diff --git a/.changeset/many-eyes-rest.md b/.changeset/many-eyes-rest.md
new file mode 100644
index 0000000000..d7a5a806b2
--- /dev/null
+++ b/.changeset/many-eyes-rest.md
@@ -0,0 +1,5 @@
+---
+'@backstage/plugin-scaffolder-backend': patch
+---
+
+Fixes task failures caused by undefined step input
diff --git a/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.test.ts b/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.test.ts
new file mode 100644
index 0000000000..b598b91036
--- /dev/null
+++ b/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.test.ts
@@ -0,0 +1,169 @@
+/*
+ * Copyright 2021 Spotify AB
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+import {
+  getVoidLogger,
+  SingleConnectionDatabaseManager,
+} from '@backstage/backend-common';
+import { TaskWorker } from './TaskWorker';
+import os from 'os';
+import { ConfigReader, JsonObject } from '@backstage/config';
+import { StorageTaskBroker } from './StorageTaskBroker';
+import { DatabaseTaskStore } from './DatabaseTaskStore';
+import { createTemplateAction, TemplateActionRegistry } from '../actions';
+
+async function createStore(): Promise<DatabaseTaskStore> {
+  const manager = SingleConnectionDatabaseManager.fromConfig(
+    new ConfigReader({
+      backend: {
+        database: {
+          client: 'sqlite3',
+          connection: ':memory:',
+        },
+      },
+    }),
+  ).forPlugin('scaffolder');
+  return await DatabaseTaskStore.create(await manager.getClient());
+}
+
+describe('TaskWorker', () => {
+  let storage: DatabaseTaskStore;
+
+  beforeAll(async () => {
+    storage = await createStore();
+  });
+
+  const logger = getVoidLogger();
+  const actionRegistry = new TemplateActionRegistry();
+  actionRegistry.register({
+    id: 'test-action',
+    handler: async ctx => {
+      ctx.output('testOutput', 'winning');
+    },
+  });
+
+  it('should fail when action does not exist', async () => {
+    const broker = new StorageTaskBroker(storage, logger);
+    const taskWorker = new TaskWorker({
+      logger,
+      workingDirectory: os.tmpdir(),
+      actionRegistry,
+      taskBroker: broker,
+    });
+    const { taskId } = await broker.dispatch({
+      steps: [{ id: 'test', name: 'test', action: 'not-found-action' }],
+      output: {
+        result: '{{ steps.test.output.testOutput }}',
+      },
+      values: {},
+    });
+    const task = await broker.claim();
+    await taskWorker.runOneTask(task);
+    const { events } = await storage.listEvents({ taskId });
+    const event = events.find(e => e.type === 'completion');
+
+    expect((event?.body?.error as JsonObject)?.message).toBe(
+      "Template action with ID 'not-found-action' is not registered.",
+    );
+  });
+
+  it('should template output', async () => {
+    const broker = new StorageTaskBroker(storage, logger);
+    const taskWorker = new TaskWorker({
+      logger,
+      workingDirectory: os.tmpdir(),
+      actionRegistry,
+      taskBroker: broker,
+    });
+
+    const { taskId } = await broker.dispatch({
+      steps: [{ id: 'test', name: 'test', action: 'test-action' }],
+      output: {
+        result: '{{ steps.test.output.testOutput }}',
+      },
+      values: {},
+    });
+
+    const task = await broker.claim();
+    await taskWorker.runOneTask(task);
+
+    const { events } = await storage.listEvents({ taskId });
+    const event = events.find(e => e.type === 'completion');
+    expect((event?.body?.output as JsonObject).result).toBe('winning');
+  });
+
+  it('should template input', async () => {
+    const inputAction = createTemplateAction<{
+      name: string;
+    }>({
+      id: 'test-input',
+      schema: {
+        input: {
+          type: 'object',
+          required: ['name'],
+          properties: {
+            name: {
+              title: 'name',
+              description: 'Enter name',
+              type: 'string',
+            },
+          },
+        },
+      },
+      async handler(ctx) {
+        if (ctx.input.name !== 'winning') {
+          throw new Error(
+            `expected name to be "winning" got ${ctx.input.name}`,
+          );
+        }
+      },
+    });
+    actionRegistry.register(inputAction);
+
+    const broker = new StorageTaskBroker(storage, logger);
+    const taskWorker = new TaskWorker({
+      logger,
+      workingDirectory: os.tmpdir(),
+      actionRegistry,
+      taskBroker: broker,
+    });
+
+    const { taskId } = await broker.dispatch({
+      steps: [
+        { id: 'test', name: 'test', action: 'test-action' },
+        {
+          id: 'test-input',
+          name: 'test-input',
+          action: 'test-input',
+          input: {
+            name: '{{ steps.test.output.testOutput }}',
+          },
+        },
+      ],
+      output: {
+        result: '{{ steps.test.output.testOutput }}',
+      },
+      values: {},
+    });
+
+    const task = await broker.claim();
+    await taskWorker.runOneTask(task);
+
+    const { events } = await storage.listEvents({ taskId });
+    const event = events.find(e => e.type === 'completion');
+    expect((event?.body?.output as JsonObject).result).toBe('winning');
+  });
+});
diff --git a/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.ts b/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.ts
index 4d8f652ae0..bd0a418598 100644
--- a/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.ts
+++ b/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.ts
@@ -98,9 +98,9 @@ export class TaskWorker {
             throw new Error(`Action '${step.action}' does not exist`);
           }
 
-          const input = JSON.parse(
-            JSON.stringify(step.input),
-            (_key, value) => {
+          const input =
+            step.input &&
+            JSON.parse(JSON.stringify(step.input), (_key, value) => {
               if (typeof value === 'string') {
                 return handlebars.compile(value, {
                   noEscape: true,
@@ -110,8 +110,7 @@ export class TaskWorker {
                 })(templateCtx);
               }
               return value;
-            },
-          );
+            });
 
           if (action.schema?.input) {
             const validateResult = validateJsonSchema(input, action.schema, {