diff --git a/homeassistant/components/binary_sensor/mqtt.py b/homeassistant/components/binary_sensor/mqtt.py
index d2a2be88172533..f4b0459fb07edc 100644
--- a/homeassistant/components/binary_sensor/mqtt.py
+++ b/homeassistant/components/binary_sensor/mqtt.py
@@ -135,7 +135,7 @@ def state_message_received(_topic, payload, _qos):
             value_template = self._config.get(CONF_VALUE_TEMPLATE)
             if value_template is not None:
                 payload = value_template.async_render_with_possible_json_value(
-                    payload)
+                    payload, variables={'entity_id': self.entity_id})
             if payload == self._config.get(CONF_PAYLOAD_ON):
                 self._state = True
             elif payload == self._config.get(CONF_PAYLOAD_OFF):
diff --git a/homeassistant/helpers/template.py b/homeassistant/helpers/template.py
index 2173f972cba819..e82302dfd3b9cd 100644
--- a/homeassistant/helpers/template.py
+++ b/homeassistant/helpers/template.py
@@ -149,7 +149,8 @@ def render_with_possible_json_value(self, value, error_value=_SENTINEL):
             error_value).result()
 
     def async_render_with_possible_json_value(self, value,
-                                              error_value=_SENTINEL):
+                                              error_value=_SENTINEL,
+                                              variables=None):
         """Render template with value exposed.
 
         If valid JSON will expose value_json too.
@@ -159,9 +160,9 @@ def async_render_with_possible_json_value(self, value,
         if self._compiled is None:
             self._ensure_compiled()
 
-        variables = {
-            'value': value
-        }
+        variables = dict(variables or {})
+        variables['value'] = value
+
         try:
             variables['value_json'] = json.loads(value)
         except ValueError:
diff --git a/tests/components/binary_sensor/test_mqtt.py b/tests/components/binary_sensor/test_mqtt.py
index 74c7d32927ba68..ce9293ba256ba3 100644
--- a/tests/components/binary_sensor/test_mqtt.py
+++ b/tests/components/binary_sensor/test_mqtt.py
@@ -58,6 +58,33 @@ def test_setting_sensor_value_via_mqtt_message(self):
         state = self.hass.states.get('binary_sensor.test')
         assert STATE_OFF == state.state
 
+    def test_setting_sensor_value_via_mqtt_message_and_template(self):
+        """Test the setting of the value via MQTT."""
+        assert setup_component(self.hass, binary_sensor.DOMAIN, {
+            binary_sensor.DOMAIN: {
+                'platform': 'mqtt',
+                'name': 'test',
+                'state_topic': 'test-topic',
+                'payload_on': 'ON',
+                'payload_off': 'OFF',
+                'value_template': '{%if is_state(entity_id,\"on\")-%}OFF'
+                                  '{%-else-%}ON{%-endif%}'
+            }
+        })
+
+        state = self.hass.states.get('binary_sensor.test')
+        assert STATE_OFF == state.state
+
+        fire_mqtt_message(self.hass, 'test-topic', '')
+        self.hass.block_till_done()
+        state = self.hass.states.get('binary_sensor.test')
+        assert STATE_ON == state.state
+
+        fire_mqtt_message(self.hass, 'test-topic', '')
+        self.hass.block_till_done()
+        state = self.hass.states.get('binary_sensor.test')
+        assert STATE_OFF == state.state
+
     def test_valid_device_class(self):
         """Test the setting of a valid sensor class."""
         assert setup_component(self.hass, binary_sensor.DOMAIN, {