibly complex variable in vars. '''
+    path = name.split('.')
+    space = vars
+    for part in path:
+        if part in space:
+            space = space[part]
+        else:
+            return
+    return space
+
+_KEYCRE = re.compile(r"\$(?P<complex>\{){0,1}((?(complex)[\w\.]+|\w+))(?(complex)\})")
+#                        if { -> complex     if complex, allow . and need trailing }
 
 def varReplace(raw, vars):
     '''Perform variable replacement of $vars
@@ -220,8 +232,9 @@ def varReplace(raw, vars):
 
         # Determine replacement value (if unknown variable then preserve
         # original)
-        varname = m.group(1).lower()
-        replacement = str(vars.get(varname, m.group()))
+        varname = m.group(2).lower()
+
+        replacement = str(varLookup(varname, vars) or m.group())
 
         start, end = m.span()
         done.append(raw[:start])    # Keep stuff leading up to token
diff --git a/test/TestUtils.py b/test/TestUtils.py
new file mode 100644
index 0000000000..23459d84a2
--- /dev/null
+++ b/test/TestUtils.py
@@ -0,0 +1,155 @@
+import os
+import unittest
+
+import ansible.utils
+
+class TestUtils(unittest.TestCase):
+
+    #####################################
+    ### varLookup function tests
+
+    def test_varLookup_list(self):
+        vars = {
+            'data': {
+                'who': ['joe', 'jack', 'jeff']
+            }
+        }
+
+        res = ansible.utils.varLookup('data.who', vars)
+
+        assert sorted(res) == sorted(vars['data']['who'])
+
+    #####################################
+    ### varReplace function tests
+
+    def test_varReplace_simple(self):
+        template = 'hello $who'
+        vars = {
+            'who': 'world',
+        }
+
+        res = ansible.utils.varReplace(template, vars)
+
+        assert res == 'hello world'
+
+    def test_varReplace_multiple(self):
+        template = '$what $who'
+        vars = {
+            'what': 'hello',
+            'who': 'world',
+        }
+
+        res = ansible.utils.varReplace(template, vars)
+
+        assert res == 'hello world'
+
+    def test_varReplace_middle(self):
+        template = 'hello $who!'
+        vars = {
+            'who': 'world',
+        }
+
+        res = ansible.utils.varReplace(template, vars)
+
+        assert res == 'hello world!'
+
+    def test_varReplace_alternative(self):
+        template = 'hello ${who}'
+        vars = {
+            'who': 'world',
+        }
+
+        res = ansible.utils.varReplace(template, vars)
+
+        assert res == 'hello world'
+
+    def test_varReplace_almost_alternative(self):
+        template = 'hello $who}'
+        vars = {
+            'who': 'world',
+        }
+
+        res = ansible.utils.varReplace(template, vars)
+
+        assert res == 'hello world}'
+
+    def test_varReplace_almost_alternative2(self):
+        template = 'hello ${who'
+        vars = {
+            'who': 'world',
+        }
+
+        res = ansible.utils.varReplace(template, vars)
+
+        assert res == template
+
+    def test_varReplace_alternative_greed(self):
+        template = 'hello ${who} }'
+        vars = {
+            'who': 'world',
+        }
+
+        res = ansible.utils.varReplace(template, vars)
+
+        assert res == 'hello world }'
+
+    def test_varReplace_notcomplex(self):
+        template = 'hello $mydata.who'
+        vars = {
+            'data': {
+                'who': 'world',
+            },
+        }
+
+        res = ansible.utils.varReplace(template, vars)
+
+        print res
+        assert res == template
+
+    def test_varReplace_nested(self):
+        template = 'hello ${data.who}'
+        vars = {
+            'data': {
+                'who': 'world'
+            },
+        }
+
+        res = ansible.utils.varReplace(template, vars)
+
+        assert res == 'hello world'
+
+    def test_varReplace_nested_int(self):
+        template = '$what ${data.who}'
+        vars = {
+            'data': {
+                'who': 2
+            },
+            'what': 'hello',
+        }
+
+        res = ansible.utils.varReplace(template, vars)
+
+        assert res == 'hello 2'
+
+    #####################################
+    ### Template function tests
+
+    def test_template_basic(self):
+        template = 'hello {{ who }}'
+        vars = {
+            'who': 'world',
+        }
+
+        res = ansible.utils.template(template, vars, {})
+
+        assert res == 'hello world'
+
+    def test_template_whitespace(self):
+        template = 'hello {{ who }}\n'
+        vars = {
+            'who': 'world',
+        }
+
+        res = ansible.utils.template(template, vars, {})
+
+        assert res == 'hello world\n'