diff --git a/changelog/10757.txt b/changelog/10757.txt
new file mode 100644
index 000000000..23fec64a8
--- /dev/null
+++ b/changelog/10757.txt
@@ -0,0 +1,3 @@
+```release-note:bug
+agent: Set namespace for template server in agent.
+```
\ No newline at end of file
diff --git a/command/agent.go b/command/agent.go
index 0bbad294b..3ee5bafe0 100644
--- a/command/agent.go
+++ b/command/agent.go
@@ -371,6 +371,7 @@ func (c *AgentCommand) Run(args []string) int {
 		// Check if a default namespace has been set
 		mountPath := config.AutoAuth.Method.MountPath
 		if cns := config.AutoAuth.Method.Namespace; cns != "" {
+			namespace = cns
 			// Only set this value if the env var is empty, otherwise we end up with a nested namespace
 			if ens := os.Getenv(api.EnvVaultNamespace); ens == "" {
 				mountPath = path.Join(cns, mountPath)