diff --git a/internal/lang/funcs/filesystem.go b/internal/lang/funcs/filesystem.go
index 289a09ea9083..276dd12ce40a 100644
--- a/internal/lang/funcs/filesystem.go
+++ b/internal/lang/funcs/filesystem.go
@@ -137,7 +137,7 @@ func MakeTemplateFileFunc(baseDir string, funcsCb func() (funcs map[string]funct
 
 			vars, varsMarks := args[1].UnmarkDeep()
 
-			if !pathArg.IsKnown() {
+			if !pathArg.IsKnown() || !vars.IsKnown() {
 				return cty.UnknownVal(retType).WithMarks(pathMarks, varsMarks), nil
 			}
 
diff --git a/internal/lang/funcs/filesystem_test.go b/internal/lang/funcs/filesystem_test.go
index 5439661424c4..35d39c9036e8 100644
--- a/internal/lang/funcs/filesystem_test.go
+++ b/internal/lang/funcs/filesystem_test.go
@@ -216,6 +216,12 @@ func TestTemplateFile(t *testing.T) {
 			cty.StringVal("- a\n- b\n- c\n").Mark("path").Mark("var"),
 			``,
 		},
+		{
+			cty.StringVal("testdata/list.tmpl").Mark("path"),
+			cty.UnknownVal(cty.Map(cty.String)),
+			cty.DynamicVal.Mark("path"),
+			``,
+		},
 		{
 			cty.StringVal("testdata/list.tmpl").Mark("path"),
 			cty.ObjectVal(map[string]cty.Value{