@@ -731,7 +731,7 @@ func NewDaemonFromDirectory(config *Config, eng *engine.Engine) (*Daemon, error)

 		return nil, fmt.Errorf("You specified --iptables=false with --icc=false. ICC uses iptables to function. Please set --icc or --iptables to true.")

 	}

 	if !config.EnableIptables && config.EnableIpMasq {

-		return nil, fmt.Errorf("You specified --iptables=false with --ipmasq=true. IP masquerading uses iptables to function. Please set --ipmasq to false or --iptables to true.")

+		config.EnableIpMasq = false

 	}

 	config.DisableNetwork = config.BridgeIface == disableNetworkBridge

@@ -82,3 +82,13 @@ func TestDaemonRestartWithVolumesRefs(t *testing.T) {

 	logDone("daemon - volume refs are restored")

 }

+

+func TestDaemonStartIptablesFalse(t *testing.T) {

+	d := NewDaemon(t)

+	if err := d.Start("--iptables=false"); err != nil {

+		t.Fatalf("we should have been able to start the daemon with passing iptables=false: %v", err)

+	}

+	d.Stop()

+

+	logDone("daemon - started daemon with iptables=false")

+}