diff --git a/builtin/logical/ssh/backend_test.go b/builtin/logical/ssh/backend_test.go
index 55ba9f386e3c3..488522c1976ac 100644
--- a/builtin/logical/ssh/backend_test.go
+++ b/builtin/logical/ssh/backend_test.go
@@ -31,6 +31,7 @@ const (
 	testIP              = "127.0.0.1"
 	testUserName        = "vaultssh"
 	testAdminUser       = "vaultssh"
+	testCaKeyType       = "ca"
 	testOTPKeyType      = "otp"
 	testDynamicKeyType  = "dynamic"
 	testCIDRList        = "127.0.0.1/32"
@@ -204,7 +205,7 @@ func testSSH(user, host string, auth ssh.AuthMethod, command string) error {
 	return err
 }
 
-func TestBackend_allowed_users(t *testing.T) {
+func TestBackend_AllowedUsers(t *testing.T) {
 	config := logical.TestBackendConfig()
 	config.StorageView = &logical.InmemStorage{}
 
@@ -318,6 +319,24 @@ func TestBackend_allowed_users(t *testing.T) {
 	}
 }
 
+func TestBackend_AllowedUsersTemplate(t *testing.T) {
+	testAllowedUsersTemplate(t,
+		"{{ identity.entity.metadata.ssh_username }}",
+		testUserName, map[string]string{
+			"ssh_username": testUserName,
+		},
+	)
+}
+
+func TestBackend_AllowedUsersTemplate_WithStaticPrefix(t *testing.T) {
+	testAllowedUsersTemplate(t,
+		"ssh-{{ identity.entity.metadata.ssh_username }}",
+		"ssh-"+testUserName, map[string]string{
+			"ssh_username": testUserName,
+		},
+	)
+}
+
 func newTestingFactory(t *testing.T) func(ctx context.Context, conf *logical.BackendConfig) (logical.Backend, error) {
 	return func(ctx context.Context, conf *logical.BackendConfig) (logical.Backend, error) {
 		defaultLeaseTTLVal := 2 * time.Minute
@@ -1614,6 +1633,63 @@ func getSshCaTestCluster(t *testing.T, userIdentity string) (*vault.TestCluster,
 	return cluster, userpassToken
 }
 
+func testAllowedUsersTemplate(t *testing.T, testAllowedUsersTemplate string,
+	expectedValidPrincipal string, testEntityMetadata map[string]string) {
+	cluster, userpassToken := getSshCaTestCluster(t, testUserName)
+	defer cluster.Cleanup()
+	client := cluster.Cores[0].Client
+
+	// set metadata "ssh_username" to userpass username
+	tokenLookupResponse, err := client.Logical().Write("/auth/token/lookup", map[string]interface{}{
+		"token": userpassToken,
+	})
+	if err != nil {
+		t.Fatal(err)
+	}
+	entityID := tokenLookupResponse.Data["entity_id"].(string)
+	_, err = client.Logical().Write("/identity/entity/id/"+entityID, map[string]interface{}{
+		"metadata": testEntityMetadata,
+	})
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	_, err = client.Logical().Write("ssh/roles/my-role", map[string]interface{}{
+		"key_type":                testCaKeyType,
+		"allow_user_certificates": true,
+		"allowed_users":           testAllowedUsersTemplate,
+		"allowed_users_template":  true,
+	})
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	// sign SSH key as userpass user
+	client.SetToken(userpassToken)
+	signResponse, err := client.Logical().Write("ssh/sign/my-role", map[string]interface{}{
+		"public_key":       testCAPublicKey,
+		"valid_principals": expectedValidPrincipal,
+	})
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	// check for the expected valid principals of certificate
+	signedKey := signResponse.Data["signed_key"].(string)
+	key, _ := base64.StdEncoding.DecodeString(strings.Split(signedKey, " ")[1])
+	parsedKey, err := ssh.ParsePublicKey(key)
+	if err != nil {
+		t.Fatal(err)
+	}
+	actualPrincipals := parsedKey.(*ssh.Certificate).ValidPrincipals
+	if actualPrincipals[0] != expectedValidPrincipal {
+		t.Fatal(
+			fmt.Sprintf("incorrect ValidPrincipals: %v should be %v",
+				actualPrincipals, []string{expectedValidPrincipal}),
+		)
+	}
+}
+
 func configCaStep(caPublicKey, caPrivateKey string) logicaltest.TestStep {
 	return logicaltest.TestStep{
 		Operation: logical.UpdateOperation,
diff --git a/builtin/logical/ssh/path_sign.go b/builtin/logical/ssh/path_sign.go
index 459f885896cc0..7dfe9f37e39ca 100644
--- a/builtin/logical/ssh/path_sign.go
+++ b/builtin/logical/ssh/path_sign.go
@@ -220,7 +220,7 @@ func (b *backend) calculateValidPrincipals(data *framework.FieldData, req *logic
 	for _, principal := range strutil.RemoveDuplicates(strutil.ParseStringSlice(principalsAllowedByRole, ","), false) {
 		if role.AllowedUsersTemplate {
 			// Look for templating markers {{ .* }}
-			matched, _ := regexp.MatchString(`^{{.+?}}$`, principal)
+			matched, _ := regexp.MatchString(`{{.+?}}`, principal)
 			if matched {
 				if req.EntityID != "" {
 					// Retrieve principal based on template + entityID from request.
diff --git a/changelog/10886.txt b/changelog/10886.txt
new file mode 100644
index 0000000000000..85453698302ba
--- /dev/null
+++ b/changelog/10886.txt
@@ -0,0 +1,3 @@
+```release-note:improvement
+secrets/ssh: Let allowed_users template mix templated and non-templated parts.
+```
\ No newline at end of file
diff --git a/website/content/api-docs/secret/ssh.mdx b/website/content/api-docs/secret/ssh.mdx
index a5087d0ca8d9d..36002bb4da092 100644
--- a/website/content/api-docs/secret/ssh.mdx
+++ b/website/content/api-docs/secret/ssh.mdx
@@ -132,9 +132,11 @@ This endpoint creates or updates a named role.
   then this list enforces it. If this field is set, then credentials can only
   be created for `default_user` and usernames present in this list. Setting
   this option will enable all the users with access this role to fetch
-  credentials for all other usernames in this list. Use with caution. N.B.: if
-  the type is `ca`, an empty list does not allow any user; instead you must use
-  `*` to enable this behavior.
+  credentials for all other usernames in this list.
+  When `allowed_users_template` is set to `true`, this field can contain an identity
+  template with any prefix or suffix, like `ssh-{{identity.entity.id}}-user`.
+  Use with caution. N.B.: if the type is `ca`, an empty list does not allow any user;
+  instead you must use `*` to enable this behavior.
 
 - `allowed_users_template` `(bool: false)` - If set, allowed_users can be specified
   using identity template policies. Non-templated users are also permitted.