diff --git a/src/python/jw/pkg/cmds/projects/lib/templates.py b/src/python/jw/pkg/cmds/projects/lib/templates.py
index bc9bf23c..ad55af2f 100644
--- a/src/python/jw/pkg/cmds/projects/lib/templates.py
+++ b/src/python/jw/pkg/cmds/projects/lib/templates.py
@@ -1,3 +1,4 @@
+import re
 import textwrap
 
 from typing import Any, Iterable, TypeAlias, TypeGuard
@@ -95,12 +96,17 @@ def format_list_dict(
     parts = template.splitlines(keepends = True)
 
     for line in parts:
-        for key, value in fmt_dict.items():
-            marker = '{' + key + '}'
-            if marker in line:
-                indent = line[:line.index(marker)]
-                value = str(value).replace('\n', '\n' + indent)
-                line = line.replace(marker, value)
+        for key, val in fmt_dict.items():
+            # -- A marker preceded by '$' or '{' is literal text rather
+            # than a placeholder, so that e.g. ${prefix} survives as a
+            # pkg-config variable reference
+            rx = re.compile(r'(?<![${])\{' + re.escape(key) + r'\}')
+            m = rx.search(line)
+            if m is None:
+                continue
+            indent = line[:m.start()]
+            sub = str(val).replace('\n', '\n' + indent)
+            line = rx.sub(lambda _m: sub, line)
         ret.append(line)
 
     return ''.join(ret)
@@ -114,9 +120,9 @@ _templates = {
     'pkg-config':
     """\
         prefix = {prefix}
-        exec_prefix = {{prefix}}
-        includedir = {{prefix}}/include
-        libdir = {{exec_prefix}}/lib
+        exec_prefix = ${prefix}
+        includedir = ${prefix}/include
+        libdir = ${exec_prefix}/lib
 
         Name: {name}
         Description: {description}
diff --git a/test/unit/python/jw/pkg/cmds/projects/lib/templates/test.py b/test/unit/python/jw/pkg/cmds/projects/lib/templates/test.py
index 46400ddd..5dfb7d46 100644
--- a/test/unit/python/jw/pkg/cmds/projects/lib/templates/test.py
+++ b/test/unit/python/jw/pkg/cmds/projects/lib/templates/test.py
@@ -1,9 +1,14 @@
+import os
+import tempfile
+
 from jw.pkg.cmds.projects.lib.templates import (
+    format_list_dict,
     is_list_dict,
     is_str_dict,
     is_tuple_list,
     merge_values,
     render_values_to_list_dict,
+    tmpl_render,
 )
 
 # -- Type guards --
@@ -47,6 +52,85 @@ try:
 except Exception:
     pass
 
+# -- format_list_dict --
+
+# A plain {key} marker is substituted
+assert format_list_dict('a {key} b', {'key': ['x', 'y']}, False, ', ') == \
+    'a x, y b'
+
+# ${key} is a literal, e.g. a pkg-config variable reference
+assert format_list_dict(
+    'exec_prefix = ${prefix}', {'prefix': ['/usr']}, False, '\n'
+) == 'exec_prefix = ${prefix}'
+
+# {{key}} is a literal, too
+assert format_list_dict('{{prefix}}', {'prefix': ['/usr']}, False, '\n') == \
+    '{{prefix}}'
+
+# A ${key} next to a real marker: only the marker is substituted
+assert format_list_dict('x = {p} ${p}', {'p': ['v']}, False, '\n') == \
+    'x = v ${p}'
+
+# Backslashes in the value are not treated as regex replacements
+assert format_list_dict('{p}', {'p': ['a\\b', 'c$1']}, False, '\n') == \
+    'a\\b\nc$1'
+
+# li_quote wraps each list element in double quotes
+assert format_list_dict('{p}', {'p': ['a', 'b']}, True, ',\n') == \
+    '"a",\n"b"'
+
+# Multi-line values are re-indented to the marker position
+assert format_list_dict('  {p}', {'p': ['x\ny']}, False, '\n') == '  x\n  y'
+
+# String values pass through unsplit
+assert format_list_dict('{p}', {'p': 'xyz'}, False, '\n') == 'xyz'
+
+# -- tmpl_render --
+
+# The built-in pkg-config template renders a valid .pc file
+expected_pc = (
+    'prefix = /usr\n'
+    'exec_prefix = ${prefix}\n'
+    'includedir = ${prefix}/include\n'
+    'libdir = ${exec_prefix}/lib\n'
+    '\n'
+    'Name: jw-pkg\n'
+    'Description: desc\n'
+    'Version: 1.0\n'
+)
+assert tmpl_render(
+    'pkg-config',
+    [{
+        'prefix': '/usr', 'name': 'jw-pkg', 'description': 'desc', 'version': '1.0'
+    }]
+) == expected_pc
+
+# A template file from the search path wins over the built-ins
+with tempfile.TemporaryDirectory() as tmp:
+    path = os.path.join(tmp, 'my-tmpl')
+    with open(path, 'w') as f:
+        f.write('hello {who}\n')
+    assert tmpl_render(
+        'my-tmpl', [{
+            'who': 'world'
+        }], search_path = [tmp]
+    ) == 'hello world\n'
+
+# A missing template falls back to the built-ins
+with tempfile.TemporaryDirectory() as tmp:
+    assert tmpl_render(
+        'pkg-config', [{
+            'prefix': '/usr'
+        }], search_path = [tmp]
+    ).startswith('prefix = /usr\n')
+
+# An unknown template without search path raises
+try:
+    tmpl_render('no-such-template', [])
+    assert False, 'Should have raised'
+except Exception:
+    pass
+
 # -- merge_values --
 
 # String values are merged as whole strings, not character by character
@@ -70,4 +154,4 @@ assert merge_values(
     'a': ['x', 'y', 'z'], 'b': ['w']
 }
 
-print('All templates merge tests passed')
+print('All templates tests passed')