diff --git a/django/core/management/__init__.py b/django/core/management/__init__.py
index e2885bbd2a..4bbf57e175 100644
--- a/django/core/management/__init__.py
+++ b/django/core/management/__init__.py
@@ -1,6 +1,6 @@
 from __future__ import unicode_literals
 
-import collections
+from collections import OrderedDict, defaultdict
 from importlib import import_module
 import os
 import pkgutil
@@ -145,7 +145,7 @@ class ManagementUtility(object):
                 "",
                 "Available subcommands:",
             ]
-            commands_dict = collections.defaultdict(lambda: [])
+            commands_dict = defaultdict(lambda: [])
             for name, app in six.iteritems(get_commands()):
                 if app == 'django.core':
                     app = 'django'
@@ -317,8 +317,11 @@ class ManagementUtility(object):
                     autoreload.check_errors(django.setup)()
                 except Exception:
                     # The exception will be raised later in the child process
-                    # started by the autoreloader.
-                    pass
+                    # started by the autoreloader. Pretend it didn't happen by
+                    # loading an empty list of applications.
+                    apps.all_models = defaultdict(OrderedDict)
+                    apps.app_configs = OrderedDict()
+                    apps.apps_ready = apps.models_ready = apps.ready = True
 
             # In all other cases, django.setup() is required to succeed.
             else:
diff --git a/docs/releases/1.8.6.txt b/docs/releases/1.8.6.txt
index 178d714f01..8fb9e16be5 100644
--- a/docs/releases/1.8.6.txt
+++ b/docs/releases/1.8.6.txt
@@ -25,3 +25,7 @@ Bugfixes
 * Allowed filtering over a ``RawSQL`` annotation (:ticket:`25506`).
 
 * Made the ``Concat`` database function idempotent on SQLite (:ticket:`25517`).
+
+* Avoided a confusing stack trace when starting :djadmin:`runserver` with an
+  invalid :setting:`INSTALLED_APPS` setting (:ticket:`25510`). This regression
+  appeared in 1.8.5 as a side effect of fixing :ticket:`24704`.