diff --git a/fn.go b/fn.go
index d03eccc..62978b2 100644
--- a/fn.go
+++ b/fn.go
@@ -18,17 +18,15 @@ import (
 	"k8s.io/apimachinery/pkg/util/json"
 	"k8s.io/apimachinery/pkg/util/yaml"
 
+	"github.com/crossplane-contrib/function-go-templating/input/v1beta1"
 	"github.com/crossplane/crossplane-runtime/pkg/fieldpath"
 	"github.com/crossplane/crossplane-runtime/pkg/meta"
-
 	"github.com/crossplane/function-sdk-go/errors"
 	"github.com/crossplane/function-sdk-go/logging"
 	fnv1 "github.com/crossplane/function-sdk-go/proto/v1"
 	"github.com/crossplane/function-sdk-go/request"
 	"github.com/crossplane/function-sdk-go/resource"
 	"github.com/crossplane/function-sdk-go/response"
-
-	"github.com/crossplane-contrib/function-go-templating/input/v1beta1"
 )
 
 // osFS is a dead-simple implementation of [io/fs.FS] that just wraps around
@@ -43,8 +41,9 @@ func (*osFS) Open(name string) (fs.File, error) {
 type Function struct {
 	fnv1.UnimplementedFunctionRunnerServiceServer
 
-	log  logging.Logger
-	fsys fs.FS
+	log           logging.Logger
+	fsys          fs.FS
+	defaultSource string
 }
 
 type YamlErrorContext struct {
@@ -72,6 +71,12 @@ func (f *Function) RunFunction(_ context.Context, req *fnv1.RunFunctionRequest)
 		response.Fatal(rsp, errors.Wrapf(err, "cannot get Function input from %T", req))
 		return rsp, nil
 	}
+	if in.Source == "" && f.defaultSource != "" {
+		in.Source = v1beta1.FileSystemSource
+		in.FileSystem = &v1beta1.TemplateSourceFileSystem{
+			DirPath: f.defaultSource,
+		}
+	}
 
 	tg, err := NewTemplateSourceGetter(f.fsys, req.GetContext(), in)
 	if err != nil {
diff --git a/fn_test.go b/fn_test.go
index 008ebb3..8a653c2 100644
--- a/fn_test.go
+++ b/fn_test.go
@@ -12,13 +12,11 @@ import (
 	"google.golang.org/protobuf/types/known/durationpb"
 	"k8s.io/utils/ptr"
 
+	"github.com/crossplane-contrib/function-go-templating/input/v1beta1"
 	"github.com/crossplane/crossplane-runtime/pkg/logging"
-
 	fnv1 "github.com/crossplane/function-sdk-go/proto/v1"
 	"github.com/crossplane/function-sdk-go/resource"
 	"github.com/crossplane/function-sdk-go/response"
-
-	"github.com/crossplane-contrib/function-go-templating/input/v1beta1"
 )
 
 var (
@@ -71,8 +69,9 @@ metadata:
 
 func TestRunFunction(t *testing.T) {
 	type args struct {
-		ctx context.Context
-		req *fnv1.RunFunctionRequest
+		ctx           context.Context
+		req           *fnv1.RunFunctionRequest
+		defaultSource string
 	}
 	type want struct {
 		rsp *fnv1.RunFunctionResponse
@@ -192,6 +191,28 @@ func TestRunFunction(t *testing.T) {
 				},
 			},
 		},
+		"DefaultSourceDoesNotExist": {
+			// We can't easily inject a filesystem with valid input into the
+			// test, so just make sure the default source is used and assume it
+			// would work properly if it pointed to something valid.
+			reason: "The default source should be used if specified when the input is empty",
+			args: args{
+				req:           &fnv1.RunFunctionRequest{},
+				defaultSource: "does/not/exist",
+			},
+			want: want{
+				rsp: &fnv1.RunFunctionResponse{
+					Meta: &fnv1.ResponseMeta{Ttl: durationpb.New(response.DefaultTTL)},
+					Results: []*fnv1.Result{
+						{
+							Severity: fnv1.Severity_SEVERITY_FATAL,
+							Message:  "invalid function input: cannot read tmpl from the folder {does/not/exist}: open does/not/exist: file does not exist",
+							Target:   fnv1.Target_TARGET_COMPOSITE.Enum(),
+						},
+					},
+				},
+			},
+		},
 		"NoResourceNameAnnotation": {
 			reason: "The Function should return a fatal result if the cd does not have a composition-resource-name annotation",
 			args: args{
@@ -1403,8 +1424,9 @@ func TestRunFunction(t *testing.T) {
 	for name, tc := range cases {
 		t.Run(name, func(t *testing.T) {
 			f := &Function{
-				log:  logging.NewNopLogger(),
-				fsys: testdataFS,
+				log:           logging.NewNopLogger(),
+				fsys:          testdataFS,
+				defaultSource: tc.args.defaultSource,
 			}
 			rsp, err := f.RunFunction(tc.args.ctx, tc.args.req)
 
diff --git a/main.go b/main.go
index 0329300..24a89df 100644
--- a/main.go
+++ b/main.go
@@ -3,7 +3,6 @@ package main
 
 import (
 	"github.com/alecthomas/kong"
-
 	"github.com/crossplane/function-sdk-go"
 )
 
@@ -16,6 +15,8 @@ type CLI struct {
 	TLSCertsDir        string `help:"Directory containing server certs (tls.key, tls.crt) and the CA used to verify client certificates (ca.crt)" env:"TLS_SERVER_CERTS_DIR"`
 	Insecure           bool   `help:"Run without mTLS credentials. If you supply this flag --tls-server-certs-dir will be ignored."`
 	MaxRecvMessageSize int    `help:"Maximum size of received messages in MB." default:"4"`
+
+	DefaultSource string `help:"Default template source to use when input is not provided to the function." default:"" env:"FUNCTION_GO_TEMPLATING_DEFAULT_SOURCE"`
 }
 
 // Run this Function.
@@ -27,8 +28,9 @@ func (c *CLI) Run() error {
 
 	return function.Serve(
 		&Function{
-			log:  log,
-			fsys: &osFS{},
+			log:           log,
+			fsys:          &osFS{},
+			defaultSource: c.DefaultSource,
 		},
 		function.Listen(c.Network, c.Address),
 		function.MTLSCertificates(c.TLSCertsDir),