diff --git a/compose/cli/main.py b/compose/cli/main.py
index edc07d426..fd7f92a81 100644
--- a/compose/cli/main.py
+++ b/compose/cli/main.py
@@ -234,19 +234,21 @@ class TopLevelCommand(object):
             --no-cache              Do not use cache when building the image.
             --pull                  Always attempt to pull a newer version of the image.
             -m, --memory MEM        Sets memory limit for the build container.
-            --build-arg key=val     Set build-time variables for one service.
+            --build-arg key=val     Set build-time variables for services.
         """
         service_names = options['SERVICE']
         build_args = options.get('--build-arg', None)
         if build_args:
+            if not service_names and docker.utils.version_lt(self.project.client.api_version, '1.25'):
+                raise UserError(
+                    '--build-arg is only supported when services are specified for API version < 1.25.'
+                    ' Please use a Compose file version > 2.2 or specify which services to build.'
+                )
             environment = Environment.from_env_file(self.project_dir)
             build_args = resolve_build_args(build_args, environment)
 
-        if not service_names and build_args:
-            raise UserError("Need service name for --build-arg option")
-
         self.project.build(
-            service_names=service_names,
+            service_names=options['SERVICE'],
             no_cache=bool(options.get('--no-cache', False)),
             pull=bool(options.get('--pull', False)),
             force_rm=bool(options.get('--force-rm', False)),
diff --git a/tests/acceptance/cli_test.py b/tests/acceptance/cli_test.py
index 134485c40..125501b0d 100644
--- a/tests/acceptance/cli_test.py
+++ b/tests/acceptance/cli_test.py
@@ -658,6 +658,33 @@ class CLITestCase(DockerClientTestCase):
         result = self.dispatch(['build', '--no-cache', '--memory', '96m', 'service'], None)
         assert 'memory: 100663296' in result.stdout  # 96 * 1024 * 1024
 
+    def test_build_with_buildarg_from_compose_file(self):
+        pull_busybox(self.client)
+        self.base_dir = 'tests/fixtures/build-args'
+        result = self.dispatch(['build'], None)
+        assert 'Favorite Touhou Character: mariya.kirisame' in result.stdout
+
+    def test_build_with_buildarg_cli_override(self):
+        pull_busybox(self.client)
+        self.base_dir = 'tests/fixtures/build-args'
+        result = self.dispatch(['build', '--build-arg', 'favorite_th_character=sakuya.izayoi'], None)
+        assert 'Favorite Touhou Character: sakuya.izayoi' in result.stdout
+
+    @mock.patch.dict(os.environ)
+    def test_build_with_buildarg_old_api_version(self):
+        pull_busybox(self.client)
+        self.base_dir = 'tests/fixtures/build-args'
+        os.environ['COMPOSE_API_VERSION'] = '1.24'
+        result = self.dispatch(
+            ['build', '--build-arg', 'favorite_th_character=reimu.hakurei'], None, returncode=1
+        )
+        assert '--build-arg is only supported when services are specified' in result.stderr
+
+        result = self.dispatch(
+            ['build', '--build-arg', 'favorite_th_character=hong.meiling', 'web'], None
+        )
+        assert 'Favorite Touhou Character: hong.meiling' in result.stdout
+
     def test_bundle_with_digests(self):
         self.base_dir = 'tests/fixtures/bundle-with-digests/'
         tmpdir = pytest.ensuretemp('cli_test_bundle')
diff --git a/tests/fixtures/build-args/Dockerfile b/tests/fixtures/build-args/Dockerfile
new file mode 100644
index 000000000..93ebcb9cd
--- /dev/null
+++ b/tests/fixtures/build-args/Dockerfile
@@ -0,0 +1,4 @@
+FROM busybox:latest
+LABEL com.docker.compose.test_image=true
+ARG favorite_th_character
+RUN echo "Favorite Touhou Character: ${favorite_th_character}"
diff --git a/tests/fixtures/build-args/docker-compose.yml b/tests/fixtures/build-args/docker-compose.yml
new file mode 100644
index 000000000..ed60a337b
--- /dev/null
+++ b/tests/fixtures/build-args/docker-compose.yml
@@ -0,0 +1,7 @@
+version: '2.2'
+services:
+  web:
+    build:
+      context: .
+      args:
+        - favorite_th_character=mariya.kirisame