diff --git a/plugins/scaffolder-backend/src/scaffolder/stages/helpers.ts b/plugins/scaffolder-backend/src/scaffolder/stages/helpers.ts
index f8d8229298..784e72ca87 100644
--- a/plugins/scaffolder-backend/src/scaffolder/stages/helpers.ts
+++ b/plugins/scaffolder-backend/src/scaffolder/stages/helpers.ts
@@ -13,6 +13,8 @@
  * See the License for the specific language governing permissions and
  * limitations under the License.
  */
+
+import { posix as posixPath } from 'path';
 import {
   TemplateEntityV1alpha1,
   LOCATION_ANNOTATION,
@@ -53,3 +55,20 @@ export const parseLocationAnnotation = (
     location,
   };
 };
+
+export function joinGitUrlPath(repoUrl: string, path?: string): string {
+  const parsed = new URL(repoUrl);
+
+  if (parsed.hostname.endsWith('azure.com')) {
+    const templatePath = posixPath.normalize(
+      posixPath.join(
+        posixPath.dirname(parsed.searchParams.get('path') || '/'),
+        path || '.',
+      ),
+    );
+    parsed.searchParams.set('path', templatePath);
+    return parsed.toString();
+  }
+
+  return new URL(path || '.', repoUrl).toString().replace(/\/$/, '');
+}
diff --git a/plugins/scaffolder-backend/src/service/router.ts b/plugins/scaffolder-backend/src/service/router.ts
index a3e7202f95..9098e5d05e 100644
--- a/plugins/scaffolder-backend/src/service/router.ts
+++ b/plugins/scaffolder-backend/src/service/router.ts
@@ -27,6 +27,7 @@ import {
   TemplaterValues,
   PublisherBuilder,
   parseLocationAnnotation,
+  joinGitUrlPath,
   FilePreparer,
 } from '../scaffolder';
 import { CatalogEntityClient } from '../lib/catalog';
@@ -138,12 +139,10 @@ export async function createRouter(
 
               const preparer = preparers.get(templateEntityLocation);
 
-              const url = new URL(
-                template.spec.path || '.',
+              const url = joinGitUrlPath(
                 templateEntityLocation,
-              )
-                .toString()
-                .replace(/\/$/, '');
+                template.spec.path,
+              );
 
               await preparer.prepare({
                 url,