diff --git a/.changeset/spotty-pandas-deny.md b/.changeset/spotty-pandas-deny.md
new file mode 100644
index 0000000000..c3da6afe2b
--- /dev/null
+++ b/.changeset/spotty-pandas-deny.md
@@ -0,0 +1,5 @@
+---
+'@backstage/plugin-scaffolder-backend': patch
+---
+
+- Move out the `cookiecutter` templating to its own module that is depended on by the `scaffolder-backend` plugin. No breaking change yet, but we will drop first class support for `cookiecutter` in the future and it will become an opt-in feature.
diff --git a/plugins/scaffolder-backend-module-cookiecutter/.eslintrc.js b/plugins/scaffolder-backend-module-cookiecutter/.eslintrc.js
new file mode 100644
index 0000000000..16a033dbc6
--- /dev/null
+++ b/plugins/scaffolder-backend-module-cookiecutter/.eslintrc.js
@@ -0,0 +1,3 @@
+module.exports = {
+  extends: [require.resolve('@backstage/cli/config/eslint.backend')],
+};
diff --git a/plugins/scaffolder-backend-module-cookiecutter/README.md b/plugins/scaffolder-backend-module-cookiecutter/README.md
new file mode 100644
index 0000000000..77ae93c5f3
--- /dev/null
+++ b/plugins/scaffolder-backend-module-cookiecutter/README.md
@@ -0,0 +1,162 @@
+# scaffolder-backend-module-cookiecutter
+
+Welcome to the `fetch:cookiecutter` action for the `scaffolder-backend`.
+
+## Getting started
+
+You need to configure the action in your backend:
+
+## From your Backstage root directory
+
+```
+cd packages/backend
+yarn add @backstage/plugin-scaffolder-backend-module-cookiecutter
+```
+
+Configure the action:
+(you can check the [docs](https://backstage.io/docs/features/software-templates/writing-custom-actions#registering-custom-actions) to see all options):
+
+```typescript
+// packages/backend/src/plugins/scaffolder.ts
+
+const actions = [
+  createFetchCookiecutterAction({
+    integrations,
+    reader,
+    containerRunner,
+  }),
+  ...createBuiltInActions({
+    ...
+  })
+];
+
+return await createRouter({
+  containerRunner,
+  logger,
+  config,
+  database,
+  catalogClient,
+  reader,
+  actions,
+});
+```
+
+After that you can use the action in your template:
+
+```yaml
+apiVersion: backstage.io/v1beta2
+kind: Template
+metadata:
+  name: cookiecutter-demo
+  title: Cookiecutter Test
+  description: Cookiecutter example
+spec:
+  owner: backstage/techdocs-core
+  type: service
+
+  parameters:
+    - title: Fill in some steps
+      required:
+        - name
+        - owner
+      properties:
+        name:
+          title: Name
+          type: string
+          description: Unique name of the component
+          ui:autofocus: true
+          ui:options:
+            rows: 5
+        owner:
+          title: Owner
+          type: string
+          description: Owner of the component
+          ui:field: OwnerPicker
+          ui:options:
+            allowedKinds:
+              - Group
+        system:
+          title: System
+          type: string
+          description: System of the component
+          ui:field: EntityPicker
+          ui:options:
+            allowedKinds:
+              - System
+            defaultKind: System
+
+    - title: Choose a location
+      required:
+        - repoUrl
+        - dryRun
+      properties:
+        repoUrl:
+          title: Repository Location
+          type: string
+          ui:field: RepoUrlPicker
+          ui:options:
+            allowedHosts:
+              - github.com
+        dryRun:
+          title: Only perform a dry run, don't publish anything
+          type: boolean
+          default: false
+
+  steps:
+    - id: fetch-base
+      name: Fetch Base
+      action: fetch:cookiecutter
+      input:
+        url: ./template
+        values:
+          name: '{{ parameters.name }}'
+          owner: '{{ parameters.owner }}'
+          system: '{{ parameters.system }}'
+          destination: '{{ parseRepoUrl parameters.repoUrl }}'
+
+    - id: publish
+      if: '{{ not parameters.dryRun }}'
+      name: Publish
+      action: publish:github
+      input:
+        allowedHosts: ['github.com']
+        description: 'This is {{ parameters.name }}'
+        repoUrl: '{{ parameters.repoUrl }}'
+
+    - id: register
+      if: '{{ not parameters.dryRun }}'
+      name: Register
+      action: catalog:register
+      input:
+        repoContentsUrl: '{{ steps.publish.output.repoContentsUrl }}'
+        catalogInfoPath: '/catalog-info.yaml'
+
+    - name: Results
+      if: '{{ parameters.dryRun }}'
+      action: debug:log
+      input:
+        listWorkspace: true
+
+  output:
+    links:
+      - title: Repository
+        url: '{{ steps.publish.output.remoteUrl }}'
+      - title: Open in catalog
+        icon: 'catalog'
+        entityRef: '{{ steps.register.output.entityRef }}'
+```
+
+You can also visit the `/create/actions` route in your Backstage application to find out more about the parameters this action accepts when it's installed to configure how you like.
+
+### Environment setup
+
+The environment needs to have either `cookiecutter` installed and be available in the `PATH` or access to a `docker` daemon so it can spin up a docker container with `cookiecutter` available.
+
+If you are running Backstage from a Docker container and you want to avoid calling a container inside a container, you can set up `cookiecutter` in your own image, this will use the local installation instead.
+
+You can do so by including the following lines in the last step of your Dockerfile:
+
+```dockerfile
+RUN apt-get update && apt-get install -y python3 python3-pip
+RUN pip3 install cookiecutter
+```
diff --git a/plugins/scaffolder-backend-module-cookiecutter/api-report.md b/plugins/scaffolder-backend-module-cookiecutter/api-report.md
new file mode 100644
index 0000000000..8e46667fce
--- /dev/null
+++ b/plugins/scaffolder-backend-module-cookiecutter/api-report.md
@@ -0,0 +1,23 @@
+## API Report File for "@backstage/plugin-scaffolder-backend-module-cookiecutter"
+
+> Do not edit this file. It is a report generated by [API Extractor](https://api-extractor.com/).
+
+```ts
+/// <reference types="node" />
+
+import { ContainerRunner } from '@backstage/backend-common';
+import { ScmIntegrations } from '@backstage/integration';
+import { TemplateAction } from '@backstage/plugin-scaffolder-backend';
+import { UrlReader } from '@backstage/backend-common';
+
+// Warning: (ae-missing-release-tag) "createFetchCookiecutterAction" is exported by the package, but it is missing a release tag (@alpha, @beta, @public, or @internal)
+//
+// @public (undocumented)
+export function createFetchCookiecutterAction(options: {
+  reader: UrlReader;
+  integrations: ScmIntegrations;
+  containerRunner: ContainerRunner;
+}): TemplateAction<any>;
+
+// (No @packageDocumentation comment for this package)
+```
diff --git a/plugins/scaffolder-backend-module-cookiecutter/package.json b/plugins/scaffolder-backend-module-cookiecutter/package.json
new file mode 100644
index 0000000000..f321d6b45c
--- /dev/null
+++ b/plugins/scaffolder-backend-module-cookiecutter/package.json
@@ -0,0 +1,45 @@
+{
+  "name": "@backstage/plugin-scaffolder-backend-module-cookiecutter",
+  "version": "0.1.0",
+  "main": "src/index.ts",
+  "types": "src/index.ts",
+  "license": "Apache-2.0",
+  "publishConfig": {
+    "access": "public",
+    "main": "dist/index.cjs.js",
+    "types": "dist/index.d.ts"
+  },
+  "scripts": {
+    "start": "backstage-cli backend:dev",
+    "build": "backstage-cli backend:build",
+    "lint": "backstage-cli lint",
+    "test": "backstage-cli test",
+    "prepack": "backstage-cli prepack",
+    "postpack": "backstage-cli postpack",
+    "clean": "backstage-cli clean"
+  },
+  "dependencies": {
+    "@backstage/backend-common": "^0.8.6",
+    "@backstage/errors": "^0.1.1",
+    "@backstage/integration": "^0.5.7",
+    "@backstage/plugin-scaffolder-backend": "^0.14.0",
+    "@backstage/config": "^0.1.5",
+    "command-exists": "^1.2.9",
+    "fs-extra": "10.0.0",
+    "winston": "^3.2.1",
+    "cross-fetch": "^3.0.6",
+    "yn": "^4.0.0"
+  },
+  "devDependencies": {
+    "@backstage/cli": "^0.7.3",
+    "@types/fs-extra": "^9.0.1",
+    "@types/mock-fs": "^4.13.0",
+    "@types/jest": "^26.0.7",
+    "@types/command-exists": "^1.2.0",
+    "mock-fs": "^4.13.0",
+    "msw": "^0.29.0"
+  },
+  "files": [
+    "dist"
+  ]
+}
diff --git a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/cookiecutter.test.ts b/plugins/scaffolder-backend-module-cookiecutter/src/actions/fetch/cookiecutter.test.ts
similarity index 96%
rename from plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/cookiecutter.test.ts
rename to plugins/scaffolder-backend-module-cookiecutter/src/actions/fetch/cookiecutter.test.ts
index 86f953a6a5..bc3fe3eca2 100644
--- a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/cookiecutter.test.ts
+++ b/plugins/scaffolder-backend-module-cookiecutter/src/actions/fetch/cookiecutter.test.ts
@@ -17,9 +17,12 @@ const runCommand = jest.fn();
 const commandExists = jest.fn();
 const fetchContents = jest.fn();
 
-jest.mock('./helpers', () => ({ fetchContents }));
+jest.mock('@backstage/plugin-scaffolder-backend', () => ({
+  ...jest.requireActual('@backstage/plugin-scaffolder-backend'),
+  fetchContents,
+  runCommand,
+}));
 jest.mock('command-exists', () => commandExists);
-jest.mock('../helpers', () => ({ runCommand }));
 
 import {
   getVoidLogger,
@@ -33,7 +36,7 @@ import os from 'os';
 import { PassThrough } from 'stream';
 import { createFetchCookiecutterAction } from './cookiecutter';
 import { join } from 'path';
-import { ActionContext } from '../../types';
+import type { ActionContext } from '@backstage/plugin-scaffolder-backend';
 
 describe('fetch:cookiecutter', () => {
   const integrations = ScmIntegrations.fromConfig(
diff --git a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/cookiecutter.ts b/plugins/scaffolder-backend-module-cookiecutter/src/actions/fetch/cookiecutter.ts
similarity index 94%
rename from plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/cookiecutter.ts
rename to plugins/scaffolder-backend-module-cookiecutter/src/actions/fetch/cookiecutter.ts
index 048b2bba64..1f6fbdb7d8 100644
--- a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/cookiecutter.ts
+++ b/plugins/scaffolder-backend-module-cookiecutter/src/actions/fetch/cookiecutter.ts
@@ -26,9 +26,11 @@ import commandExists from 'command-exists';
 import fs from 'fs-extra';
 import path, { resolve as resolvePath } from 'path';
 import { Writable } from 'stream';
-import { runCommand } from '../helpers';
-import { createTemplateAction } from '../../createTemplateAction';
-import { fetchContents } from './helpers';
+import {
+  runCommand,
+  createTemplateAction,
+  fetchContents,
+} from '@backstage/plugin-scaffolder-backend';
 
 export class CookiecutterRunner {
   private readonly containerRunner: ContainerRunner;
@@ -136,7 +138,7 @@ export function createFetchCookiecutterAction(options: {
   }>({
     id: 'fetch:cookiecutter',
     description:
-      "Downloads a template from the given URL into the workspace, and runs cookiecutter on it. This action is deprecated in favor of 'fetch:template'. See https://backstage.io/docs/features/software-templates/builtin-actions#migrating-from-fetch-cookiecutter-to-fetch-template for more details.",
+      'Downloads a template from the given URL into the workspace, and runs cookiecutter on it.',
     schema: {
       input: {
         type: 'object',
diff --git a/plugins/scaffolder-backend-module-cookiecutter/src/actions/fetch/index.ts b/plugins/scaffolder-backend-module-cookiecutter/src/actions/fetch/index.ts
new file mode 100644
index 0000000000..bbe5a16a04
--- /dev/null
+++ b/plugins/scaffolder-backend-module-cookiecutter/src/actions/fetch/index.ts
@@ -0,0 +1,16 @@
+/*
+ * Copyright 2021 The Backstage Authors
+ *
+ * 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.
+ */
+export { createFetchCookiecutterAction } from './cookiecutter';
diff --git a/plugins/scaffolder-backend-module-cookiecutter/src/actions/index.ts b/plugins/scaffolder-backend-module-cookiecutter/src/actions/index.ts
new file mode 100644
index 0000000000..1b47db9e03
--- /dev/null
+++ b/plugins/scaffolder-backend-module-cookiecutter/src/actions/index.ts
@@ -0,0 +1,16 @@
+/*
+ * Copyright 2021 The Backstage Authors
+ *
+ * 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.
+ */
+export * from './fetch';
diff --git a/plugins/scaffolder-backend-module-cookiecutter/src/index.ts b/plugins/scaffolder-backend-module-cookiecutter/src/index.ts
new file mode 100644
index 0000000000..4f06b14a86
--- /dev/null
+++ b/plugins/scaffolder-backend-module-cookiecutter/src/index.ts
@@ -0,0 +1,16 @@
+/*
+ * Copyright 2021 The Backstage Authors
+ *
+ * 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.
+ */
+export * from './actions';
diff --git a/plugins/scaffolder-backend/api-report.md b/plugins/scaffolder-backend/api-report.md
index f29274cc24..0e7a25534c 100644
--- a/plugins/scaffolder-backend/api-report.md
+++ b/plugins/scaffolder-backend/api-report.md
@@ -8,6 +8,7 @@
 import { CatalogApi } from '@backstage/catalog-client';
 import { Config } from '@backstage/config';
 import { ContainerRunner } from '@backstage/backend-common';
+import { createFetchCookiecutterAction } from '@backstage/plugin-scaffolder-backend-module-cookiecutter';
 import { createPullRequest } from 'octokit-plugin-create-pull-request';
 import express from 'express';
 import { JsonObject } from '@backstage/config';
@@ -78,14 +79,7 @@ export function createCatalogWriteAction(): TemplateAction<any>;
 // @public
 export function createDebugLogAction(): TemplateAction<any>;
 
-// Warning: (ae-missing-release-tag) "createFetchCookiecutterAction" is exported by the package, but it is missing a release tag (@alpha, @beta, @public, or @internal)
-//
-// @public (undocumented)
-export function createFetchCookiecutterAction(options: {
-  reader: UrlReader;
-  integrations: ScmIntegrations;
-  containerRunner: ContainerRunner;
-}): TemplateAction<any>;
+export { createFetchCookiecutterAction };
 
 // Warning: (ae-missing-release-tag) "createFetchPlainAction" is exported by the package, but it is missing a release tag (@alpha, @beta, @public, or @internal)
 //
diff --git a/plugins/scaffolder-backend/package.json b/plugins/scaffolder-backend/package.json
index 8f10c9fa53..e44a22403c 100644
--- a/plugins/scaffolder-backend/package.json
+++ b/plugins/scaffolder-backend/package.json
@@ -35,6 +35,7 @@
     "@backstage/config": "^0.1.5",
     "@backstage/errors": "^0.1.1",
     "@backstage/integration": "^0.5.8",
+    "@backstage/plugin-scaffolder-backend-module-cookiecutter": "^0.1.0",
     "@gitbeaker/core": "^30.2.0",
     "@gitbeaker/node": "^30.2.0",
     "@octokit/rest": "^18.5.3",
diff --git a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/createBuiltinActions.ts b/plugins/scaffolder-backend/src/scaffolder/actions/builtin/createBuiltinActions.ts
index 6541625035..ae5a7d0697 100644
--- a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/createBuiltinActions.ts
+++ b/plugins/scaffolder-backend/src/scaffolder/actions/builtin/createBuiltinActions.ts
@@ -24,11 +24,8 @@ import {
 } from './catalog';
 
 import { createDebugLogAction } from './debug';
-import {
-  createFetchCookiecutterAction,
-  createFetchPlainAction,
-  createFetchTemplateAction,
-} from './fetch';
+import { createFetchPlainAction, createFetchTemplateAction } from './fetch';
+import { createFetchCookiecutterAction } from '@backstage/plugin-scaffolder-backend-module-cookiecutter';
 import {
   createFilesystemDeleteAction,
   createFilesystemRenameAction,
diff --git a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/index.ts b/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/index.ts
index fea32df39c..c9a16c274e 100644
--- a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/index.ts
+++ b/plugins/scaffolder-backend/src/scaffolder/actions/builtin/fetch/index.ts
@@ -15,6 +15,5 @@
  */
 
 export { createFetchPlainAction } from './plain';
-export { createFetchCookiecutterAction } from './cookiecutter';
 export { createFetchTemplateAction } from './template';
 export { fetchContents } from './helpers';
diff --git a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/index.ts b/plugins/scaffolder-backend/src/scaffolder/actions/builtin/index.ts
index 849b056ac9..2a583f369a 100644
--- a/plugins/scaffolder-backend/src/scaffolder/actions/builtin/index.ts
+++ b/plugins/scaffolder-backend/src/scaffolder/actions/builtin/index.ts
@@ -20,4 +20,6 @@ export * from './debug';
 export * from './fetch';
 export * from './filesystem';
 export * from './publish';
+
+export { createFetchCookiecutterAction } from '@backstage/plugin-scaffolder-backend-module-cookiecutter';
 export { runCommand } from './helpers';