diff --git a/packages/aws-cdk/lib/init.ts b/packages/aws-cdk/lib/init.ts
index f066b6c8fefb8..6166736f3e8da 100644
--- a/packages/aws-cdk/lib/init.ts
+++ b/packages/aws-cdk/lib/init.ts
@@ -196,7 +196,13 @@ interface ProjectInfo {
 
 function versionedTemplatesDir(): Promise<string> {
   return new Promise(async resolve => {
-    const majorVersion = semver.major(versionNumber());
+    let currentVersion = versionNumber();
+    // If the CLI is invoked from source (i.e., developement), rather than from a packaged distribution,
+    // the version number will be '0.0.0'. We will (currently) default to the v1 templates in this case.
+    if (currentVersion === '0.0.0') {
+      currentVersion = '1.0.0';
+    }
+    const majorVersion = semver.major(currentVersion);
     resolve(path.join(__dirname, 'init-templates', `v${majorVersion}`));
   });
 }
diff --git a/packages/aws-cdk/test/init.test.ts b/packages/aws-cdk/test/init.test.ts
index 4f2e8e11401f2..db042d76fc25d 100644
--- a/packages/aws-cdk/test/init.test.ts
+++ b/packages/aws-cdk/test/init.test.ts
@@ -93,6 +93,13 @@ describe.each(['1', '2'])('v%s tests', (majorVersion) => {
   });
 });
 
+test('when no version number is present (e.g., local development), the v1 templates are chosen by default', async () => {
+  mockMajorVersion = '0.0.0';
+  jest.resetAllMocks();
+
+  expect((await availableInitTemplates()).length).toBeGreaterThan(0);
+});
+
 function cliTest(name: string, handler: (dir: string) => void | Promise<any>): void {
   test(name, () => withTempDir(handler));
 }