diff --git a/src/axolotl/utils/data/sft.py b/src/axolotl/utils/data/sft.py
index e05c029665..b72e0a2b38 100644
--- a/src/axolotl/utils/data/sft.py
+++ b/src/axolotl/utils/data/sft.py
@@ -350,7 +350,15 @@ def for_d_in_datasets(dataset_configs):
                             split=None,
                         )
                     else:
-                        ds = load_from_disk(config_dataset.path)
+                        try:
+                            ds = load_from_disk(config_dataset.path)
+                        except FileNotFoundError:
+                            ds = load_dataset(
+                                config_dataset.path,
+                                name=config_dataset.name,
+                                streaming=False,
+                                split=None,
+                            )
                 elif local_path.is_file():
                     ds_type = get_ds_type(config_dataset)
 
diff --git a/tests/test_datasets.py b/tests/test_datasets.py
index a57b6d83e2..e87f19cc7f 100644
--- a/tests/test_datasets.py
+++ b/tests/test_datasets.py
@@ -371,44 +371,79 @@ def test_load_hub_with_revision_with_dpo(self):
     def test_load_local_hub_with_revision(self):
         """Verify that a local copy of a hub dataset can be loaded with a specific revision"""
         with tempfile.TemporaryDirectory() as tmp_dir:
-            with tempfile.TemporaryDirectory() as tmp_dir2:
-                tmp_ds_path = Path(tmp_dir2) / "mhenrichsen/alpaca_2k_test"
-                tmp_ds_path.mkdir(parents=True, exist_ok=True)
-                snapshot_download(
-                    repo_id="mhenrichsen/alpaca_2k_test",
-                    repo_type="dataset",
-                    local_dir=tmp_ds_path,
-                    revision="d05c1cb",
-                )
-
-                prepared_path = Path(tmp_dir) / "prepared"
-                cfg = DictDefault(
-                    {
-                        "tokenizer_config": "huggyllama/llama-7b",
-                        "sequence_len": 1024,
-                        "datasets": [
-                            {
-                                "path": "mhenrichsen/alpaca_2k_test",
-                                "ds_type": "parquet",
-                                "type": "alpaca",
-                                "data_files": [
-                                    f"{tmp_ds_path}/alpaca_2000.parquet",
-                                ],
-                                "revision": "d05c1cb",
-                            },
-                        ],
-                    }
-                )
+            tmp_ds_path = Path(tmp_dir) / "mhenrichsen/alpaca_2k_test"
+            tmp_ds_path.mkdir(parents=True, exist_ok=True)
+            snapshot_download(
+                repo_id="mhenrichsen/alpaca_2k_test",
+                repo_type="dataset",
+                local_dir=tmp_ds_path,
+                revision="d05c1cb",
+            )
+
+            prepared_path = Path(tmp_dir) / "prepared"
+            cfg = DictDefault(
+                {
+                    "tokenizer_config": "huggyllama/llama-7b",
+                    "sequence_len": 1024,
+                    "datasets": [
+                        {
+                            "path": "mhenrichsen/alpaca_2k_test",
+                            "ds_type": "parquet",
+                            "type": "alpaca",
+                            "data_files": [
+                                f"{tmp_ds_path}/alpaca_2000.parquet",
+                            ],
+                            "revision": "d05c1cb",
+                        },
+                    ],
+                }
+            )
 
-                dataset, _ = load_tokenized_prepared_datasets(
-                    self.tokenizer, cfg, prepared_path
-                )
+            dataset, _ = load_tokenized_prepared_datasets(
+                self.tokenizer, cfg, prepared_path
+            )
 
-                assert len(dataset) == 2000
-                assert "input_ids" in dataset.features
-                assert "attention_mask" in dataset.features
-                assert "labels" in dataset.features
-                shutil.rmtree(tmp_ds_path)
+            assert len(dataset) == 2000
+            assert "input_ids" in dataset.features
+            assert "attention_mask" in dataset.features
+            assert "labels" in dataset.features
+            shutil.rmtree(tmp_ds_path)
+
+    def test_loading_local_dataset_folder(self):
+        """Verify that a dataset downloaded to a local folder can be loaded"""
+
+        with tempfile.TemporaryDirectory() as tmp_dir:
+            tmp_ds_path = Path(tmp_dir) / "mhenrichsen/alpaca_2k_test"
+            tmp_ds_path.mkdir(parents=True, exist_ok=True)
+            snapshot_download(
+                repo_id="mhenrichsen/alpaca_2k_test",
+                repo_type="dataset",
+                local_dir=tmp_ds_path,
+            )
+
+            prepared_path = Path(tmp_dir) / "prepared"
+            cfg = DictDefault(
+                {
+                    "tokenizer_config": "huggyllama/llama-7b",
+                    "sequence_len": 1024,
+                    "datasets": [
+                        {
+                            "path": str(tmp_ds_path),
+                            "type": "alpaca",
+                        },
+                    ],
+                }
+            )
+
+            dataset, _ = load_tokenized_prepared_datasets(
+                self.tokenizer, cfg, prepared_path
+            )
+
+            assert len(dataset) == 2000
+            assert "input_ids" in dataset.features
+            assert "attention_mask" in dataset.features
+            assert "labels" in dataset.features
+            shutil.rmtree(tmp_ds_path)
 
 
 if __name__ == "__main__":