diff --git a/pkg/addon/templateagent/template_agent.go b/pkg/addon/templateagent/template_agent.go
index dc9615327..fad41364e 100644
--- a/pkg/addon/templateagent/template_agent.go
+++ b/pkg/addon/templateagent/template_agent.go
@@ -36,7 +36,8 @@ const (
 // to convert it to Values by JsonStructToValues.
 // the built-in values can not be overridden by getValuesFuncs
 type templateCRDBuiltinValues struct {
-	ClusterName string `json:"CLUSTER_NAME,omitempty"`
+	ClusterName      string `json:"CLUSTER_NAME,omitempty"`
+	InstallNamespace string `json:"INSTALL_NAMESPACE,omitempty"`
 }
 
 // templateDefaultValues includes the default values for crd template agentAddon.
diff --git a/pkg/addon/templateagent/template_agent_test.go b/pkg/addon/templateagent/template_agent_test.go
index 911422840..5d349dd20 100644
--- a/pkg/addon/templateagent/template_agent_test.go
+++ b/pkg/addon/templateagent/template_agent_test.go
@@ -180,6 +180,7 @@ func TestAddonTemplateAgentManifests(t *testing.T) {
 					{Name: "LOG_LEVEL", Value: "4"},
 					{Name: "HUB_KUBECONFIG", Value: "/managed/hub-kubeconfig/kubeconfig"},
 					{Name: "CLUSTER_NAME", Value: clusterName},
+					{Name: "INSTALL_NAMESPACE", Value: "test-install-namespace"},
 				}
 				if !equality.Semantic.DeepEqual(envs, expectedEnvs) {
 					t.Errorf("unexpected envs %v", envs)
diff --git a/pkg/addon/templateagent/values.go b/pkg/addon/templateagent/values.go
index 7ac5a7563..5ed72619c 100644
--- a/pkg/addon/templateagent/values.go
+++ b/pkg/addon/templateagent/values.go
@@ -96,12 +96,12 @@ func (a *CRDTemplateAgentAddon) getValues(
 			overrideValues = addonfactory.MergeValues(overrideValues, publicValues)
 		}
 	}
-	builtinSortedKeys, builtinValues, err := a.getBuiltinValues(cluster, addon)
+	builtinSortedKeys, builtinValues, err := a.getBuiltinValues(cluster, addon, privateValues)
 	if err != nil {
 		return presetValues, overrideValues, privateValues, nil
 	}
-	// builtinValues only contains CLUSTER_NAME, and it should override overrideValues if CLUSTER_NAME
-	// is also set in the overrideValues, since CLUSTER_NAME should not be set externally.
+	// builtinValues contains CLUSTER_NAME and INSTALL_NAMESPACE, and it should override overrideValues if
+	// the contained values are also set in the overrideValues, since these values should not be set externally.
 	overrideValues = addonfactory.MergeValues(overrideValues, builtinValues)
 
 	for k, v := range overrideValues {
@@ -124,10 +124,16 @@ func (a *CRDTemplateAgentAddon) getValues(
 
 func (a *CRDTemplateAgentAddon) getBuiltinValues(
 	cluster *clusterv1.ManagedCluster,
-	_ *addonapiv1alpha1.ManagedClusterAddOn) ([]string, addonfactory.Values, error) {
+	_ *addonapiv1alpha1.ManagedClusterAddOn,
+	privateValues map[string]interface{}) ([]string, addonfactory.Values, error) {
 	builtinValues := templateCRDBuiltinValues{}
 	builtinValues.ClusterName = cluster.GetName()
 
+	namespace, ok := privateValues[InstallNamespacePrivateValueKey]
+	if ok && namespace != nil {
+		builtinValues.InstallNamespace = namespace.(string)
+	}
+
 	value, err := addonfactory.JsonStructToValues(builtinValues)
 	if err != nil {
 		return nil, nil, err
diff --git a/pkg/addon/templateagent/values_test.go b/pkg/addon/templateagent/values_test.go
index 3cbe878c4..f4c9ab524 100644
--- a/pkg/addon/templateagent/values_test.go
+++ b/pkg/addon/templateagent/values_test.go
@@ -149,9 +149,14 @@ func TestGetValues(t *testing.T) {
 					name:  "CLUSTER_NAME",
 					value: "test-cluster",
 				},
+				{
+					name:  "INSTALL_NAMESPACE",
+					value: "default-ns",
+				},
 			},
 			expectedOverride: map[string]interface{}{
-				"CLUSTER_NAME": "test-cluster",
+				"CLUSTER_NAME":      "test-cluster",
+				"INSTALL_NAMESPACE": "default-ns",
 			},
 			expectedPrivate: map[string]interface{}{
 				InstallNamespacePrivateValueKey: "default-ns",
@@ -169,10 +174,15 @@ func TestGetValues(t *testing.T) {
 					name:  "CLUSTER_NAME",
 					value: "test-cluster",
 				},
+				{
+					name:  "INSTALL_NAMESPACE",
+					value: "default-ns",
+				},
 			},
 			expectedOverride: map[string]interface{}{
-				"CLUSTER_NAME": "test-cluster",
-				"key1":         "value1",
+				"CLUSTER_NAME":      "test-cluster",
+				"INSTALL_NAMESPACE": "default-ns",
+				"key1":              "value1",
 			},
 			expectedPrivate: map[string]interface{}{
 				InstallNamespacePrivateValueKey: "default-ns",
@@ -188,8 +198,7 @@ func TestGetValues(t *testing.T) {
 				},
 			},
 			values: addonfactory.Values{
-				InstallNamespacePrivateValueKey: "default-ns",
-				"HUB_KUBECONFIG":                "/managed/hub-kubeconfig/kubeconfig-test",
+				"HUB_KUBECONFIG": "/managed/hub-kubeconfig/kubeconfig-test",
 			},
 			expectedPreset: orderedValues{
 				{
@@ -205,9 +214,7 @@ func TestGetValues(t *testing.T) {
 				"HUB_KUBECONFIG": "/managed/hub-kubeconfig/kubeconfig-test",
 				"CLUSTER_NAME":   "test-cluster",
 			},
-			expectedPrivate: map[string]interface{}{
-				InstallNamespacePrivateValueKey: "default-ns",
-			},
+			expectedPrivate: map[string]interface{}{},
 		},
 		{
 			name: "builtIn value should not be overridden",
@@ -232,10 +239,15 @@ func TestGetValues(t *testing.T) {
 					name:  "CLUSTER_NAME",
 					value: "test-cluster",
 				},
+				{
+					name:  "INSTALL_NAMESPACE",
+					value: "default-ns",
+				},
 			},
 			expectedOverride: map[string]interface{}{
-				"HUB_KUBECONFIG": "/managed/hub-kubeconfig/kubeconfig-test",
-				"CLUSTER_NAME":   "test-cluster",
+				"HUB_KUBECONFIG":    "/managed/hub-kubeconfig/kubeconfig-test",
+				"CLUSTER_NAME":      "test-cluster",
+				"INSTALL_NAMESPACE": "default-ns",
 			},
 			expectedPrivate: map[string]interface{}{
 				InstallNamespacePrivateValueKey: "default-ns",