diff --git a/tpl/template_i18n.go b/tpl/template_i18n.go
index bac449035..453351a10 100644
--- a/tpl/template_i18n.go
+++ b/tpl/template_i18n.go
@@ -63,30 +63,26 @@ func SetI18nTfuncs(bndl *bundle.Bundle) {
 
 	for _, lang := range bndl.LanguageTags() {
 		currentLang := lang
-		tFunc, err := bndl.Tfunc(currentLang)
 
-		if err != nil {
-			jww.WARN.Printf("could not load translations for language %q (%s), will use default content language.\n", lang, err)
-			translator.translateFuncs[currentLang] = defaultT
-			continue
-		}
 		translator.translateFuncs[currentLang] = func(translationID string, args ...interface{}) string {
-			if translated := tFunc(translationID, args...); translated != translationID {
+			tFunc, err := bndl.Tfunc(currentLang)
+			if err != nil {
+				jww.WARN.Printf("could not load translations for language %q (%s), will use default content language.\n", lang, err)
+			} else if translated := tFunc(translationID, args...); translated != translationID {
 				return translated
 			}
 			if Logi18nWarnings {
 				i18nWarningLogger.Printf("i18n|MISSING_TRANSLATION|%s|%s", currentLang, translationID)
 			}
+			if viper.GetBool("EnableMissingTranslationPlaceholders") {
+				return fmt.Sprintf("[i18n] %s", translationID)
+			}
 			if defaultT != nil {
 				if translated := defaultT(translationID, args...); translated != translationID {
 					return translated
 				}
 			}
-
-			if !viper.GetBool("EnableMissingTranslationPlaceholders") {
-				return ""
-			}
-			return fmt.Sprintf("[i18n] %s", translationID)
+			return ""
 		}
 	}
 }
diff --git a/tpl/template_i18n_test.go b/tpl/template_i18n_test.go
new file mode 100644
index 000000000..2940c8d4d
--- /dev/null
+++ b/tpl/template_i18n_test.go
@@ -0,0 +1,115 @@
+// Copyright 2015 The Hugo Authors. All rights reserved.
+//
+// Licensed under the Apache License, Version 2.0 (the "License");
+// you may not use this file except in compliance with the License.
+// You may obtain a copy of the License at
+// http://www.apache.org/licenses/LICENSE-2.0
+//
+// Unless required by applicable law or agreed to in writing, software
+// distributed under the License is distributed on an "AS IS" BASIS,
+// WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+// See the License for the specific language governing permissions and
+// limitations under the License.
+
+package tpl
+
+import (
+	"testing"
+
+	"github.com/nicksnyder/go-i18n/i18n/bundle"
+	"github.com/spf13/viper"
+	"github.com/stretchr/testify/assert"
+)
+
+type test struct {
+	file    string
+	content []byte
+}
+
+func doTestI18nTranslate(t *testing.T, data []test, lang, id string) string {
+	i18nBundle := bundle.New()
+
+	for _, r := range data {
+		err := i18nBundle.ParseTranslationFileBytes(r.file, r.content)
+		if err != nil {
+			t.Errorf("Error parsing translation file: %s", err)
+		}
+		SetI18nTfuncs(i18nBundle)
+	}
+
+	SetTranslateLang(lang)
+
+	translated, err := I18nTranslate(id, nil)
+	if err != nil {
+		t.Errorf("Error translating '%s': %s", id, err)
+	}
+	return translated
+}
+
+func TestI18nTranslate(t *testing.T) {
+	var data []test
+	var actual, expected string
+
+	viper.SetDefault("DefaultContentLanguage", "en")
+
+	// Test without and with placeholders
+	for _, enablePlaceholders := range []bool{false, true} {
+		viper.Set("EnableMissingTranslationPlaceholders", enablePlaceholders)
+
+		// All translations present
+		data = []test{
+			{"en.yaml", []byte("- id: \"hello\"\n  translation: \"Hello, World!\"")},
+			{"es.yaml", []byte("- id: \"hello\"\n  translation: \"¡Hola, Mundo!\"")},
+		}
+		expected = "¡Hola, Mundo!"
+		actual = doTestI18nTranslate(t, data, "es", "hello")
+		assert.Equal(t, expected, actual)
+
+		// Translation missing in current language but present in default
+		data = []test{
+			{"en.yaml", []byte("- id: \"hello\"\n  translation: \"Hello, World!\"")},
+			{"es.yaml", []byte("- id: \"goodbye\"\n  translation: \"¡Adiós, Mundo!\"")},
+		}
+		if enablePlaceholders {
+			expected = "[i18n] hello"
+		} else {
+			expected = "Hello, World!"
+		}
+		actual = doTestI18nTranslate(t, data, "es", "hello")
+		assert.Equal(t, expected, actual)
+
+		// Translation missing in default language but present in current
+		data = []test{
+			{"en.yaml", []byte("- id: \"goodbye\"\n  translation: \"Goodbye, World!\"")},
+			{"es.yaml", []byte("- id: \"hello\"\n  translation: \"¡Hola, Mundo!\"")},
+		}
+		expected = "¡Hola, Mundo!"
+		actual = doTestI18nTranslate(t, data, "es", "hello")
+		assert.Equal(t, expected, actual)
+
+		// Translation missing in both default and current language
+		data = []test{
+			{"en.yaml", []byte("- id: \"goodbye\"\n  translation: \"Goodbye, World!\"")},
+			{"es.yaml", []byte("- id: \"goodbye\"\n  translation: \"¡Adiós, Mundo!\"")},
+		}
+		if enablePlaceholders {
+			expected = "[i18n] hello"
+		} else {
+			expected = ""
+		}
+		actual = doTestI18nTranslate(t, data, "es", "hello")
+		assert.Equal(t, expected, actual)
+
+		// Default translation file missing or empty
+		data = []test{
+			{"en.yaml", []byte("")},
+		}
+		actual = doTestI18nTranslate(t, data, "es", "hello")
+		if enablePlaceholders {
+			expected = "[i18n] hello"
+		} else {
+			expected = ""
+		}
+		assert.Equal(t, expected, actual)
+	}
+}