diff --git a/tests/components/template/test_template_entity.py b/tests/components/template/test_template_entity.py
index c09a09750fe..9d3d350e81c 100644
--- a/tests/components/template/test_template_entity.py
+++ b/tests/components/template/test_template_entity.py
@@ -2,7 +2,9 @@
 
 import pytest
 
+from homeassistant.components import sensor
 from homeassistant.components.template import template_entity
+from homeassistant.const import STATE_OFF, STATE_ON, STATE_UNAVAILABLE
 from homeassistant.core import HomeAssistant
 from homeassistant.helpers import template
 
@@ -22,3 +24,46 @@ async def test_template_entity_requires_hass_set(hass: HomeAssistant) -> None:
     entity.add_template_attribute("_hello", tpl_with_hass)
 
     assert len(entity._template_attrs.get(tpl_with_hass, [])) == 1
+
+
+@pytest.mark.parametrize(("count", "domain"), [(1, sensor.DOMAIN)])
+@pytest.mark.parametrize(
+    "config",
+    [
+        {
+            "sensor": {
+                "platform": "template",
+                "sensors": {
+                    "test_template_sensor": {
+                        "value_template": "{{ states.sensor.test_sensor.state }}",
+                        "availability_template": "{{ is_state('sensor.test_sensor', 'on') }}",
+                        "icon_template": "{% if states.sensor.test_sensor.state == 'on' %}mdi:on{% else %}mdi:off{% endif %}",
+                    }
+                },
+            },
+        },
+    ],
+)
+@pytest.mark.usefixtures("start_ha")
+async def test_unavailable_does_not_render_other_state_attributes(
+    hass: HomeAssistant,
+) -> None:
+    """Test when entity goes unavailable, other state attributes are not rendered."""
+    hass.states.async_set("sensor.test_sensor", STATE_OFF)
+
+    # When template returns true..
+    hass.states.async_set("sensor.test_sensor", STATE_ON)
+    await hass.async_block_till_done()
+
+    # Device State should not be unavailable
+    assert hass.states.get("sensor.test_template_sensor").state != STATE_UNAVAILABLE
+    assert hass.states.get("sensor.test_template_sensor").attributes["icon"] == "mdi:on"
+
+    # When Availability template returns false
+    hass.states.async_set("sensor.test_sensor", STATE_OFF)
+    await hass.async_block_till_done()
+
+    # device state should be unavailable
+    assert hass.states.get("sensor.test_template_sensor").state == STATE_UNAVAILABLE
+    # Icon should be mdi:on as going unavailable does not render state attributes
+    assert hass.states.get("sensor.test_template_sensor").attributes["icon"] == "mdi:on"