diff --git a/image.go b/image.go
index 642b74d9..5a006eb9 100644
--- a/image.go
+++ b/image.go
@@ -6,8 +6,10 @@ import (
 )
 
 // If the given name is a URL, return it.
-// If it is of the form project/name, use that URL.
-// If it is of the form name then look in the configured project and then hosted image projects.
+// If it is of the form project/name, search the specified project first, then
+// search image families in the specified project.
+// If it is of the form name then look in the configured project, then hosted
+// image projects, and lastly at image families in hosted image projects.
 func resolveImage(c *Config, name string) (string, error) {
 
 	if strings.HasPrefix(name, "https://www.googleapis.com/compute/v1/") {
@@ -28,8 +30,8 @@ func resolveImage(c *Config, name string) (string, error) {
 			// If we match a lookup for an alternate project, then try that next.
 			// If not, we return the original error.
 
-			// If the image name contains the left hand side, we use the project from the right hand
-			// side.
+			// If the image name contains the left hand side, we use the project from
+			// the right hand side.
 			imageMap := map[string]string{
 				"centos":   "centos-cloud",
 				"coreos":   "coreos-cloud",
@@ -57,13 +59,28 @@ func resolveImage(c *Config, name string) (string, error) {
 				return image.SelfLink, nil
 			}
 
+			// If it doesn't exist, try to see if it works as an image family:
+			image, err = c.clientCompute.Images.GetFromFamily(project, name).Do()
+			if err == nil {
+				return image.SelfLink, nil
+			}
+
 			return "", err
 
 		} else if len(splitName) == 2 {
+
+			// Check if image exists in the specified project:
 			image, err := c.clientCompute.Images.Get(splitName[0], splitName[1]).Do()
 			if err == nil {
 				return image.SelfLink, nil
 			}
+
+			// If it doesn't, check if it exists as an image family:
+			image, err = c.clientCompute.Images.GetFromFamily(splitName[0], splitName[1]).Do()
+			if err == nil {
+				return image.SelfLink, nil
+			}
+
 			return "", err
 
 		} else {
diff --git a/resource_compute_instance_test.go b/resource_compute_instance_test.go
index a20e127e..bdd8c3d3 100644
--- a/resource_compute_instance_test.go
+++ b/resource_compute_instance_test.go
@@ -104,6 +104,52 @@ func TestAccComputeInstance_basic3(t *testing.T) {
 	})
 }
 
+func TestAccComputeInstance_basic4(t *testing.T) {
+	var instance compute.Instance
+	var instanceName = fmt.Sprintf("instance-test-%s", acctest.RandString(10))
+
+	resource.Test(t, resource.TestCase{
+		PreCheck:     func() { testAccPreCheck(t) },
+		Providers:    testAccProviders,
+		CheckDestroy: testAccCheckComputeInstanceDestroy,
+		Steps: []resource.TestStep{
+			resource.TestStep{
+				Config: testAccComputeInstance_basic4(instanceName),
+				Check: resource.ComposeTestCheckFunc(
+					testAccCheckComputeInstanceExists(
+						"google_compute_instance.foobar", &instance),
+					testAccCheckComputeInstanceTag(&instance, "foo"),
+					testAccCheckComputeInstanceMetadata(&instance, "foo", "bar"),
+					testAccCheckComputeInstanceDisk(&instance, instanceName, true, true),
+				),
+			},
+		},
+	})
+}
+
+func TestAccComputeInstance_basic5(t *testing.T) {
+	var instance compute.Instance
+	var instanceName = fmt.Sprintf("instance-test-%s", acctest.RandString(10))
+
+	resource.Test(t, resource.TestCase{
+		PreCheck:     func() { testAccPreCheck(t) },
+		Providers:    testAccProviders,
+		CheckDestroy: testAccCheckComputeInstanceDestroy,
+		Steps: []resource.TestStep{
+			resource.TestStep{
+				Config: testAccComputeInstance_basic5(instanceName),
+				Check: resource.ComposeTestCheckFunc(
+					testAccCheckComputeInstanceExists(
+						"google_compute_instance.foobar", &instance),
+					testAccCheckComputeInstanceTag(&instance, "foo"),
+					testAccCheckComputeInstanceMetadata(&instance, "foo", "bar"),
+					testAccCheckComputeInstanceDisk(&instance, instanceName, true, true),
+				),
+			},
+		},
+	})
+}
+
 func TestAccComputeInstance_IP(t *testing.T) {
 	var instance compute.Instance
 	var ipName = fmt.Sprintf("instance-test-%s", acctest.RandString(10))
@@ -665,6 +711,29 @@ func testAccComputeInstance_basic(instance string) string {
 }
 
 func testAccComputeInstance_basic2(instance string) string {
+	return fmt.Sprintf(`
+	resource "google_compute_instance" "foobar" {
+		name = "%s"
+		machine_type = "n1-standard-1"
+		zone = "us-central1-a"
+		can_ip_forward = false
+		tags = ["foo", "bar"]
+
+		disk {
+			image = "debian-8"
+		}
+
+		network_interface {
+			network = "default"
+		}
+
+		metadata {
+			foo = "bar"
+		}
+	}`, instance)
+}
+
+func testAccComputeInstance_basic3(instance string) string {
 	return fmt.Sprintf(`
 	resource "google_compute_instance" "foobar" {
 		name = "%s"
@@ -688,7 +757,31 @@ func testAccComputeInstance_basic2(instance string) string {
 	}`, instance)
 }
 
-func testAccComputeInstance_basic3(instance string) string {
+func testAccComputeInstance_basic4(instance string) string {
+	return fmt.Sprintf(`
+	resource "google_compute_instance" "foobar" {
+		name = "%s"
+		machine_type = "n1-standard-1"
+		zone = "us-central1-a"
+		can_ip_forward = false
+		tags = ["foo", "bar"]
+
+		disk {
+			image = "debian-cloud/debian-8"
+		}
+
+		network_interface {
+			network = "default"
+		}
+
+
+		metadata {
+			foo = "bar"
+		}
+	}`, instance)
+}
+
+func testAccComputeInstance_basic5(instance string) string {
 	return fmt.Sprintf(`
 	resource "google_compute_instance" "foobar" {
 		name = "%s"