diff --git a/pkg/analyzer_cli/lib/src/build_mode.dart b/pkg/analyzer_cli/lib/src/build_mode.dart
index a8e97572ddf..5beef119944 100644
--- a/pkg/analyzer_cli/lib/src/build_mode.dart
+++ b/pkg/analyzer_cli/lib/src/build_mode.dart
@@ -270,7 +270,8 @@ class BuildMode {
     ]);
 
     // Set context options.
-    Driver.setAnalysisContextOptions(resourceProvider, context, options,
+    Driver.setAnalysisContextOptions(
+        resourceProvider, context.sourceFactory, context, options,
         (AnalysisOptionsImpl contextOptions) {
       if (options.buildSummaryOnlyDiet) {
         contextOptions.analyzeFunctionBodies = false;
diff --git a/pkg/analyzer_cli/lib/src/driver.dart b/pkg/analyzer_cli/lib/src/driver.dart
index 16ec22d2fa3..35caf046d23 100644
--- a/pkg/analyzer_cli/lib/src/driver.dart
+++ b/pkg/analyzer_cli/lib/src/driver.dart
@@ -491,13 +491,6 @@ class Driver implements CommandLineStarter {
     // Create a context.
     _context = AnalysisEngine.instance.createAnalysisContext();
 
-    AnalyzeFunctionBodiesPredicate dietParsingPolicy =
-        _chooseDietParsingPolicy(options);
-    setAnalysisContextOptions(resourceProvider, _context, options,
-        (AnalysisOptionsImpl contextOptions) {
-      contextOptions.analyzeFunctionBodiesPredicate = dietParsingPolicy;
-    });
-
     // Find package info.
     _PackageInfo packageInfo = _findPackages(options);
 
@@ -528,6 +521,14 @@ class Driver implements CommandLineStarter {
     SourceFactory sourceFactory = _chooseUriResolutionPolicy(
         options, embedderMap, packageInfo, summaryDataStore);
 
+    AnalyzeFunctionBodiesPredicate dietParsingPolicy =
+        _chooseDietParsingPolicy(options);
+    setAnalysisContextOptions(
+        resourceProvider, sourceFactory, _context, options,
+        (AnalysisOptionsImpl contextOptions) {
+      contextOptions.analyzeFunctionBodiesPredicate = dietParsingPolicy;
+    });
+
     _context.sourceFactory = sourceFactory;
     _context.resultProvider =
         new InputPackagesResultProvider(_context, summaryDataStore);
@@ -680,6 +681,7 @@ class Driver implements CommandLineStarter {
 
   static void setAnalysisContextOptions(
       file_system.ResourceProvider resourceProvider,
+      SourceFactory sourceFactory,
       AnalysisContext context,
       CommandLineOptions options,
       void configureContextOptions(AnalysisOptionsImpl contextOptions)) {
@@ -704,7 +706,7 @@ class Driver implements CommandLineStarter {
     context.analysisOptions = contextOptions;
 
     // Process analysis options file (and notify all interested parties).
-    _processAnalysisOptions(resourceProvider, context, options);
+    _processAnalysisOptions(resourceProvider, sourceFactory, context, options);
   }
 
   /// Perform a deep comparison of two string lists.
@@ -761,14 +763,16 @@ class Driver implements CommandLineStarter {
 
   static void _processAnalysisOptions(
       file_system.ResourceProvider resourceProvider,
+      SourceFactory sourceFactory,
       AnalysisContext context,
       CommandLineOptions options) {
     file_system.File file = _getOptionsFile(resourceProvider, options);
     List<OptionsProcessor> optionsProcessors =
         AnalysisEngine.instance.optionsPlugin.optionsProcessors;
+
     try {
       AnalysisOptionsProvider analysisOptionsProvider =
-          new AnalysisOptionsProvider();
+          new AnalysisOptionsProvider(sourceFactory);
       Map<String, YamlNode> optionMap =
           analysisOptionsProvider.getOptionsFromFile(file);
       optionsProcessors.forEach(
diff --git a/pkg/analyzer_cli/test/data/options_include_directive_tests_project/.analysis_options b/pkg/analyzer_cli/test/data/options_include_directive_tests_project/.analysis_options
new file mode 100644
index 00000000000..7d954249ead
--- /dev/null
+++ b/pkg/analyzer_cli/test/data/options_include_directive_tests_project/.analysis_options
@@ -0,0 +1 @@
+include: other_options.yaml
diff --git a/pkg/analyzer_cli/test/data/options_include_directive_tests_project/_packages b/pkg/analyzer_cli/test/data/options_include_directive_tests_project/_packages
new file mode 100644
index 00000000000..574bcbd9ff6
--- /dev/null
+++ b/pkg/analyzer_cli/test/data/options_include_directive_tests_project/_packages
@@ -0,0 +1,3 @@
+# Generated by pub on 2016-11-30 13:02:00.280796.
+foo:pkg/foo/lib/
+options_include_directive_tests_project:lib/
diff --git a/pkg/analyzer_cli/test/data/options_include_directive_tests_project/lib/test_file.dart b/pkg/analyzer_cli/test/data/options_include_directive_tests_project/lib/test_file.dart
new file mode 100644
index 00000000000..c53a7e080f7
--- /dev/null
+++ b/pkg/analyzer_cli/test/data/options_include_directive_tests_project/lib/test_file.dart
@@ -0,0 +1,16 @@
+// Copyright (c) 2016, the Dart project authors.  Please see the AUTHORS file
+// for details. All rights reserved. Use of this source code is governed by a
+// BSD-style license that can be found in the LICENSE file.
+
+library analyzer_cli.test.data.options_include_directive_test_project.test_file;
+
+
+int foo() {
+
+  int x = baz(); // Undefined function.
+  if (x == 0) {
+    print('x is zero');
+  } else ; // Empty else statement
+
+  // Missing return
+}
diff --git a/pkg/analyzer_cli/test/data/options_include_directive_tests_project/other_options.yaml b/pkg/analyzer_cli/test/data/options_include_directive_tests_project/other_options.yaml
new file mode 100644
index 00000000000..c27dd4a63e4
--- /dev/null
+++ b/pkg/analyzer_cli/test/data/options_include_directive_tests_project/other_options.yaml
@@ -0,0 +1 @@
+include: package:foo/foo_package_options.yaml
diff --git a/pkg/analyzer_cli/test/data/options_include_directive_tests_project/pkg/foo/lib/foo_package_options.yaml b/pkg/analyzer_cli/test/data/options_include_directive_tests_project/pkg/foo/lib/foo_package_options.yaml
new file mode 100644
index 00000000000..89c0bf6a4f6
--- /dev/null
+++ b/pkg/analyzer_cli/test/data/options_include_directive_tests_project/pkg/foo/lib/foo_package_options.yaml
@@ -0,0 +1,13 @@
+analyzer:
+  strong-mode: true
+  errors:
+    unused_local_variable: ignore
+    missing_return: error
+    undefined_function: warning
+  language:
+    enableSuperMixins: true
+
+linter:
+ rules:
+   # see catalog here: http://dart-lang.github.io/linter/lints/
+   - avoid_empty_else
diff --git a/pkg/analyzer_cli/test/driver_test.dart b/pkg/analyzer_cli/test/driver_test.dart
index 222d96d63be..f582e59cdb4 100644
--- a/pkg/analyzer_cli/test/driver_test.dart
+++ b/pkg/analyzer_cli/test/driver_test.dart
@@ -306,6 +306,25 @@ linter:
 
       createTests('old', AnalysisEngine.ANALYSIS_OPTIONS_FILE);
       createTests('new', AnalysisEngine.ANALYSIS_OPTIONS_YAML_FILE);
+
+      test('include directive', () {
+        String testDir = path.join(
+            testDirectory, 'data', 'options_include_directive_tests_project');
+        drive(
+          path.join(testDir, 'lib', 'test_file.dart'),
+          args: [
+            '--fatal-warnings',
+            '--packages',
+            path.join(testDir, '_packages'),
+          ],
+          options: path.join(testDir, '.analysis_options'),
+        );
+        expect(exitCode, 3);
+        expect(outSink.toString(),
+            contains('but doesn\'t end with a return statement.'));
+        expect(outSink.toString(), contains('isn\'t defined'));
+        expect(outSink.toString(), contains('Avoid empty else statements.'));
+      });
     });
 
     void createTests(String designator, String optionsFileName) {