diff --git a/tests/unit/test_templates.py b/tests/unit/test_templates.py
new file mode 100644
index 0000000..06f2174
--- /dev/null
+++ b/tests/unit/test_templates.py
@@ -0,0 +1,136 @@
+"""Unit tests for the templates module."""
+
+import pytest
+from unittest.mock import patch, MagicMock
+from pathlib import Path
+
+from scaffoldforge.templates import TemplateEngine
+from scaffoldforge.parsers import IssueData, ChecklistItem
+
+
+class TestTemplateEngine:
+    """Tests for TemplateEngine class."""
+
+    def test_engine_initialization(self):
+        """Test engine initialization."""
+        engine = TemplateEngine()
+        assert engine.env is not None
+
+    def test_engine_initialization_with_custom_dir(self):
+        """Test engine initialization with custom directory."""
+        engine = TemplateEngine(template_dir="/tmp/templates")
+        assert engine.template_dir == "/tmp/templates"
+
+    def test_list_available_languages(self):
+        """Test listing available languages."""
+        languages = TemplateEngine.list_available_languages()
+        assert isinstance(languages, list)
+        assert "python" in languages
+        assert "javascript" in languages
+        assert "go" in languages
+        assert "rust" in languages
+
+    def test_list_available_templates_for_python(self):
+        """Test listing templates for Python."""
+        templates = TemplateEngine.list_available_templates("python")
+        assert isinstance(templates, list)
+        assert "default" in templates
+
+    def test_list_available_templates_for_unknown_language(self):
+        """Test listing templates for unknown language."""
+        templates = TemplateEngine.list_available_templates("unknown")
+        assert templates == []
+
+    def test_get_template_context(self):
+        """Test generating template context from issue data."""
+        issue_data = IssueData(
+            number=123,
+            title="Create New Feature",
+            body="This is a test issue",
+            body_html="",
+            labels=["python"],
+            state="open",
+            url="https://github.com/user/repo/issues/123",
+            repository="user/repo",
+            author="testuser",
+            created_at="2024-01-01T00:00:00",
+            updated_at="2024-01-02T00:00:00",
+            checklist=[
+                ChecklistItem(text="Task 1", completed=False),
+                ChecklistItem(text="Task 2", completed=True),
+            ]
+        )
+
+        engine = TemplateEngine()
+        context = engine.get_template_context(issue_data)
+
+        assert context["project_name"] is not None
+        assert context["issue_number"] == 123
+        assert context["issue_title"] == "Create New Feature"
+        assert "Task 1" in context["todo_items"]
+        assert "Task 2" in context["completed_items"]
+
+    def test_generate_project_name(self):
+        """Test project name generation from issue title."""
+        issue_data = IssueData(
+            number=1, title="Create a new feature for user", body="",
+            body_html="", labels=[], state="open", url="", repository="",
+            author="", created_at="", updated_at=""
+        )
+
+        engine = TemplateEngine()
+        project_name = engine._generate_project_name(issue_data)
+        assert "create" in project_name
+        assert "new" in project_name
+        assert "feature" in project_name
+
+    def test_to_kebab_case(self):
+        """Test kebab-case conversion."""
+        engine = TemplateEngine()
+        assert engine._to_kebab_case("Hello World") == "hello-world"
+        assert engine._to_kebab_case("Test 123") == "test-123"
+
+    def test_to_snake_case(self):
+        """Test snake_case conversion."""
+        engine = TemplateEngine()
+        assert engine._to_snake_case("Hello World") == "hello_world"
+        assert engine._to_snake_case("Test 123") == "test_123"
+
+    def test_to_pascal_case(self):
+        """Test PascalCase conversion."""
+        engine = TemplateEngine()
+        assert engine._to_pascal_case("hello world") == "HelloWorld"
+        assert engine._to_pascal_case("test_123") == "Test123"
+
+    def test_render_string(self):
+        """Test rendering a template string."""
+        engine = TemplateEngine()
+        content = "Hello {{ name }}"
+        rendered = engine.render_string(content, {"name": "World"})
+        assert rendered == "Hello World"
+
+    def test_render_with_special_characters(self):
+        """Test rendering with special characters in context."""
+        engine = TemplateEngine()
+        issue_data = IssueData(
+            number=1,
+            title="Feature with 'quotes' and \"double quotes\"",
+            body="",
+            body_html="",
+            labels=[],
+            state="open",
+            url="",
+            repository="",
+            author="",
+            created_at="",
+            updated_at=""
+        )
+        context = engine.get_template_context(issue_data)
+        assert context["project_name"] is not None
+
+    def test_load_templates_caching(self):
+        """Test that templates are cached."""
+        engine = TemplateEngine()
+        templates1 = engine.load_templates("python", "default")
+        templates2 = engine.load_templates("python", "default")
+        assert templates1 is templates2