diff --git a/gcloud/datastore/__init__.py b/gcloud/datastore/__init__.py
index 1a2df8147706..6f77e05fba51 100644
--- a/gcloud/datastore/__init__.py
+++ b/gcloud/datastore/__init__.py
@@ -80,6 +80,8 @@ def set_default_dataset_id(dataset_id=None):
 
     :type dataset_id: string
     :param dataset_id: Optional. The dataset ID to use as default.
+
+    :raises: :class:`EnvironmentError` if no dataset ID was implied.
     """
     if dataset_id is None:
         dataset_id = os.getenv(_DATASET_ENV_VAR_NAME)
@@ -92,6 +94,8 @@ def set_default_dataset_id(dataset_id=None):
 
     if dataset_id is not None:
         _implicit_environ.DATASET_ID = dataset_id
+    else:
+        raise EnvironmentError('No dataset ID could be inferred.')
 
 
 def set_default_connection(connection=None):
diff --git a/gcloud/datastore/test___init__.py b/gcloud/datastore/test___init__.py
index 0ebc28a8927c..e4907862a10f 100644
--- a/gcloud/datastore/test___init__.py
+++ b/gcloud/datastore/test___init__.py
@@ -58,7 +58,7 @@ def test_no_env_var_set(self):
 
         with self._monkeyEnviron(None):
             with self._monkeyImplicit():
-                self._callFUT()
+                self.assertRaises(EnvironmentError, self._callFUT)
 
         self.assertEqual(_implicit_environ.DATASET_ID, None)
 
@@ -98,7 +98,7 @@ def test_set_explicit_None_wo_env_var_set(self):
 
         with self._monkeyEnviron(None):
             with self._monkeyImplicit():
-                self._callFUT(None)
+                self.assertRaises(EnvironmentError, self._callFUT, None)
 
         self.assertEqual(_implicit_environ.DATASET_ID, None)
 
@@ -152,7 +152,10 @@ def _implicit_compute_engine_helper(self, status):
 
         with self._monkeyEnviron(None):
             with self._monkeyImplicit(connection=connection):
-                self._callFUT()
+                if EXPECTED_ID is None:
+                    self.assertRaises(EnvironmentError, self._callFUT)
+                else:
+                    self._callFUT()
 
         self.assertEqual(_implicit_environ.DATASET_ID, EXPECTED_ID)
         self.assertEqual(connection.host, '169.254.169.254')