diff --git a/llm/cli.py b/llm/cli.py
index 2e11e2c8..d6f3d206 100644
--- a/llm/cli.py
+++ b/llm/cli.py
@@ -675,11 +675,6 @@ def read_prompt():
             raise click.ClickException(str(ex))
         extract = template_obj.extract
         extract_last = template_obj.extract_last
-        # Combine with template fragments/system_fragments
-        if template_obj.fragments:
-            fragments = [*template_obj.fragments, *fragments]
-        if template_obj.system_fragments:
-            system_fragments = [*template_obj.system_fragments, *system_fragments]
         if template_obj.schema_object:
             schema = template_obj.schema_object
         if template_obj.tools:
@@ -711,6 +706,12 @@ def read_prompt():
             raise click.ClickException(str(ex))
         if model_id is None and template_obj.model:
             model_id = template_obj.model
+        # Combine with template fragments/system_fragments AFTER evaluation
+        # so that any variables in the fragments have been interpolated
+        if template_obj.fragments:
+            fragments = [*template_obj.fragments, *fragments]
+        if template_obj.system_fragments:
+            system_fragments = [*template_obj.system_fragments, *system_fragments]
         # Merge in any attachments
         if template_obj.attachments:
             attachments = [
diff --git a/llm/templates.py b/llm/templates.py
index 657a4764..5a584af6 100644
--- a/llm/templates.py
+++ b/llm/templates.py
@@ -53,14 +53,29 @@ def evaluate(
         else:
             prompt = self.interpolate(self.prompt, params)
             system = self.interpolate(self.system, params)
+
+        # Interpolate fragments
+        if self.fragments:
+            self.fragments = [interpolated for fragment in self.fragments if (interpolated := self.interpolate(fragment, params)) is not None]
+        if self.system_fragments:
+            self.system_fragments = [interpolated for fragment in self.system_fragments if (interpolated := self.interpolate(fragment, params)) is not None]
+
         return prompt, system
 
     def vars(self) -> set:
         all_vars = set()
+        # Check prompt and system
         for text in [self.prompt, self.system]:
             if not text:
                 continue
             all_vars.update(self.extract_vars(string.Template(text)))
+        # Check fragments and system_fragments
+        for fragment_list in [self.fragments, self.system_fragments]:
+            if not fragment_list:
+                continue
+            for fragment in fragment_list:
+                if fragment:
+                    all_vars.update(self.extract_vars(string.Template(fragment)))
         return all_vars
 
     @classmethod
diff --git a/tests/test_templates.py b/tests/test_templates.py
index dcdabd9b..fe7a39fc 100644
--- a/tests/test_templates.py
+++ b/tests/test_templates.py
@@ -33,9 +33,7 @@
         ),
     ),
 )
-def test_template_evaluate(
-    prompt, system, defaults, params, expected_prompt, expected_system, expected_error
-):
+def test_template_evaluate(prompt, system, defaults, params, expected_prompt, expected_system, expected_error):
     t = Template(name="t", prompt=prompt, system=system, defaults=defaults)
     if expected_error:
         with pytest.raises(Template.MissingVariables) as ex:
@@ -47,6 +45,49 @@ def test_template_evaluate(
         assert system == expected_system
 
 
+def test_template_evaluate_with_fragments():
+    """Test that fragments and system_fragments support interpolation"""
+    t = Template(
+        name="t",
+        prompt="Main prompt: $input",
+        fragments=["Fragment 1: $input", "Fragment 2: $var2"],
+        system_fragments=["System fragment: $sys_var"],
+    )
+    prompt, system = t.evaluate("test input", {"var2": "value2", "sys_var": "sys_value"})
+
+    # Check that prompt and system are correctly interpolated
+    assert prompt == "Main prompt: test input"
+
+    # Check that fragments are interpolated
+    assert t.fragments == ["Fragment 1: test input", "Fragment 2: value2"]
+    assert t.system_fragments == ["System fragment: sys_value"]
+
+
+def test_template_evaluate_with_fragments_missing_vars():
+    """Test that missing variables in fragments raise an error"""
+    t = Template(
+        name="t",
+        prompt="Main prompt: $input",
+        fragments=["Fragment with $missing_var"],
+    )
+    with pytest.raises(Template.MissingVariables) as ex:
+        t.evaluate("test input", {})
+    assert "missing_var" in ex.value.args[0]
+
+
+def test_template_vars_includes_fragments():
+    """Test that the vars() method includes variables from fragments"""
+    t = Template(
+        name="t",
+        prompt="Prompt with $prompt_var",
+        system="System with $system_var",
+        fragments=["Fragment with $fragment_var"],
+        system_fragments=["System fragment with $sys_fragment_var"],
+    )
+    vars = t.vars()
+    assert vars == {"prompt_var", "system_var", "fragment_var", "sys_fragment_var"}
+
+
 def test_templates_list_no_templates_found():
     runner = CliRunner()
     result = runner.invoke(cli, ["templates", "list"])
@@ -58,15 +99,9 @@ def test_templates_list_no_templates_found():
 def test_templates_list(templates_path, args):
     (templates_path / "one.yaml").write_text("template one", "utf-8")
     (templates_path / "two.yaml").write_text("template two", "utf-8")
-    (templates_path / "three.yaml").write_text(
-        "template three is very long " * 4, "utf-8"
-    )
-    (templates_path / "four.yaml").write_text(
-        "'this one\n\nhas newlines in it'", "utf-8"
-    )
-    (templates_path / "both.yaml").write_text(
-        "system: summarize this\nprompt: $input", "utf-8"
-    )
+    (templates_path / "three.yaml").write_text("template three is very long " * 4, "utf-8")
+    (templates_path / "four.yaml").write_text("'this one\n\nhas newlines in it'", "utf-8")
+    (templates_path / "both.yaml").write_text("system: summarize this\nprompt: $input", "utf-8")
     (templates_path / "sys.yaml").write_text("system: Summarize this", "utf-8")
     (templates_path / "invalid.yaml").write_text("system2: This is invalid", "utf-8")
     runner = CliRunner()
@@ -115,11 +150,7 @@ def test_templates_list(templates_path, args):
                 "--schema",
                 '{"properties": {"b": {"type": "string"}, "a": {"type": "string"}}}',
             ],
-            {
-                "schema_object": {
-                    "properties": {"b": {"type": "string"}, "a": {"type": "string"}}
-                }
-            },
+            {"schema_object": {"properties": {"b": {"type": "string"}, "a": {"type": "string"}}}},
             None,
         ),
         # And fragments and system_fragments
@@ -164,9 +195,7 @@ def test_templates_prompt_save(templates_path, args, expected, expected_error):
         yaml_data = yaml.safe_load((templates_path / "saved.yaml").read_text("utf-8"))
         # Adjust attachment and attachment_types paths to be just the filename
         if "attachments" in yaml_data:
-            yaml_data["attachments"] = [
-                os.path.basename(path) for path in yaml_data["attachments"]
-            ]
+            yaml_data["attachments"] = [os.path.basename(path) for path in yaml_data["attachments"]]
         for item in yaml_data.get("attachment_types", []):
             item["value"] = os.path.basename(item["value"])
         assert yaml_data == expected
@@ -177,18 +206,12 @@ def test_templates_prompt_save(templates_path, args, expected, expected_error):
 
 def test_templates_error_on_missing_schema(templates_path):
     runner = CliRunner()
-    runner.invoke(
-        cli, ["the-prompt", "--save", "prompt_no_schema"], catch_exceptions=False
-    )
+    runner.invoke(cli, ["the-prompt", "--save", "prompt_no_schema"], catch_exceptions=False)
     # This should complain about no schema
-    result = runner.invoke(
-        cli, ["hi", "--schema", "t:prompt_no_schema"], catch_exceptions=False
-    )
+    result = runner.invoke(cli, ["hi", "--schema", "t:prompt_no_schema"], catch_exceptions=False)
     assert result.output == "Error: Template 'prompt_no_schema' has no schema\n"
     # And this is just an invalid template
-    result2 = runner.invoke(
-        cli, ["hi", "--schema", "t:bad_template"], catch_exceptions=False
-    )
+    result2 = runner.invoke(cli, ["hi", "--schema", "t:bad_template"], catch_exceptions=False)
     assert result2.output == "Error: Invalid template: bad_template\n"
 
 
@@ -316,9 +339,7 @@ def test_execute_prompt_with_a_template(
     runner = CliRunner()
     result = runner.invoke(
         cli,
-        ["--no-stream", "-t", "template"]
-        + ([input_text] if input_text else [])
-        + extra_args,
+        ["--no-stream", "-t", "template"] + ([input_text] if input_text else []) + extra_args,
         catch_exceptions=False,
     )
     if isinstance(expected_input, str):
@@ -446,9 +467,7 @@ def register_tools(self, register):
         ("plugin", True, False),
     ),
 )
-def test_tools_in_templates(
-    source, expected_tool_success, expected_functions_success, httpx_mock, tmpdir
-):
+def test_tools_in_templates(source, expected_tool_success, expected_functions_success, httpx_mock, tmpdir):
     template_yaml = textwrap.dedent(
         """
     name: test