diff --git a/CHANGELOG.md b/CHANGELOG.md
index fa2f9cff0de..eb02832b6d1 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -5,6 +5,7 @@ FEATURES:
 IMPROVEMENTS:
 * compute: Autogenerate `google_vpn_gateway` [GH-1409]
 * compute: add `enable_flow_logs` field to subnetwork [GH-1385]
+* project: Don't fail if `folder_id` and `org_id` are set but one is empty for `google_project` [GH-1425]
 
 ## 1.11.0 (May 01, 2018)
 
diff --git a/google/resource_google_project.go b/google/resource_google_project.go
index d16dbcdbfaa..acdd28f3155 100644
--- a/google/resource_google_project.go
+++ b/google/resource_google_project.go
@@ -51,17 +51,15 @@ func resourceGoogleProject() *schema.Resource {
 				Required: true,
 			},
 			"org_id": &schema.Schema{
-				Type:          schema.TypeString,
-				Optional:      true,
-				Computed:      true,
-				ConflictsWith: []string{"folder_id"},
+				Type:     schema.TypeString,
+				Optional: true,
+				Computed: true,
 			},
 			"folder_id": &schema.Schema{
-				Type:          schema.TypeString,
-				Optional:      true,
-				Computed:      true,
-				ConflictsWith: []string{"org_id"},
-				StateFunc:     parseFolderId,
+				Type:      schema.TypeString,
+				Optional:  true,
+				Computed:  true,
+				StateFunc: parseFolderId,
 			},
 			"policy_data": &schema.Schema{
 				Type:     schema.TypeString,
@@ -105,7 +103,9 @@ func resourceGoogleProjectCreate(d *schema.ResourceData, meta interface{}) error
 		Name:      d.Get("name").(string),
 	}
 
-	getParentResourceId(d, project)
+	if err := getParentResourceId(d, project); err != nil {
+		return err
+	}
 
 	if _, ok := d.GetOk("labels"); ok {
 		project.Labels = expandLabels(d)
@@ -215,20 +215,27 @@ func prefixedProject(pid string) string {
 }
 
 func getParentResourceId(d *schema.ResourceData, p *cloudresourcemanager.Project) error {
-	if v, ok := d.GetOk("org_id"); ok {
-		org_id := v.(string)
+	orgId := d.Get("org_id").(string)
+	folderId := d.Get("folder_id").(string)
+
+	if orgId != "" && folderId != "" {
+		return fmt.Errorf("'org_id' and 'folder_id' cannot be both set.")
+	}
+
+	if orgId != "" {
 		p.Parent = &cloudresourcemanager.ResourceId{
-			Id:   org_id,
+			Id:   orgId,
 			Type: "organization",
 		}
 	}
 
-	if v, ok := d.GetOk("folder_id"); ok {
+	if folderId != "" {
 		p.Parent = &cloudresourcemanager.ResourceId{
-			Id:   parseFolderId(v),
+			Id:   parseFolderId(folderId),
 			Type: "folder",
 		}
 	}
+
 	return nil
 }
 
@@ -271,7 +278,9 @@ func resourceGoogleProjectUpdate(d *schema.ResourceData, meta interface{}) error
 
 	// Project parent has changed
 	if d.HasChange("org_id") || d.HasChange("folder_id") {
-		getParentResourceId(d, p)
+		if err := getParentResourceId(d, p); err != nil {
+			return err
+		}
 
 		// Do update on project
 		p, err = config.clientResourceManager.Projects.Update(p.ProjectId, p).Do()
diff --git a/google/resource_google_project_test.go b/google/resource_google_project_test.go
index c38eec5db88..a599c62ba42 100644
--- a/google/resource_google_project_test.go
+++ b/google/resource_google_project_test.go
@@ -170,6 +170,23 @@ func TestAccProject_deleteDefaultNetwork(t *testing.T) {
 	})
 }
 
+func TestAccProject_parentFolder(t *testing.T) {
+	t.Parallel()
+
+	org := getTestOrgFromEnv(t)
+	pid := "terraform-" + acctest.RandString(10)
+	folderDisplayName := "tf-test-" + acctest.RandString(10)
+	resource.Test(t, resource.TestCase{
+		PreCheck:  func() { testAccPreCheck(t) },
+		Providers: testAccProviders,
+		Steps: []resource.TestStep{
+			{
+				Config: testAccProject_parentFolder(pid, pname, folderDisplayName, org),
+			},
+		},
+	})
+}
+
 func testAccCheckGoogleProjectExists(r, pid string) resource.TestCheckFunc {
 	return func(s *terraform.State) error {
 		rs, ok := s.RootModule().Resources[r]
@@ -314,6 +331,24 @@ resource "google_project" "acceptance" {
 }`, pid, name, org, billing)
 }
 
+func testAccProject_parentFolder(pid, projectName, folderName, org string) string {
+	return fmt.Sprintf(`
+resource "google_project" "acceptance" {
+  project_id = "%s"
+  name       = "%s"
+  # ensures we can set both org_id and folder_id as long as only one is not empty.
+  org_id     = ""                            
+  folder_id  = "${google_folder.folder1.id}"
+}
+
+resource "google_folder" "folder1" {
+  display_name = "%s"
+  parent       = "organizations/%s"
+}
+
+`, pid, projectName, folderName, org)
+}
+
 func skipIfEnvNotSet(t *testing.T, envs ...string) {
 	for _, k := range envs {
 		if os.Getenv(k) == "" {