diff --git a/heatclient/common/template_utils.py b/heatclient/common/template_utils.py
index a1b176c3..2a6504ca 100644
--- a/heatclient/common/template_utils.py
+++ b/heatclient/common/template_utils.py
@@ -31,15 +31,26 @@ def process_template_path(template_path, object_request=None, existing=False):
     """Read template from template path.
 
     Attempt to read template first as a file or url. If that is unsuccessful,
-    try again to assuming path is to a template object.
+    try again assuming path is to a template object.
+
+    :param template_path: local or uri path to template
+    :param object_request: custom object request function used to get template
+                           if local or uri path fails
+    :param existing: if the current stack's template should be used
+    :returns: get_file dict and template contents
+    :raises: error.URLError
     """
     try:
         return get_template_contents(template_file=template_path,
                                      existing=existing)
-    except error.URLError:
-        return get_template_contents(template_object=template_path,
-                                     object_request=object_request,
-                                     existing=existing)
+    except error.URLError as template_file_exc:
+        try:
+            return get_template_contents(template_object=template_path,
+                                         object_request=object_request,
+                                         existing=existing)
+        except exc.HTTPNotFound:
+            # The initial exception gives the user better failure context.
+            raise template_file_exc
 
 
 def get_template_contents(template_file=None, template_url=None,
diff --git a/heatclient/tests/unit/test_template_utils.py b/heatclient/tests/unit/test_template_utils.py
index 551f4636..a1cac5ea 100644
--- a/heatclient/tests/unit/test_template_utils.py
+++ b/heatclient/tests/unit/test_template_utils.py
@@ -15,6 +15,7 @@ import base64
 import json
 from mox3 import mox
 import six
+from six.moves.urllib import error
 from six.moves.urllib import request
 import tempfile
 import testtools
@@ -566,6 +567,17 @@ class TestGetTemplateContents(testtools.TestCase):
                 'Could not fetch template from file://%s' % tmpl_file.name,
                 str(ex))
 
+    def test_get_template_file_nonextant(self):
+        nonextant_file = '/template/dummy/file/path/and/name.yaml'
+        ex = self.assertRaises(
+            error.URLError,
+            template_utils.get_template_contents,
+            nonextant_file)
+        self.assertEqual(
+            "<urlopen error [Errno 2] No such file or directory: '%s'>"
+            % nonextant_file,
+            str(ex))
+
     def test_get_template_contents_file_none(self):
         ex = self.assertRaises(
             exc.CommandError,