diff --git a/pkg/cmd/template/regular_input_test.go b/pkg/cmd/template/regular_input_test.go
index 1d232f7b..b94e3f13 100644
--- a/pkg/cmd/template/regular_input_test.go
+++ b/pkg/cmd/template/regular_input_test.go
@@ -11,6 +11,7 @@ import (
 	"os"
 	"testing"
 
+	"github.com/stretchr/testify/assert"
 	"github.com/stretchr/testify/require"
 	"github.com/vmware-tanzu/carvel-ytt/pkg/cmd/template"
 	cmdtpl "github.com/vmware-tanzu/carvel-ytt/pkg/cmd/template"
@@ -87,6 +88,24 @@ organization=Acme Widgets Inc.`)
 	assertStdoutAndStderr(t, stdout, stderr, expectedStdOut, expectedStdErr)
 }
 
+func Test_Input_Marked_As_Starlark_Is_Evaluated_As_Starlark(t *testing.T) {
+	starlarkData := []byte(`fail("hello")`)
+
+	filesToProcess := []*files.File{
+		files.MustNewFileFromSource(files.NewBytesSource("print.star1", starlarkData)),
+	}
+
+	stdout := bytes.NewBufferString("")
+	stderr := bytes.NewBufferString("")
+	testUI := ui.NewCustomWriterTTY(false, stdout, stderr)
+	opts := cmdtpl.NewOptions()
+	opts.FileMarksOpts.FileMarks = []string{"print.star1:type=starlark"}
+
+	out := opts.RunWithFiles(cmdtpl.Input{Files: filesToProcess}, testUI)
+	require.Error(t, out.Err)
+	assert.ErrorContains(t, out.Err, "fail: hello")
+}
+
 func Test_FileMark_YAML_Shows_No_Warning(t *testing.T) {
 	yamlData := []byte(`foo: bar`)
 
diff --git a/pkg/files/file.go b/pkg/files/file.go
index 26a6a990..5c17c448 100644
--- a/pkg/files/file.go
+++ b/pkg/files/file.go
@@ -246,8 +246,8 @@ func (r *File) IsLibrary() bool {
 		return true
 	}
 
-	// make exception for starlark files as they are just pure code
-	return r.matchesExt(starlarkExts)
+	// Starlark files are always libraries
+	return r.Type() == TypeStarlark
 }
 
 func (r *File) matchesExt(exts []string) bool {