diff --git a/internal/init_test.go b/internal/init_test.go
new file mode 100644
index 00000000..a2eda983
--- /dev/null
+++ b/internal/init_test.go
@@ -0,0 +1,15 @@
+package internal
+
+import (
+	"testing"
+
+	"github.com/stretchr/testify/assert"
+)
+
+func TestAccBundleInitErrorOnUnknownFields(t *testing.T) {
+	t.Log(GetEnvOrSkipTest(t, "CLOUD_ENV"))
+
+	tmpDir := t.TempDir()
+	_, _, err := RequireErrorRun(t, "bundle", "init", "./testdata/init/field-does-not-exist", "--output-dir", tmpDir)
+	assert.EqualError(t, err, "failed to compute file content for bar.tmpl. variable \"does_not_exist\" not defined")
+}
diff --git a/internal/testdata/init/field-does-not-exist/databricks_template_schema.json b/internal/testdata/init/field-does-not-exist/databricks_template_schema.json
new file mode 100644
index 00000000..c37fc089
--- /dev/null
+++ b/internal/testdata/init/field-does-not-exist/databricks_template_schema.json
@@ -0,0 +1,8 @@
+{
+    "properties": {
+        "foo": {
+            "type": "string",
+            "default": "abc"
+        }
+    }
+}
diff --git a/internal/testdata/init/field-does-not-exist/template/bar.tmpl b/internal/testdata/init/field-does-not-exist/template/bar.tmpl
new file mode 100644
index 00000000..95f8d250
--- /dev/null
+++ b/internal/testdata/init/field-does-not-exist/template/bar.tmpl
@@ -0,0 +1,3 @@
+{{.foo}}
+{{.does_not_exist}}
+hello, world
diff --git a/libs/template/renderer.go b/libs/template/renderer.go
index f674ea0f..09ccc3f5 100644
--- a/libs/template/renderer.go
+++ b/libs/template/renderer.go
@@ -8,6 +8,7 @@ import (
 	"os"
 	"path"
 	"path/filepath"
+	"regexp"
 	"slices"
 	"sort"
 	"strings"
@@ -102,6 +103,12 @@ func (r *renderer) executeTemplate(templateDefinition string) (string, error) {
 		return "", err
 	}
 
+	// The template execution will error instead of printing <no value> on unknown
+	// map keys if the "missingkey=error" option is set.
+	// We do this here instead of doing this once for r.baseTemplate because
+	// the Template.Clone() method does not clone options.
+	tmpl = tmpl.Option("missingkey=error")
+
 	// Parse the template text
 	tmpl, err = tmpl.Parse(templateDefinition)
 	if err != nil {
@@ -112,6 +119,20 @@ func (r *renderer) executeTemplate(templateDefinition string) (string, error) {
 	result := strings.Builder{}
 	err = tmpl.Execute(&result, r.config)
 	if err != nil {
+		// Parse and return a more readable error for missing values that are used
+		// by the template definition but are not provided in the passed config.
+		target := &template.ExecError{}
+		if errors.As(err, target) {
+			captureRegex := regexp.MustCompile(`map has no entry for key "(.*)"`)
+			matches := captureRegex.FindStringSubmatch(target.Err.Error())
+			if len(matches) != 2 {
+				return "", err
+			}
+			return "", template.ExecError{
+				Name: target.Name,
+				Err:  fmt.Errorf("variable %q not defined", matches[1]),
+			}
+		}
 		return "", err
 	}
 	return result.String(), nil
diff --git a/libs/template/renderer_test.go b/libs/template/renderer_test.go
index 21dd1e4f..8f8a8291 100644
--- a/libs/template/renderer_test.go
+++ b/libs/template/renderer_test.go
@@ -189,6 +189,18 @@ My email is {{template "email"}}
 	assert.Contains(t, statement, `My email is hrithik.roshan@databricks.com`)
 }
 
+func TestRendererExecuteTemplateWithUnknownProperty(t *testing.T) {
+	templateText := `{{.does_not_exist}}`
+
+	r := renderer{
+		config:       map[string]any{},
+		baseTemplate: template.New("base"),
+	}
+
+	_, err := r.executeTemplate(templateText)
+	assert.ErrorContains(t, err, "variable \"does_not_exist\" not defined")
+}
+
 func TestRendererIsSkipped(t *testing.T) {
 
 	skipPatterns := []string{"a*", "*yz", "def", "a/b/*"}