diff --git a/db/database.cpp b/db/database.cpp
index cd4e8f4cc70..a75191308ec 100644
--- a/db/database.cpp
+++ b/db/database.cpp
@@ -192,22 +192,31 @@ namespace mongo {
         return ret;
     }
 
+    bool fileIndexExceedsQuota( const char *ns, int fileIndex, bool enforceQuota ) {
+        return
+            cmdLine.quota &&
+            enforceQuota &&
+            fileIndex >= cmdLine.quotaFiles &&
+            // we don't enforce the quota on "special" namespaces as that could lead to problems -- e.g.
+            // rejecting an index insert after inserting the main record.
+            !NamespaceString::special( ns ) &&
+            NamespaceString( ns ).db != "local";
+    }
+    
     MongoDataFile* Database::suitableFile( const char *ns, int sizeNeeded, bool preallocate, bool enforceQuota ) {
 
         // check existing files
         for ( int i=numFiles()-1; i>=0; i-- ) {
             MongoDataFile* f = getFile( i );
             if ( f->getHeader()->unusedLength >= sizeNeeded ) {
-                // we don't enforce the quota on "special" namespaces as that could lead to problems -- e.g.
-                // rejecting an index insert after inserting the main record.
-                if( cmdLine.quota && enforceQuota && i > cmdLine.quotaFiles && !NamespaceString::special(ns) )
+                if ( fileIndexExceedsQuota( ns, i-1, enforceQuota ) ) // NOTE i-1 is the value used historically for this check.
                     ;
                 else
                     return f;
             }
         }
 
-        if( cmdLine.quota && enforceQuota && numFiles() >= cmdLine.quotaFiles && !NamespaceString::special(ns) )
+        if ( fileIndexExceedsQuota( ns, numFiles(), enforceQuota ) )
             uasserted(12501, "quota exceeded");
 
         // allocate files until we either get one big enough or hit maxSize
diff --git a/jstests/disk/quota.js b/jstests/disk/quota.js
new file mode 100644
index 00000000000..d93e5eaafc0
--- /dev/null
+++ b/jstests/disk/quota.js
@@ -0,0 +1,47 @@
+// Check functioning of --quotaFiles parameter, including with respect to SERVER-3293 ('local' database).
+
+port = allocatePorts( 1 )[ 0 ];
+
+baseName = "jstests_disk_quota";
+dbpath = "/data/db/" + baseName;
+
+m = startMongod( "--port", port, "--dbpath", "/data/db/" + baseName, "--quotaFiles", "1", "--smallfiles" );
+db = m.getDB( baseName );
+
+big = new Array( 10000 ).toString();
+
+// Insert documents until quota is exhausted.
+while( !db.getLastError() ) {
+    db[ baseName ].save( {b:big} );
+}
+printjson( db.getLastError() );
+
+dotTwoDataFile = dbpath + "/" + baseName + ".2";
+files = listFiles( dbpath );
+for( i in files ) {
+    // Since only one data file is allowed, a .0 file is expected and a .1 file may be preallocated (SERVER-3410) but no .2 file is expected.
+	assert.neq( dotTwoDataFile, files[ i ].name );
+}
+
+dotTwoDataFile = dbpath + "/" + "local" + ".2";
+// Check that quota does not apply to local db, and a .2 file can be created.
+l = m.getDB( "local" )[ baseName ];
+for( i = 0; i < 10000; ++i ) {
+    l.save( {b:big} );
+    assert( !db.getLastError() );
+	dotTwoFound = false;
+    if ( i % 100 != 0 ) {
+        continue;
+    }
+    files = listFiles( dbpath );
+    for( f in files ) {
+     	if ( files[ f ].name == dotTwoDataFile ) {
+         	dotTwoFound = true;
+        }
+    }
+    if ( dotTwoFound ) {
+     	break;   
+    }
+}
+
+assert( dotTwoFound );