diff --git a/plugins/scaffolder-backend/fixtures/test-nested-template/public/react-logo192.png b/plugins/scaffolder-backend/fixtures/test-nested-template/public/react-logo192.png
new file mode 100644
index 0000000000..fc44b0a379
Binary files /dev/null and b/plugins/scaffolder-backend/fixtures/test-nested-template/public/react-logo192.png differ
diff --git a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/template.test.ts b/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/template.test.ts
index 179626581a..3ab96a367e 100644
--- a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/template.test.ts
+++ b/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/template.test.ts
@@ -15,6 +15,7 @@
  */
 
 import os from 'os';
+import { resolve as resolvePath } from 'path';
 import fs from 'fs-extra';
 import mockFs from 'mock-fs';
 import { getVoidLogger, UrlReader } from '@backstage/backend-common';
@@ -24,12 +25,17 @@ import { fetchContents } from './helpers';
 import { ActionContext, TemplateAction } from '../../types';
 import { createFetchTemplateAction, FetchTemplateInput } from './template';
 
-// TODO(mtlewis/orkohunter): Test handling binary files
-
 jest.mock('./helpers', () => ({
   fetchContents: jest.fn(),
 }));
 
+const aBinaryFile = fs.readFileSync(
+  resolvePath(
+    'src',
+    '../fixtures/test-nested-template/public/react-logo192.png',
+  ),
+);
+
 const mockFetchContents = fetchContents as jest.MockedFunction<
   typeof fetchContents
 >;
@@ -119,6 +125,7 @@ describe('fetch:template', () => {
                 'templated-content.txt': '${{ name }}: ${{ count }}',
               },
               '.${{ name }}': '${{ itemList | dump }}',
+              'a-binary-file.png': aBinaryFile,
             },
           });
 
@@ -169,6 +176,12 @@ describe('fetch:template', () => {
           fs.readdir(`${workspacePath}/target/empty-dir-1234`, 'utf-8'),
         ).resolves.toEqual([]);
       });
+
+      it('copies binary files as it-is without processing them', async () => {
+        await expect(
+          fs.readFile(`${workspacePath}/target/a-binary-file.png`),
+        ).resolves.toEqual(aBinaryFile);
+      });
     });
 
     describe('copyWithoutRender', () => {