diff --git a/pyproject.toml b/pyproject.toml
index 495086681..464c64ee6 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -75,9 +75,12 @@ dev = [
 version = {attr = "xpk.core.config.__version__"}
 
 [tool.setuptools]
-packages = ["xpk", "xpk.parser", "xpk.core", "xpk.commands", "xpk.api", "xpk.templates", "xpk.utils", "xpk.core.blueprint", "xpk.core.remote_state", "xpk.core.workload_decorators"]
 package-dir = {"" = "src"}
-package-data = {"xpk.api" = ["storage_crd.yaml"], "xpk.templates" = ["storage.yaml"]}
+packages = { find = { where = ["src"] } }
+
+[tool.setuptools.package-data]
+"xpk" = ["templates/*"]
+"xpk.api" = ["*.yaml"]
 
 [tool.pyink]
 # Formatting configuration to follow Google style-guide.
diff --git a/src/xpk/commands/cluster.py b/src/xpk/commands/cluster.py
index ef2715061..f1a02bda0 100644
--- a/src/xpk/commands/cluster.py
+++ b/src/xpk/commands/cluster.py
@@ -78,7 +78,7 @@
 from . import cluster_gcluster
 from .common import set_cluster_command, validate_sub_slicing_system
 from jinja2 import Environment, FileSystemLoader
-from ..utils.templates import TEMPLATE_PATH
+from ..utils.templates import get_templates_absolute_path
 import shutil
 import os
 
@@ -434,7 +434,9 @@ def cluster_cacheimage(args) -> None:
       system.accelerator_type
   ].accelerator_label
 
-  template_env = Environment(loader=FileSystemLoader(TEMPLATE_PATH))
+  template_env = Environment(
+      loader=FileSystemLoader(searchpath=get_templates_absolute_path())
+  )
   cluster_preheat_yaml = template_env.get_template(CLUSTER_PREHEAT_JINJA_FILE)
   rendered_yaml = cluster_preheat_yaml.render(
       cachekey=args.cache_key,
diff --git a/src/xpk/core/kueue_manager.py b/src/xpk/core/kueue_manager.py
index 582e27519..921350db6 100644
--- a/src/xpk/core/kueue_manager.py
+++ b/src/xpk/core/kueue_manager.py
@@ -39,7 +39,7 @@
 )
 from ..utils.file import write_tmp_file
 from ..utils.console import xpk_print, xpk_exit
-from ..utils.templates import TEMPLATE_PATH
+from ..utils.templates import TEMPLATE_PATH, get_templates_absolute_path
 
 WAIT_FOR_KUEUE_TIMEOUT = "10m"
 CLUSTER_QUEUE_NAME = "cluster-queue"
@@ -82,7 +82,12 @@ def __init__(
       template_path=TEMPLATE_PATH,
   ):
     self.kueue_version = kueue_version
-    self.template_env = Environment(loader=FileSystemLoader(template_path))
+
+    self.template_env = Environment(
+        loader=FileSystemLoader(
+            searchpath=get_templates_absolute_path(template_path)
+        )
+    )
 
   def install_or_upgrade(
       self,
diff --git a/src/xpk/utils/templates.py b/src/xpk/utils/templates.py
index 11e9cba24..eca9d2063 100644
--- a/src/xpk/utils/templates.py
+++ b/src/xpk/utils/templates.py
@@ -18,7 +18,7 @@
 
 import ruamel.yaml
 
-TEMPLATE_PATH = "src/xpk/templates/"
+TEMPLATE_PATH = "templates"
 
 yaml = ruamel.yaml.YAML()
 
@@ -28,3 +28,16 @@ def load(path: str) -> dict:
   with open(template_path, "r", encoding="utf-8") as file:
     data: dict = yaml.load(file)
   return data
+
+
+def get_templates_absolute_path(templates_path: str = TEMPLATE_PATH) -> str:
+  """
+  Return the absolute path to the templates folder
+
+  Args:
+    templates_path: The path to the templates folder relative to the src/xpk directory
+  """
+  current_file_path = os.path.abspath(__file__)
+  current_dir = os.path.dirname(current_file_path)
+  xpk_package_dir = os.path.dirname(current_dir)
+  return os.path.join(xpk_package_dir, templates_path)