diff --git a/core/src/main/java/org/apache/oozie/command/coord/CoordSubmitXCommand.java b/core/src/main/java/org/apache/oozie/command/coord/CoordSubmitXCommand.java
index cd09c22b5..a06520acf 100644
--- a/core/src/main/java/org/apache/oozie/command/coord/CoordSubmitXCommand.java
+++ b/core/src/main/java/org/apache/oozie/command/coord/CoordSubmitXCommand.java
@@ -26,6 +26,7 @@
 import java.util.HashMap;
 import java.util.HashSet;
 import java.util.List;
+import java.util.Map;
 import java.util.Set;
 import java.util.TreeSet;
 
@@ -87,7 +88,7 @@
  */
 public class CoordSubmitXCommand extends SubmitTransitionXCommand {
 
-    private final Configuration conf;
+    private Configuration conf;
     private final String authToken;
     private final String bundleId;
     private final String coordName;
@@ -370,6 +371,14 @@ protected void mergeDefaultConfig() throws CommandException {
                 LOG.info("configDefault Doesn't exist " + configDefault);
             }
             PropertiesUtils.checkDisallowedProperties(conf, DISALLOWED_USER_PROPERTIES);
+
+            // Resolving all variables in the job properties.
+            // This ensures the Hadoop Configuration semantics is preserved.
+            XConfiguration resolvedVarsConf = new XConfiguration();
+            for (Map.Entry<String, String> entry : conf) {
+                resolvedVarsConf.set(entry.getKey(), conf.get(entry.getKey()));
+            }
+            conf = resolvedVarsConf;
         }
         catch (IOException e) {
             throw new CommandException(ErrorCode.E0702, e.getMessage() + " : Problem reading default config "
diff --git a/release-log.txt b/release-log.txt
index 57913bcc1..3a794739d 100644
--- a/release-log.txt
+++ b/release-log.txt
@@ -18,6 +18,7 @@ OOZIE-108 Upgrade pom version to 3.1.0.
 
 -- Oozie 3.0.2 release
 
+OOZIE-120 coordinator resolve config default variable
 OOZIE-119 relative path in coord dataset include should throw exception if given
 OOZIE-115 oozie should check if app path is directory and read the app xml under it