diff --git a/internal/lang/funcs/filesystem.go b/internal/lang/funcs/filesystem.go
index 276dd12ce40a..07a978618fe5 100644
--- a/internal/lang/funcs/filesystem.go
+++ b/internal/lang/funcs/filesystem.go
@@ -126,10 +126,11 @@ func MakeTemplateFileFunc(baseDir string, funcsCb func() (funcs map[string]funct
 			if err != nil {
 				return cty.DynamicPseudoType, err
 			}
+			vars, _ := args[1].UnmarkDeep()
 
 			// This is safe even if args[1] contains unknowns because the HCL
 			// template renderer itself knows how to short-circuit those.
-			val, err := renderTmpl(expr, args[1])
+			val, err := renderTmpl(expr, vars)
 			return val.Type(), err
 		},
 		Impl: func(args []cty.Value, retType cty.Type) (cty.Value, error) {
diff --git a/internal/lang/funcs/filesystem_test.go b/internal/lang/funcs/filesystem_test.go
index 35d39c9036e8..51b49abb11de 100644
--- a/internal/lang/funcs/filesystem_test.go
+++ b/internal/lang/funcs/filesystem_test.go
@@ -211,9 +211,9 @@ func TestTemplateFile(t *testing.T) {
 					cty.StringVal("a"),
 					cty.StringVal("b").Mark("var"),
 					cty.StringVal("c"),
-				}),
+				}).Mark("vars"),
 			}),
-			cty.StringVal("- a\n- b\n- c\n").Mark("path").Mark("var"),
+			cty.StringVal("- a\n- b\n- c\n").Mark("path").Mark("var").Mark("vars"),
 			``,
 		},
 		{