diff --git a/openstack/common/log.py b/openstack/common/log.py
index b24b6551..f9f226b8 100644
--- a/openstack/common/log.py
+++ b/openstack/common/log.py
@@ -475,7 +475,7 @@ def _setup_logging_from_conf():
         streamlog = ColorHandler()
         log_root.addHandler(streamlog)
 
-    elif not CONF.log_file:
+    elif not logpath:
         # pass sys.stdout as a positional argument
         # python2.6 calls the argument strm, in 2.7 it's stream
         streamlog = logging.StreamHandler(sys.stdout)
diff --git a/tests/unit/test_log.py b/tests/unit/test_log.py
index 751732b9..aea4f98b 100644
--- a/tests/unit/test_log.py
+++ b/tests/unit/test_log.py
@@ -17,6 +17,7 @@
 import logging
 import os
 import sys
+import tempfile
 
 import mock
 from oslo.config import cfg
@@ -437,6 +438,16 @@ class LogConfigOptsTestCase(test.BaseTestCase):
         self.CONF(['--log-file', log_file])
         self.assertEqual(self.CONF.log_file, log_file)
 
+    def test_log_dir_handlers(self):
+        log_dir = tempfile.mkdtemp()
+        self.CONF(['--log-dir', log_dir])
+        self.CONF.set_default('use_stderr', False)
+        log._setup_logging_from_conf()
+        logger = log._loggers[None].logger
+        self.assertEqual(1, len(logger.handlers))
+        self.assertIsInstance(logger.handlers[0],
+                              logging.handlers.WatchedFileHandler)
+
     def test_logfile_deprecated(self):
         logfile = '/some/other/path/foo-bar.log'
         self.CONF(['--logfile', logfile])