diff --git a/libs/template/materialize_test.go b/libs/template/materialize_test.go
new file mode 100644
index 000000000..dff678fa6
--- /dev/null
+++ b/libs/template/materialize_test.go
@@ -0,0 +1,54 @@
+package template
+
+import (
+	"os"
+	"path/filepath"
+	"testing"
+
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+)
+
+func setupConfig(t *testing.T, config string) string {
+	// create target directory with the input config
+	tmp := t.TempDir()
+	f, err := os.Create(filepath.Join(tmp, "config.json"))
+	require.NoError(t, err)
+	_, err = f.WriteString(config)
+	f.Close()
+	require.NoError(t, err)
+	return tmp
+}
+
+func TestMaterializeEmptyDirsAreNotGenerated(t *testing.T) {
+	tmp := setupConfig(t, `
+	{
+		"a": "dir-with-file",
+		"b": "empty-dir",
+		"c": "dir-with-skipped-file",
+		"d": "skipping"
+	}`)
+	err := Materialize("./testdata/skip_dir", tmp, filepath.Join(tmp, "config.json"))
+	require.NoError(t, err)
+
+	assert.DirExists(t, filepath.Join(tmp, "dir-with-file"))
+	assert.FileExists(t, filepath.Join(tmp, "dir-with-file/.gitkeep"))
+	assert.NoDirExists(t, filepath.Join(tmp, "empty-dir"))
+	assert.NoDirExists(t, filepath.Join(tmp, "dir-with-skipped-file"))
+
+	tmp2 := setupConfig(t, `
+	{
+		"a": "dir-with-file",
+		"b": "empty-dir",
+		"c": "dir-not-skipped-this-time",
+		"d": "not-skipping"
+	}`)
+	err = Materialize("./testdata/skip_dir", tmp2, filepath.Join(tmp2, "config.json"))
+	require.NoError(t, err)
+
+	assert.DirExists(t, filepath.Join(tmp2, "dir-with-file"))
+	assert.FileExists(t, filepath.Join(tmp2, "dir-with-file/.gitkeep"))
+	assert.NoDirExists(t, filepath.Join(tmp2, "empty-dir"))
+	assert.DirExists(t, filepath.Join(tmp2, "dir-not-skipped-this-time"))
+	assert.FileExists(t, filepath.Join(tmp2, "dir-not-skipped-this-time/foo"))
+}
diff --git a/libs/template/testdata/skip_dir/schema.json b/libs/template/testdata/skip_dir/schema.json
new file mode 100644
index 000000000..9687bce76
--- /dev/null
+++ b/libs/template/testdata/skip_dir/schema.json
@@ -0,0 +1,14 @@
+{
+    "a": {
+        "type": "string"
+    },
+    "b": {
+        "type": "string"
+    },
+    "c": {
+        "type": "string"
+    },
+    "d": {
+        "type": "string"
+    }
+}
diff --git a/libs/template/testdata/skip_dir/template/{{.a}}/.gitkeep b/libs/template/testdata/skip_dir/template/{{.a}}/.gitkeep
new file mode 100644
index 000000000..e69de29bb
diff --git a/libs/template/testdata/skip_dir/template/{{.c}}/foo b/libs/template/testdata/skip_dir/template/{{.c}}/foo
new file mode 100644
index 000000000..9925ff1dc
--- /dev/null
+++ b/libs/template/testdata/skip_dir/template/{{.c}}/foo
@@ -0,0 +1,4 @@
+{{if eq .d "skipping"}}
+{{skipThisFile}}
+{{end}}
+Hello!