diff --git a/docs/user/reference/config/component-templates.md b/docs/user/reference/config/component-templates.md
new file mode 100644
index 00000000..e5695329
--- /dev/null
+++ b/docs/user/reference/config/component-templates.md
@@ -0,0 +1,151 @@
+# Component Templates
+
+Component templates define a matrix of axes whose cartesian product expands into multiple [component](components.md) definitions. This is useful when you need to build several variants of the same source project — for example, an out-of-tree kernel module compiled against different kernel versions and toolchains.
+
+Templates are defined under `[component-templates.<name>]` in the TOML configuration. During config loading, each template is expanded into regular components that behave identically to explicitly defined ones.
+
+## Template Config
+
+| Field | TOML Key | Type | Required | Description |
+|-------|----------|------|----------|-------------|
+| Description | `description` | string | No | Human-friendly description of this template |
+| Default component config | `default-component-config` | [ComponentConfig](components.md#component-config) | No | Base configuration applied to every expanded variant before axis overrides |
+| Matrix | `matrix` | array of [MatrixAxis](#matrix-axis) | **Yes** | Ordered list of axes whose cartesian product defines the expanded variants |
+
+## Matrix Axis
+
+Each matrix axis defines one dimension of the expansion. The cartesian product of all axes determines the set of expanded components.
+
+| Field | TOML Key | Type | Required | Description |
+|-------|----------|------|----------|-------------|
+| Axis name | `axis` | string | **Yes** | Name of this axis (e.g., `"kernel"`, `"toolchain"`) |
+| Values | `values` | map of string → [ComponentConfig](components.md#component-config) | **Yes** | Named values for this axis; each value is a partial component config merged into the expanded component |
+
+### Constraints
+
+- At least one axis is required per template.
+- Each axis must have at least one value.
+- Axis names must be unique within a template.
+- Value names must be non-empty.
+
+## Expansion Rules
+
+### Name Synthesis
+
+Expanded component names are formed by joining the template name with each selected value name, separated by `-`, in the order the axes appear in the `matrix` array:
+
+```
+<template-name>-<axis1-value>-<axis2-value>-...
+```
+
+For example, a template `my-driver` with axes `kernel` (values `6-6`, `6-12`) and `toolchain` (values `gcc13`, `gcc14`) produces:
+
+- `my-driver-6-6-gcc13`
+- `my-driver-6-6-gcc14`
+- `my-driver-6-12-gcc13`
+- `my-driver-6-12-gcc14`
+
+### Config Layering
+
+For each expanded component, configurations are layered in the following order (later layers override earlier ones):
+
+1. Template's `default-component-config`
+2. First axis's selected value config
+3. Second axis's selected value config
+4. ... (additional axes in definition order)
+
+This uses the same `MergeUpdatesFrom` mechanism as [component group defaults](component-groups.md), so all standard merge rules apply.
+
+### Collision Handling
+
+If an expanded component name collides with an explicitly defined component (or another template's expansion), a validation error is produced at load time. Expanded components are merged **after** regular components, so the error message will identify the template as the source of the collision.
+
+## Example
+
+### Basic Two-Axis Template
+
+```toml
+[component-templates.my-driver]
+description = "Out-of-tree driver built against multiple kernel versions and toolchains"
+
+[component-templates.my-driver.default-component-config]
+spec = { type = "local", path = "my-driver.spec" }
+
+[component-templates.my-driver.default-component-config.build]
+defines = { base_config = "true" }
+
+[[component-templates.my-driver.matrix]]
+axis = "kernel"
+[component-templates.my-driver.matrix.values.6-6.build]
+defines = { kernel_version = "6.6.72" }
+[component-templates.my-driver.matrix.values.6-12.build]
+defines = { kernel_version = "6.12.8" }
+
+[[component-templates.my-driver.matrix]]
+axis = "toolchain"
+[component-templates.my-driver.matrix.values.gcc13.build]
+defines = { gcc_version = "13" }
+[component-templates.my-driver.matrix.values.gcc14.build]
+defines = { gcc_version = "14" }
+```
+
+This produces 4 components. For example, `my-driver-6-6-gcc14` will have:
+- `spec` from the default: `{ type = "local", path = "my-driver.spec" }`
+- `build.defines` merged from all layers: `{ base_config = "true", kernel_version = "6.6.72", gcc_version = "14" }`
+
+### Template with Overlays
+
+Axis values can include any [ComponentConfig](components.md#component-config) fields, including overlays:
+
+```toml
+[component-templates.my-driver]
+
+[component-templates.my-driver.default-component-config]
+spec = { type = "local", path = "my-driver.spec" }
+
+[[component-templates.my-driver.matrix]]
+axis = "kernel"
+
+[component-templates.my-driver.matrix.values.6-6]
+
+[[component-templates.my-driver.matrix.values.6-6.overlays]]
+type = "spec-set-tag"
+description = "Set kernel version to 6.6"
+tag = "kernel_version"
+value = "6.6.72"
+
+[component-templates.my-driver.matrix.values.6-12]
+
+[[component-templates.my-driver.matrix.values.6-12.overlays]]
+type = "spec-set-tag"
+description = "Set kernel version to 6.12"
+tag = "kernel_version"
+value = "6.12.8"
+```
+
+### Mixing Templates with Regular Components
+
+Templates and regular components coexist in the same config files:
+
+```toml
+# Regular component
+[components.curl]
+
+# Template-expanded components
+[component-templates.my-driver]
+
+[[component-templates.my-driver.matrix]]
+axis = "kernel"
+[component-templates.my-driver.matrix.values.6-6]
+[component-templates.my-driver.matrix.values.6-12]
+```
+
+This produces 3 components: `curl`, `my-driver-6-6`, and `my-driver-6-12`.
+
+## Related Resources
+
+- [Components](components.md) — component configuration reference
+- [Component Groups](component-groups.md) — grouping components with shared defaults
+- [Config File Structure](config-file.md) — top-level config file layout
+- [Configuration System](../../explanation/config-system.md) — inheritance and merge behavior
+- [JSON Schema](../../../../schemas/azldev.schema.json) — machine-readable schema
diff --git a/docs/user/reference/config/components.md b/docs/user/reference/config/components.md
index c9aef9d0..022804e5 100644
--- a/docs/user/reference/config/components.md
+++ b/docs/user/reference/config/components.md
@@ -367,6 +367,7 @@ lines = ["cp -vf %{shimdirx64}/$(basename %{shimefix64}) %{shimefix64} ||:"]
 - [Config File Structure](config-file.md) — top-level config file layout
 - [Distros](distros.md) — distro definitions and `default-component-config` inheritance
 - [Component Groups](component-groups.md) — grouping components with shared defaults
+- [Component Templates](component-templates.md) — generating multiple component variants from a matrix
 - [Package Groups](package-groups.md) — project-level package groups and full resolution order
 - [Configuration System](../../explanation/config-system.md) — inheritance and merge behavior
 - [JSON Schema](../../../../schemas/azldev.schema.json) — machine-readable schema
diff --git a/docs/user/reference/config/config-file.md b/docs/user/reference/config/config-file.md
index 1f254e8e..eff1e1df 100644
--- a/docs/user/reference/config/config-file.md
+++ b/docs/user/reference/config/config-file.md
@@ -13,6 +13,7 @@ All config files share the same schema — there is no distinction between a "ro
 | `distros` | map of objects | Distro definitions (build environments, upstream sources) | [Distros](distros.md) |
 | `components` | map of objects | Component (package) definitions | [Components](components.md) |
 | `component-groups` | map of objects | Named groups of components with shared defaults | [Component Groups](component-groups.md) |
+| `component-templates` | map of objects | Component templates that expand into multiple components via matrix axes | [Component Templates](component-templates.md) |
 | `images` | map of objects | Image definitions (VMs, containers) | [Images](images.md) |
 | `tools` | object | Configuration for external tools used by azldev | [Tools](tools.md) |
 
diff --git a/internal/projectconfig/componenttemplate.go b/internal/projectconfig/componenttemplate.go
new file mode 100644
index 00000000..5c486bb7
--- /dev/null
+++ b/internal/projectconfig/componenttemplate.go
@@ -0,0 +1,95 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT License.
+
+package projectconfig
+
+import (
+	"errors"
+	"fmt"
+
+	"github.com/brunoga/deep"
+)
+
+// ComponentTemplateConfig defines a component template that produces multiple component variants
+// via a matrix of axes. Each axis contributes named values; the template expands into the
+// cartesian product of all axis values, yielding one [ComponentConfig] per combination.
+type ComponentTemplateConfig struct {
+	// A human-friendly description of this component template.
+	Description string `toml:"description,omitempty" json:"description,omitempty" jsonschema:"title=Description,description=Description of this component template"`
+
+	// Default configuration applied to every expanded component before axis-specific overrides.
+	DefaultComponentConfig ComponentConfig `toml:"default-component-config,omitempty" json:"defaultComponentConfig,omitempty" jsonschema:"title=Default component configuration,description=Default component config applied to every expanded variant before axis overrides"`
+
+	// Ordered list of matrix axes. Each axis defines a dimension with named values;
+	// the cartesian product of all axes determines the set of expanded components.
+	// Axis configs are applied in array order, so later axes override earlier ones.
+	Matrix []MatrixAxis `toml:"matrix" json:"matrix" validate:"required,min=1,dive" jsonschema:"required,minItems=1,title=Matrix axes,description=Ordered list of matrix axes whose cartesian product defines the expanded component variants"`
+
+	// Internal: name assigned during loading (not serialized).
+	name string `toml:"-" json:"-"`
+
+	// Internal: reference to the source config file (not serialized).
+	sourceConfigFile *ConfigFile `toml:"-" json:"-"`
+}
+
+// MatrixAxis defines a single dimension of a component template's matrix.
+// It has a name (the axis identifier) and a map of named values, each containing
+// a partial [ComponentConfig] that is merged into the expanded component.
+type MatrixAxis struct {
+	// Name of this axis (e.g., "kernel", "toolchain").
+	Axis string `toml:"axis" json:"axis" validate:"required" jsonschema:"required,title=Axis name,description=Name of this matrix axis (e.g. kernel or toolchain)"`
+
+	// Named values for this axis. Each key is a value name that appears in the
+	// synthesized component name; each value is a partial [ComponentConfig] merged
+	// into the expanded component.
+	Values map[string]ComponentConfig `toml:"values" json:"values" validate:"required,min=1,dive" jsonschema:"required,minProperties=1,title=Axis values,description=Named values for this axis; each value is a partial ComponentConfig merged into the expanded component"`
+}
+
+// Validate checks that the component template configuration is internally consistent.
+func (t ComponentTemplateConfig) Validate() error {
+	if len(t.Matrix) == 0 {
+		return errors.New("component template must have at least one matrix axis")
+	}
+
+	seenAxes := make(map[string]struct{}, len(t.Matrix))
+
+	for i, axis := range t.Matrix {
+		if axis.Axis == "" {
+			return fmt.Errorf("matrix axis %d has an empty axis name", i+1)
+		}
+
+		if _, seen := seenAxes[axis.Axis]; seen {
+			return fmt.Errorf("duplicate matrix axis name %#q", axis.Axis)
+		}
+
+		seenAxes[axis.Axis] = struct{}{}
+
+		if len(axis.Values) == 0 {
+			return fmt.Errorf("matrix axis %#q must have at least one value", axis.Axis)
+		}
+
+		for valueName := range axis.Values {
+			if valueName == "" {
+				return fmt.Errorf("matrix axis %#q has an empty value name", axis.Axis)
+			}
+		}
+	}
+
+	return nil
+}
+
+// WithAbsolutePaths returns a copy of the component template config with relative file paths
+// converted to absolute file paths (relative to referenceDir).
+func (t ComponentTemplateConfig) WithAbsolutePaths(referenceDir string) ComponentTemplateConfig {
+	result := deep.MustCopy(t)
+
+	result.DefaultComponentConfig = *(result.DefaultComponentConfig.WithAbsolutePaths(referenceDir))
+
+	for i, axis := range result.Matrix {
+		for valueName, valueCfg := range axis.Values {
+			result.Matrix[i].Values[valueName] = *(valueCfg.WithAbsolutePaths(referenceDir))
+		}
+	}
+
+	return result
+}
diff --git a/internal/projectconfig/componenttemplate_test.go b/internal/projectconfig/componenttemplate_test.go
new file mode 100644
index 00000000..26d61b3a
--- /dev/null
+++ b/internal/projectconfig/componenttemplate_test.go
@@ -0,0 +1,169 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT License.
+
+//nolint:testpackage // Allow to test private functions
+package projectconfig
+
+import (
+	"testing"
+
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+)
+
+func TestComponentTemplateConfig_Validate_Valid(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		Matrix: []MatrixAxis{
+			{
+				Axis: "kernel",
+				Values: map[string]ComponentConfig{
+					"6-6": {},
+				},
+			},
+		},
+	}
+
+	err := tmpl.Validate()
+	assert.NoError(t, err)
+}
+
+func TestComponentTemplateConfig_Validate_MultiAxis(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		Matrix: []MatrixAxis{
+			{
+				Axis: "kernel",
+				Values: map[string]ComponentConfig{
+					"6-6":  {},
+					"6-12": {},
+				},
+			},
+			{
+				Axis: "toolchain",
+				Values: map[string]ComponentConfig{
+					"gcc13": {},
+					"gcc14": {},
+				},
+			},
+		},
+	}
+
+	err := tmpl.Validate()
+	assert.NoError(t, err)
+}
+
+func TestComponentTemplateConfig_Validate_EmptyMatrix(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		Matrix: []MatrixAxis{},
+	}
+
+	err := tmpl.Validate()
+	require.Error(t, err)
+	assert.Contains(t, err.Error(), "at least one matrix axis")
+}
+
+func TestComponentTemplateConfig_Validate_NilMatrix(t *testing.T) {
+	tmpl := ComponentTemplateConfig{}
+
+	err := tmpl.Validate()
+	require.Error(t, err)
+	assert.Contains(t, err.Error(), "at least one matrix axis")
+}
+
+func TestComponentTemplateConfig_Validate_EmptyAxisName(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		Matrix: []MatrixAxis{
+			{
+				Axis:   "",
+				Values: map[string]ComponentConfig{"v1": {}},
+			},
+		},
+	}
+
+	err := tmpl.Validate()
+	require.Error(t, err)
+	assert.Contains(t, err.Error(), "empty axis name")
+}
+
+func TestComponentTemplateConfig_Validate_DuplicateAxisName(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		Matrix: []MatrixAxis{
+			{
+				Axis:   "kernel",
+				Values: map[string]ComponentConfig{"6-6": {}},
+			},
+			{
+				Axis:   "kernel",
+				Values: map[string]ComponentConfig{"6-12": {}},
+			},
+		},
+	}
+
+	err := tmpl.Validate()
+	require.Error(t, err)
+	assert.Contains(t, err.Error(), "duplicate matrix axis name")
+}
+
+func TestComponentTemplateConfig_Validate_EmptyValues(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		Matrix: []MatrixAxis{
+			{
+				Axis:   "kernel",
+				Values: map[string]ComponentConfig{},
+			},
+		},
+	}
+
+	err := tmpl.Validate()
+	require.Error(t, err)
+	assert.Contains(t, err.Error(), "at least one value")
+}
+
+func TestComponentTemplateConfig_Validate_EmptyValueName(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		Matrix: []MatrixAxis{
+			{
+				Axis:   "kernel",
+				Values: map[string]ComponentConfig{"": {}},
+			},
+		},
+	}
+
+	err := tmpl.Validate()
+	require.Error(t, err)
+	assert.Contains(t, err.Error(), "empty value name")
+}
+
+func TestComponentTemplateConfig_WithAbsolutePaths(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		DefaultComponentConfig: ComponentConfig{
+			Spec: SpecSource{
+				SourceType: SpecSourceTypeLocal,
+				Path:       "my-driver.spec",
+			},
+		},
+		Matrix: []MatrixAxis{
+			{
+				Axis: "kernel",
+				Values: map[string]ComponentConfig{
+					"6-6": {
+						Spec: SpecSource{
+							SourceType: SpecSourceTypeLocal,
+							Path:       "override.spec",
+						},
+					},
+				},
+			},
+		},
+	}
+
+	result := tmpl.WithAbsolutePaths("/project")
+
+	assert.Equal(t, "/project/my-driver.spec", result.DefaultComponentConfig.Spec.Path)
+
+	if assert.Contains(t, result.Matrix[0].Values, "6-6") {
+		assert.Equal(t, "/project/override.spec", result.Matrix[0].Values["6-6"].Spec.Path)
+	}
+
+	// Verify original was not mutated.
+	assert.Equal(t, "my-driver.spec", tmpl.DefaultComponentConfig.Spec.Path)
+}
diff --git a/internal/projectconfig/configfile.go b/internal/projectconfig/configfile.go
index 5afe001e..496b38a0 100644
--- a/internal/projectconfig/configfile.go
+++ b/internal/projectconfig/configfile.go
@@ -38,6 +38,9 @@ type ConfigFile struct {
 	// Definitions of components.
 	Components map[string]ComponentConfig `toml:"components,omitempty" validate:"dive" jsonschema:"title=Components,description=Definitions of components for this project"`
 
+	// Definitions of component templates that expand into multiple components via a matrix.
+	ComponentTemplates map[string]ComponentTemplateConfig `toml:"component-templates,omitempty" validate:"dive" jsonschema:"title=Component templates,description=Definitions of component templates that expand into multiple components via matrix axes"`
+
 	// Definitions of images.
 	Images map[string]ImageConfig `toml:"images,omitempty" validate:"dive" jsonschema:"title=Images,description=Definitions of images for this project"`
 
@@ -83,6 +86,13 @@ func (f ConfigFile) Validate() error {
 		}
 	}
 
+	// Validate component template configurations.
+	for templateName, tmpl := range f.ComponentTemplates {
+		if err := tmpl.Validate(); err != nil {
+			return fmt.Errorf("invalid component template %#q:\n%w", templateName, err)
+		}
+	}
+
 	// Validate overlay configurations for each component.
 	for componentName, component := range f.Components {
 		for i, overlay := range component.Overlays {
diff --git a/internal/projectconfig/loader.go b/internal/projectconfig/loader.go
index 270d0918..af7d4357 100644
--- a/internal/projectconfig/loader.go
+++ b/internal/projectconfig/loader.go
@@ -10,6 +10,7 @@ import (
 	"os"
 	"path"
 	"path/filepath"
+	"sort"
 	"strings"
 
 	"github.com/bmatcuk/doublestar/v4"
@@ -23,6 +24,8 @@ var (
 	ErrDuplicateComponents = errors.New("duplicate component")
 	// ErrDuplicateComponentGroups is returned when duplicate conflicting component group definitions are found.
 	ErrDuplicateComponentGroups = errors.New("duplicate component group")
+	// ErrDuplicateComponentTemplates is returned when duplicate conflicting component template definitions are found.
+	ErrDuplicateComponentTemplates = errors.New("duplicate component template")
 	// ErrDuplicateImages is returned when duplicate conflicting image definitions are found.
 	ErrDuplicateImages = errors.New("duplicate image")
 	// ErrDuplicatePackageGroups is returned when duplicate conflicting package group definitions are found.
@@ -111,6 +114,10 @@ func mergeConfigFile(resolvedCfg *ProjectConfig, loadedCfg *ConfigFile) error {
 		return err
 	}
 
+	if err := mergeComponentTemplates(resolvedCfg, loadedCfg); err != nil {
+		return err
+	}
+
 	if err := mergeImages(resolvedCfg, loadedCfg); err != nil {
 		return err
 	}
@@ -193,6 +200,53 @@ func mergeComponents(resolvedCfg *ProjectConfig, loadedCfg *ConfigFile) error {
 	return nil
 }
 
+// mergeComponentTemplates expands component template definitions from a loaded config file
+// and merges the resulting components into the resolved config. Duplicate template names
+// across config files are not allowed. Expanded component names must not collide with
+// existing components.
+func mergeComponentTemplates(resolvedCfg *ProjectConfig, loadedCfg *ConfigFile) error {
+	// Sort template names for deterministic expansion order.
+	templateNames := make([]string, 0, len(loadedCfg.ComponentTemplates))
+	for name := range loadedCfg.ComponentTemplates {
+		templateNames = append(templateNames, name)
+	}
+
+	sort.Strings(templateNames)
+
+	for _, templateName := range templateNames {
+		tmpl := loadedCfg.ComponentTemplates[templateName]
+
+		// Fill out internal fields.
+		tmpl.name = templateName
+		tmpl.sourceConfigFile = loadedCfg
+
+		// Resolve paths.
+		resolvedTmpl := tmpl.WithAbsolutePaths(loadedCfg.dir)
+		resolvedTmpl.name = templateName
+		resolvedTmpl.sourceConfigFile = loadedCfg
+
+		// Expand the template into its cartesian product of components.
+		expandedComponents, err := expandComponentTemplate(templateName, &resolvedTmpl)
+		if err != nil {
+			return fmt.Errorf("failed to expand component template %#q:\n%w", templateName, err)
+		}
+
+		// Merge expanded components into the resolved config, checking for duplicates.
+		for componentName, component := range expandedComponents {
+			if _, ok := resolvedCfg.Components[componentName]; ok {
+				return fmt.Errorf(
+					"%w: component template %#q expands to %#q which already exists",
+					ErrDuplicateComponents, templateName, componentName,
+				)
+			}
+
+			resolvedCfg.Components[componentName] = component
+		}
+	}
+
+	return nil
+}
+
 // mergeImages merges image definitions from a loaded config file into the
 // resolved config. Duplicate image names are not allowed.
 func mergeImages(resolvedCfg *ProjectConfig, loadedCfg *ConfigFile) error {
diff --git a/internal/projectconfig/templateexpansion.go b/internal/projectconfig/templateexpansion.go
new file mode 100644
index 00000000..85e02e5b
--- /dev/null
+++ b/internal/projectconfig/templateexpansion.go
@@ -0,0 +1,117 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT License.
+
+package projectconfig
+
+import (
+	"fmt"
+	"sort"
+	"strings"
+
+	"github.com/brunoga/deep"
+)
+
+// expandComponentTemplate expands a single component template into its cartesian product of
+// components. Each expanded component is created by layering the template's default config with
+// the selected axis value configs in matrix definition order.
+func expandComponentTemplate(
+	templateName string, tmpl *ComponentTemplateConfig,
+) (map[string]ComponentConfig, error) {
+	// Build the cartesian product of all axis values.
+	combinations := cartesianProduct(tmpl.Matrix)
+
+	result := make(map[string]ComponentConfig, len(combinations))
+
+	for _, combo := range combinations {
+		// Build the synthesized component name.
+		nameParts := make([]string, 0, len(combo)+1)
+		nameParts = append(nameParts, templateName)
+
+		for _, selection := range combo {
+			nameParts = append(nameParts, selection.valueName)
+		}
+
+		componentName := strings.Join(nameParts, "-")
+
+		// Start from a deep copy of the template's default component config.
+		expanded := deep.MustCopy(tmpl.DefaultComponentConfig)
+
+		// Layer each axis value config in matrix definition order.
+		for _, selection := range combo {
+			valueCfg := deep.MustCopy(selection.valueCfg)
+
+			if err := expanded.MergeUpdatesFrom(&valueCfg); err != nil {
+				return nil, fmt.Errorf(
+					"failed to merge axis %#q value %#q into expanded component %#q:\n%w",
+					selection.axisName, selection.valueName, componentName, err,
+				)
+			}
+		}
+
+		// Set the component's identity fields.
+		expanded.Name = componentName
+		expanded.SourceConfigFile = tmpl.sourceConfigFile
+
+		// Check for duplicate names within the same template expansion.
+		if _, exists := result[componentName]; exists {
+			return nil, fmt.Errorf(
+				"component template %#q produces duplicate expanded component name %#q",
+				templateName, componentName,
+			)
+		}
+
+		result[componentName] = expanded
+	}
+
+	return result, nil
+}
+
+// axisSelection represents a single axis value chosen for one slot in the cartesian product.
+type axisSelection struct {
+	axisName  string
+	valueName string
+	valueCfg  ComponentConfig
+}
+
+// cartesianProduct generates all combinations of axis values across the given matrix axes.
+// Each returned slice is one combination, with entries in the same order as the input axes.
+func cartesianProduct(axes []MatrixAxis) [][]axisSelection {
+	if len(axes) == 0 {
+		return nil
+	}
+
+	// Start with a single empty combination.
+	combinations := [][]axisSelection{{}}
+
+	for _, axis := range axes {
+		// Sort value names for deterministic expansion order within each axis.
+		valueNames := make([]string, 0, len(axis.Values))
+		for name := range axis.Values {
+			valueNames = append(valueNames, name)
+		}
+
+		sort.Strings(valueNames)
+
+		var newCombinations [][]axisSelection
+
+		for _, combo := range combinations {
+			for _, valueName := range valueNames {
+				// Extend the existing combination with this axis value.
+				extended := make([]axisSelection, len(combo), len(combo)+1)
+				copy(extended, combo)
+
+				extended = append(extended, axisSelection{
+					axisName:  axis.Axis,
+					valueName: valueName,
+					valueCfg:  axis.Values[valueName],
+				})
+
+				newCombinations = append(newCombinations, extended)
+			}
+		}
+
+		combinations = newCombinations
+	}
+
+	return combinations
+}
diff --git a/internal/projectconfig/templateexpansion_test.go b/internal/projectconfig/templateexpansion_test.go
new file mode 100644
index 00000000..746d9071
--- /dev/null
+++ b/internal/projectconfig/templateexpansion_test.go
@@ -0,0 +1,387 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT License.
+
+//nolint:testpackage // Allow to test private functions
+package projectconfig
+
+import (
+	"path/filepath"
+	"testing"
+
+	"github.com/microsoft/azure-linux-dev-tools/internal/global/testctx"
+	"github.com/microsoft/azure-linux-dev-tools/internal/utils/fileperms"
+	"github.com/microsoft/azure-linux-dev-tools/internal/utils/fileutils"
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+)
+
+func TestExpandComponentTemplate_SingleAxis(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		DefaultComponentConfig: ComponentConfig{
+			Build: ComponentBuildConfig{
+				Defines: map[string]string{"base": "true"},
+			},
+		},
+		Matrix: []MatrixAxis{
+			{
+				Axis: "kernel",
+				Values: map[string]ComponentConfig{
+					"6-6": {
+						Build: ComponentBuildConfig{
+							Defines: map[string]string{"kernel_version": "6.6.72"},
+						},
+					},
+					"6-12": {
+						Build: ComponentBuildConfig{
+							Defines: map[string]string{"kernel_version": "6.12.8"},
+						},
+					},
+				},
+			},
+		},
+	}
+
+	result, err := expandComponentTemplate("my-driver", &tmpl)
+	require.NoError(t, err)
+	assert.Len(t, result, 2)
+
+	// Check both components exist with expected names.
+	assert.Contains(t, result, "my-driver-6-12")
+	assert.Contains(t, result, "my-driver-6-6")
+
+	// Verify config layering: base + axis value.
+	comp66 := result["my-driver-6-6"]
+	assert.Equal(t, "my-driver-6-6", comp66.Name)
+	assert.Equal(t, "true", comp66.Build.Defines["base"])
+	assert.Equal(t, "6.6.72", comp66.Build.Defines["kernel_version"])
+
+	comp612 := result["my-driver-6-12"]
+	assert.Equal(t, "my-driver-6-12", comp612.Name)
+	assert.Equal(t, "true", comp612.Build.Defines["base"])
+	assert.Equal(t, "6.12.8", comp612.Build.Defines["kernel_version"])
+}
+
+func TestExpandComponentTemplate_TwoAxes(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		DefaultComponentConfig: ComponentConfig{
+			Spec: SpecSource{
+				SourceType: SpecSourceTypeLocal,
+				Path:       "/specs/my-driver.spec",
+			},
+		},
+		Matrix: []MatrixAxis{
+			{
+				Axis: "kernel",
+				Values: map[string]ComponentConfig{
+					"6-6": {
+						Build: ComponentBuildConfig{
+							Defines: map[string]string{"kernel_version": "6.6.72"},
+						},
+					},
+					"6-12": {
+						Build: ComponentBuildConfig{
+							Defines: map[string]string{"kernel_version": "6.12.8"},
+						},
+					},
+				},
+			},
+			{
+				Axis: "toolchain",
+				Values: map[string]ComponentConfig{
+					"gcc13": {
+						Build: ComponentBuildConfig{
+							Defines: map[string]string{"gcc_version": "13"},
+						},
+					},
+					"gcc14": {
+						Build: ComponentBuildConfig{
+							Defines: map[string]string{"gcc_version": "14"},
+						},
+					},
+				},
+			},
+		},
+	}
+
+	result, err := expandComponentTemplate("my-driver", &tmpl)
+	require.NoError(t, err)
+	assert.Len(t, result, 4)
+
+	// Verify all 4 cartesian product entries exist.
+	expectedNames := []string{
+		"my-driver-6-12-gcc13",
+		"my-driver-6-12-gcc14",
+		"my-driver-6-6-gcc13",
+		"my-driver-6-6-gcc14",
+	}
+
+	for _, name := range expectedNames {
+		assert.Contains(t, result, name)
+	}
+
+	// Verify one component has all layers applied.
+	comp := result["my-driver-6-6-gcc14"]
+	assert.Equal(t, "my-driver-6-6-gcc14", comp.Name)
+	assert.Equal(t, SpecSourceTypeLocal, comp.Spec.SourceType)
+	assert.Equal(t, "/specs/my-driver.spec", comp.Spec.Path)
+	assert.Equal(t, "6.6.72", comp.Build.Defines["kernel_version"])
+	assert.Equal(t, "14", comp.Build.Defines["gcc_version"])
+}
+
+func TestExpandComponentTemplate_ThreeAxes(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		Matrix: []MatrixAxis{
+			{
+				Axis: "a",
+				Values: map[string]ComponentConfig{
+					"a1": {},
+					"a2": {},
+				},
+			},
+			{
+				Axis: "b",
+				Values: map[string]ComponentConfig{
+					"b1": {},
+					"b2": {},
+				},
+			},
+			{
+				Axis: "c",
+				Values: map[string]ComponentConfig{
+					"c1": {},
+					"c2": {},
+					"c3": {},
+				},
+			},
+		},
+	}
+
+	result, err := expandComponentTemplate("test", &tmpl)
+	require.NoError(t, err)
+
+	// 2 * 2 * 3 = 12 combinations.
+	assert.Len(t, result, 12)
+
+	// Verify a few specific names.
+	assert.Contains(t, result, "test-a1-b1-c1")
+	assert.Contains(t, result, "test-a2-b2-c3")
+}
+
+func TestExpandComponentTemplate_LaterAxisOverridesEarlier(t *testing.T) {
+	tmpl := ComponentTemplateConfig{
+		DefaultComponentConfig: ComponentConfig{
+			Build: ComponentBuildConfig{
+				Defines: map[string]string{"shared": "default"},
+			},
+		},
+		Matrix: []MatrixAxis{
+			{
+				Axis: "first",
+				Values: map[string]ComponentConfig{
+					"f1": {
+						Build: ComponentBuildConfig{
+							Defines: map[string]string{"shared": "from-first"},
+						},
+					},
+				},
+			},
+			{
+				Axis: "second",
+				Values: map[string]ComponentConfig{
+					"s1": {
+						Build: ComponentBuildConfig{
+							Defines: map[string]string{"shared": "from-second"},
+						},
+					},
+				},
+			},
+		},
+	}
+
+	result, err := expandComponentTemplate("test", &tmpl)
+	require.NoError(t, err)
+	require.Len(t, result, 1)
+
+	comp := result["test-f1-s1"]
+	// Later axis ("second") should override earlier axis ("first").
+	assert.Equal(t, "from-second", comp.Build.Defines["shared"])
+}
+
+func TestExpandComponentTemplate_SourceConfigFilePropagated(t *testing.T) {
+	configFile := &ConfigFile{sourcePath: "/project/azldev.toml"}
+
+	tmpl := ComponentTemplateConfig{
+		sourceConfigFile: configFile,
+		Matrix: []MatrixAxis{
+			{
+				Axis: "kernel",
+				Values: map[string]ComponentConfig{
+					"6-6": {},
+				},
+			},
+		},
+	}
+
+	result, err := expandComponentTemplate("my-driver", &tmpl)
+	require.NoError(t, err)
+
+	comp := result["my-driver-6-6"]
+	assert.Same(t, configFile, comp.SourceConfigFile)
+}
+
+func TestCartesianProduct_Empty(t *testing.T) {
+	result := cartesianProduct(nil)
+	assert.Nil(t, result)
+
+	result = cartesianProduct([]MatrixAxis{})
+	assert.Nil(t, result)
+}
+
+func TestCartesianProduct_SingleAxisSingleValue(t *testing.T) {
+	axes := []MatrixAxis{
+		{
+			Axis: "a",
+			Values: map[string]ComponentConfig{
+				"v1": {},
+			},
+		},
+	}
+
+	result := cartesianProduct(axes)
+	require.Len(t, result, 1)
+	require.Len(t, result[0], 1)
+	assert.Equal(t, "a", result[0][0].axisName)
+	assert.Equal(t, "v1", result[0][0].valueName)
+}
+
+// Test full pipeline integration: template expansion through loadAndResolveProjectConfig.
+func TestLoadAndResolveProjectConfig_ComponentTemplate(t *testing.T) {
+	const configContents = `
+[component-templates.my-driver]
+description = "Test template"
+
+[component-templates.my-driver.default-component-config]
+spec = { type = "local", path = "my-driver.spec" }
+
+[[component-templates.my-driver.matrix]]
+axis = "kernel"
+[component-templates.my-driver.matrix.values.6-6]
+[component-templates.my-driver.matrix.values.6-12]
+
+[[component-templates.my-driver.matrix]]
+axis = "toolchain"
+[component-templates.my-driver.matrix.values.gcc13]
+[component-templates.my-driver.matrix.values.gcc14]
+`
+
+	ctx := testctx.NewCtx()
+	require.NoError(t, fileutils.WriteFile(ctx.FS(), testConfigPath, []byte(configContents), fileperms.PrivateFile))
+
+	config, err := loadAndResolveProjectConfig(ctx.FS(), false, testConfigPath)
+	require.NoError(t, err)
+
+	// Should have 4 expanded components.
+	assert.Len(t, config.Components, 4)
+	assert.Contains(t, config.Components, "my-driver-6-6-gcc13")
+	assert.Contains(t, config.Components, "my-driver-6-6-gcc14")
+	assert.Contains(t, config.Components, "my-driver-6-12-gcc13")
+	assert.Contains(t, config.Components, "my-driver-6-12-gcc14")
+
+	// Verify spec path is resolved relative to the config dir.
+	comp := config.Components["my-driver-6-6-gcc13"]
+	assert.Equal(t, SpecSourceTypeLocal, comp.Spec.SourceType)
+	assert.Equal(t, filepath.Join(filepath.Dir(testConfigPath), "my-driver.spec"), comp.Spec.Path)
+}
+
+// Test that a template expansion colliding with an explicit component produces an error.
+func TestLoadAndResolveProjectConfig_ComponentTemplate_CollisionWithExplicit(t *testing.T) {
+	const configContents = `
+[components.my-driver-6-6]
+
+[component-templates.my-driver]
+
+[[component-templates.my-driver.matrix]]
+axis = "kernel"
+[component-templates.my-driver.matrix.values.6-6]
+`
+
+	ctx := testctx.NewCtx()
+	require.NoError(t, fileutils.WriteFile(ctx.FS(), testConfigPath, []byte(configContents), fileperms.PrivateFile))
+
+	config, err := loadAndResolveProjectConfig(ctx.FS(), false, testConfigPath)
+	require.ErrorIs(t, err, ErrDuplicateComponents)
+	assert.Nil(t, config)
+}
+
+// Test that template with build defines are layered correctly.
+func TestLoadAndResolveProjectConfig_ComponentTemplate_WithBuildDefines(t *testing.T) {
+	const configContents = `
+[component-templates.my-driver]
+
+[component-templates.my-driver.default-component-config.build]
+defines = { base_macro = "base_value" }
+
+[[component-templates.my-driver.matrix]]
+axis = "kernel"
+[component-templates.my-driver.matrix.values.6-6.build]
+defines = { kernel_version = "6.6.72" }
+
+[[component-templates.my-driver.matrix]]
+axis = "toolchain"
+[component-templates.my-driver.matrix.values.gcc14.build]
+defines = { gcc_version = "14" }
+`
+
+	ctx := testctx.NewCtx()
+	require.NoError(t, fileutils.WriteFile(ctx.FS(), testConfigPath, []byte(configContents), fileperms.PrivateFile))
+
+	config, err := loadAndResolveProjectConfig(ctx.FS(), false, testConfigPath)
+	require.NoError(t, err)
+
+	require.Contains(t, config.Components, "my-driver-6-6-gcc14")
+
+	comp := config.Components["my-driver-6-6-gcc14"]
+	assert.Equal(t, "base_value", comp.Build.Defines["base_macro"])
+	assert.Equal(t, "6.6.72", comp.Build.Defines["kernel_version"])
+	assert.Equal(t, "14", comp.Build.Defines["gcc_version"])
+}
+
+// Test that a template with an empty matrix fails validation.
+func TestLoadAndResolveProjectConfig_ComponentTemplate_EmptyMatrix(t *testing.T) {
+	const configContents = `
+[component-templates.my-driver]
+`
+
+	ctx := testctx.NewCtx()
+	require.NoError(t, fileutils.WriteFile(ctx.FS(), testConfigPath, []byte(configContents), fileperms.PrivateFile))
+
+	config, err := loadAndResolveProjectConfig(ctx.FS(), false, testConfigPath)
+	require.Error(t, err)
+	assert.Nil(t, config)
+}
+
+// Test that templates and regular components coexist.
+func TestLoadAndResolveProjectConfig_ComponentTemplate_MixedWithComponents(t *testing.T) {
+	const configContents = `
+[components.curl]
+
+[component-templates.my-driver]
+
+[[component-templates.my-driver.matrix]]
+axis = "kernel"
+[component-templates.my-driver.matrix.values.6-6]
+[component-templates.my-driver.matrix.values.6-12]
+`
+
+	ctx := testctx.NewCtx()
+	require.NoError(t, fileutils.WriteFile(ctx.FS(), testConfigPath, []byte(configContents), fileperms.PrivateFile))
+
+	config, err := loadAndResolveProjectConfig(ctx.FS(), false, testConfigPath)
+	require.NoError(t, err)
+
+	// 1 explicit component + 2 expanded from template.
+	assert.Len(t, config.Components, 3)
+	assert.Contains(t, config.Components, "curl")
+	assert.Contains(t, config.Components, "my-driver-6-6")
+	assert.Contains(t, config.Components, "my-driver-6-12")
+}
diff --git a/scenario/__snapshots__/TestSnapshotsContainer_config_generate-schema_stdout_1.snap b/scenario/__snapshots__/TestSnapshotsContainer_config_generate-schema_stdout_1.snap
index 4418dea4..205ecd9f 100755
--- a/scenario/__snapshots__/TestSnapshotsContainer_config_generate-schema_stdout_1.snap
+++ b/scenario/__snapshots__/TestSnapshotsContainer_config_generate-schema_stdout_1.snap
@@ -275,6 +275,34 @@
         "type"
       ]
     },
+    "ComponentTemplateConfig": {
+      "properties": {
+        "description": {
+          "type": "string",
+          "title": "Description",
+          "description": "Description of this component template"
+        },
+        "default-component-config": {
+          "$ref": "#/$defs/ComponentConfig",
+          "title": "Default component configuration",
+          "description": "Default component config applied to every expanded variant before axis overrides"
+        },
+        "matrix": {
+          "items": {
+            "$ref": "#/$defs/MatrixAxis"
+          },
+          "type": "array",
+          "minItems": 1,
+          "title": "Matrix axes",
+          "description": "Ordered list of matrix axes whose cartesian product defines the expanded component variants"
+        }
+      },
+      "additionalProperties": false,
+      "type": "object",
+      "required": [
+        "matrix"
+      ]
+    },
     "ConfigFile": {
       "properties": {
         "$schema": {
@@ -317,6 +345,14 @@
           "title": "Components",
           "description": "Definitions of components for this project"
         },
+        "component-templates": {
+          "additionalProperties": {
+            "$ref": "#/$defs/ComponentTemplateConfig"
+          },
+          "type": "object",
+          "title": "Component templates",
+          "description": "Definitions of component templates that expand into multiple components via matrix axes"
+        },
         "images": {
           "additionalProperties": {
             "$ref": "#/$defs/ImageConfig"
@@ -513,6 +549,29 @@
       "additionalProperties": false,
       "type": "object"
     },
+    "MatrixAxis": {
+      "properties": {
+        "axis": {
+          "type": "string",
+          "title": "Axis name",
+          "description": "Name of this matrix axis (e.g. kernel or toolchain)"
+        },
+        "values": {
+          "additionalProperties": {
+            "$ref": "#/$defs/ComponentConfig"
+          },
+          "type": "object",
+          "title": "Axis values",
+          "description": "Named values for this axis; each value is a partial ComponentConfig merged into the expanded component"
+        }
+      },
+      "additionalProperties": false,
+      "type": "object",
+      "required": [
+        "axis",
+        "values"
+      ]
+    },
     "Origin": {
       "properties": {
         "type": {
diff --git a/scenario/__snapshots__/TestSnapshots_config_generate-schema_stdout_1.snap b/scenario/__snapshots__/TestSnapshots_config_generate-schema_stdout_1.snap
index 4418dea4..205ecd9f 100755
--- a/scenario/__snapshots__/TestSnapshots_config_generate-schema_stdout_1.snap
+++ b/scenario/__snapshots__/TestSnapshots_config_generate-schema_stdout_1.snap
@@ -275,6 +275,34 @@
         "type"
       ]
     },
+    "ComponentTemplateConfig": {
+      "properties": {
+        "description": {
+          "type": "string",
+          "title": "Description",
+          "description": "Description of this component template"
+        },
+        "default-component-config": {
+          "$ref": "#/$defs/ComponentConfig",
+          "title": "Default component configuration",
+          "description": "Default component config applied to every expanded variant before axis overrides"
+        },
+        "matrix": {
+          "items": {
+            "$ref": "#/$defs/MatrixAxis"
+          },
+          "type": "array",
+          "minItems": 1,
+          "title": "Matrix axes",
+          "description": "Ordered list of matrix axes whose cartesian product defines the expanded component variants"
+        }
+      },
+      "additionalProperties": false,
+      "type": "object",
+      "required": [
+        "matrix"
+      ]
+    },
     "ConfigFile": {
       "properties": {
         "$schema": {
@@ -317,6 +345,14 @@
           "title": "Components",
           "description": "Definitions of components for this project"
         },
+        "component-templates": {
+          "additionalProperties": {
+            "$ref": "#/$defs/ComponentTemplateConfig"
+          },
+          "type": "object",
+          "title": "Component templates",
+          "description": "Definitions of component templates that expand into multiple components via matrix axes"
+        },
         "images": {
           "additionalProperties": {
             "$ref": "#/$defs/ImageConfig"
@@ -513,6 +549,29 @@
       "additionalProperties": false,
       "type": "object"
     },
+    "MatrixAxis": {
+      "properties": {
+        "axis": {
+          "type": "string",
+          "title": "Axis name",
+          "description": "Name of this matrix axis (e.g. kernel or toolchain)"
+        },
+        "values": {
+          "additionalProperties": {
+            "$ref": "#/$defs/ComponentConfig"
+          },
+          "type": "object",
+          "title": "Axis values",
+          "description": "Named values for this axis; each value is a partial ComponentConfig merged into the expanded component"
+        }
+      },
+      "additionalProperties": false,
+      "type": "object",
+      "required": [
+        "axis",
+        "values"
+      ]
+    },
     "Origin": {
       "properties": {
         "type": {
diff --git a/schemas/azldev.schema.json b/schemas/azldev.schema.json
index 4418dea4..205ecd9f 100644
--- a/schemas/azldev.schema.json
+++ b/schemas/azldev.schema.json
@@ -275,6 +275,34 @@
         "type"
       ]
     },
+    "ComponentTemplateConfig": {
+      "properties": {
+        "description": {
+          "type": "string",
+          "title": "Description",
+          "description": "Description of this component template"
+        },
+        "default-component-config": {
+          "$ref": "#/$defs/ComponentConfig",
+          "title": "Default component configuration",
+          "description": "Default component config applied to every expanded variant before axis overrides"
+        },
+        "matrix": {
+          "items": {
+            "$ref": "#/$defs/MatrixAxis"
+          },
+          "type": "array",
+          "minItems": 1,
+          "title": "Matrix axes",
+          "description": "Ordered list of matrix axes whose cartesian product defines the expanded component variants"
+        }
+      },
+      "additionalProperties": false,
+      "type": "object",
+      "required": [
+        "matrix"
+      ]
+    },
     "ConfigFile": {
       "properties": {
         "$schema": {
@@ -317,6 +345,14 @@
           "title": "Components",
           "description": "Definitions of components for this project"
         },
+        "component-templates": {
+          "additionalProperties": {
+            "$ref": "#/$defs/ComponentTemplateConfig"
+          },
+          "type": "object",
+          "title": "Component templates",
+          "description": "Definitions of component templates that expand into multiple components via matrix axes"
+        },
         "images": {
           "additionalProperties": {
             "$ref": "#/$defs/ImageConfig"
@@ -513,6 +549,29 @@
       "additionalProperties": false,
       "type": "object"
     },
+    "MatrixAxis": {
+      "properties": {
+        "axis": {
+          "type": "string",
+          "title": "Axis name",
+          "description": "Name of this matrix axis (e.g. kernel or toolchain)"
+        },
+        "values": {
+          "additionalProperties": {
+            "$ref": "#/$defs/ComponentConfig"
+          },
+          "type": "object",
+          "title": "Axis values",
+          "description": "Named values for this axis; each value is a partial ComponentConfig merged into the expanded component"
+        }
+      },
+      "additionalProperties": false,
+      "type": "object",
+      "required": [
+        "axis",
+        "values"
+      ]
+    },
     "Origin": {
       "properties": {
         "type": {