diff --git a/.changeset/wild-weeks-live.md b/.changeset/wild-weeks-live.md
new file mode 100644
index 0000000000..e66b3193d0
--- /dev/null
+++ b/.changeset/wild-weeks-live.md
@@ -0,0 +1,6 @@
+---
+'@backstage/plugin-scaffolder': patch
+'@backstage/plugin-scaffolder-backend': patch
+---
+
+Ignore .git directories in Template Editor, increase upload limit for dry-runs to 10MB.
diff --git a/plugins/scaffolder-backend/src/service/router.ts b/plugins/scaffolder-backend/src/service/router.ts
index 28dd1ca413..2e4549c8f1 100644
--- a/plugins/scaffolder-backend/src/service/router.ts
+++ b/plugins/scaffolder-backend/src/service/router.ts
@@ -148,7 +148,8 @@ export async function createRouter(
   options: RouterOptions,
 ): Promise<express.Router> {
   const router = Router();
-  router.use(express.json());
+  // Be generous in upload size to support a wide range of templates in dry-run mode.
+  router.use(express.json({ limit: '10MB' }));
 
   const {
     logger: parentLogger,
diff --git a/plugins/scaffolder/src/lib/filesystem/WebFileSystemAccess.ts b/plugins/scaffolder/src/lib/filesystem/WebFileSystemAccess.ts
index 36e7b11de2..8d325e4bfb 100644
--- a/plugins/scaffolder/src/lib/filesystem/WebFileSystemAccess.ts
+++ b/plugins/scaffolder/src/lib/filesystem/WebFileSystemAccess.ts
@@ -71,6 +71,10 @@ class WebDirectoryAccess implements TemplateDirectoryAccess {
       if (handle.kind === 'file') {
         yield new WebFileAccess([...basePath, handle.name].join('/'), handle);
       } else if (handle.kind === 'directory') {
+        // Skip git storage directory
+        if (handle.name === '.git') {
+          continue;
+        }
         yield* this.listDirectoryContents(handle, [...basePath, handle.name]);
       }
     }