diff --git a/src/Cli/func/Actions/LocalActions/CreateFunctionAction.cs b/src/Cli/func/Actions/LocalActions/CreateFunctionAction.cs
index 6651040f1..f76763e0a 100644
--- a/src/Cli/func/Actions/LocalActions/CreateFunctionAction.cs
+++ b/src/Cli/func/Actions/LocalActions/CreateFunctionAction.cs
@@ -3,6 +3,7 @@
 
 using System.Text.RegularExpressions;
 using Azure.Functions.Cli.Common;
+using Azure.Functions.Cli.Exceptions;
 using Azure.Functions.Cli.ExtensionBundle;
 using Azure.Functions.Cli.Extensions;
 using Azure.Functions.Cli.Helpers;
@@ -131,7 +132,21 @@ public override async Task RunAsync()
                 FunctionName = FunctionName ?? Console.ReadLine();
                 ColoredConsole.WriteLine(FunctionName);
                 var namespaceStr = Path.GetFileName(Environment.CurrentDirectory);
-                await DotnetHelpers.DeployDotnetFunction(TemplateName.Replace(" ", string.Empty), Utilities.SanitizeClassName(FunctionName), Utilities.SanitizeNameSpace(namespaceStr), Language.Replace("-isolated", string.Empty), _workerRuntime, AuthorizationLevel);
+                try
+                {
+                    await DotnetHelpers.DeployDotnetFunction(TemplateName.Replace(" ", string.Empty), Utilities.SanitizeClassName(FunctionName), Utilities.SanitizeNameSpace(namespaceStr), Language.Replace("-isolated", string.Empty), _workerRuntime, AuthorizationLevel);
+                }
+                catch (CsTemplateNotFoundException)
+                {
+                    if (_templates.Value
+                        .Where(x => x.Metadata.Language.Equals(Languages.CSharp, StringComparison.InvariantCultureIgnoreCase))
+                        .Any(x => x.Metadata.Name.Equals(TemplateName, StringComparison.InvariantCultureIgnoreCase)))
+                    {
+                        throw new CsxTemplateReferredWithoutCsxOptionException(TemplateName);
+                    }
+
+                    throw;
+                }
             }
             else if (IsNewPythonProgrammingModel())
             {
diff --git a/src/Cli/func/Actions/LocalActions/ListTemplatesAction.cs b/src/Cli/func/Actions/LocalActions/ListTemplatesAction.cs
index 036cbcff0..a1d57b548 100644
--- a/src/Cli/func/Actions/LocalActions/ListTemplatesAction.cs
+++ b/src/Cli/func/Actions/LocalActions/ListTemplatesAction.cs
@@ -2,6 +2,7 @@
 // Licensed under the MIT License. See LICENSE in the project root for license information.
 
 using Azure.Functions.Cli.Interfaces;
+using Azure.Functions.Cli.Common;
 using Colors.Net;
 using Fclp;
 using static Azure.Functions.Cli.Common.OutputTheme;
@@ -46,6 +47,12 @@ public override async Task RunAsync()
                     ColoredConsole.WriteLine($"  {template.Metadata.Name}");
                 }
 
+                if (Constants.Languages.CSharp.Equals(languageGrouping.Key, StringComparison.InvariantCultureIgnoreCase))
+                {
+                    ColoredConsole.WriteLine($"(Use the templates above with 'func function new ls--csx --template' command within in-process model projects.)");
+                    ColoredConsole.WriteLine($"(More templates are available for C#. To list those run 'func funciton new' command without '--template'.)");
+                }
+
                 ColoredConsole.WriteLine();
             }
         }
diff --git a/src/Cli/func/Exceptions/CsTemplateNotFoundException.cs b/src/Cli/func/Exceptions/CsTemplateNotFoundException.cs
new file mode 100644
index 000000000..0acba2349
--- /dev/null
+++ b/src/Cli/func/Exceptions/CsTemplateNotFoundException.cs
@@ -0,0 +1,4 @@
+namespace Azure.Functions.Cli.Exceptions;
+
+public class CsTemplateNotFoundException(string templateName)
+    : Exception($"Unknown template '{templateName}'. Retry without --template option to see available templates.") {}
diff --git a/src/Cli/func/Exceptions/CsxTemplateReferredWithoutCsxOptionException.cs b/src/Cli/func/Exceptions/CsxTemplateReferredWithoutCsxOptionException.cs
new file mode 100644
index 000000000..7073a1dfd
--- /dev/null
+++ b/src/Cli/func/Exceptions/CsxTemplateReferredWithoutCsxOptionException.cs
@@ -0,0 +1,4 @@
+namespace Azure.Functions.Cli.Exceptions;
+
+public class CsxTemplateReferredWithoutCsxOptionException(string templateName)
+    : Exception($"Template '{templateName}' is for C# script in in-process model. Retry with --csx option to use the template. Or, retry without --template option to see available templates.") {}
diff --git a/src/Cli/func/Helpers/DotnetHelpers.cs b/src/Cli/func/Helpers/DotnetHelpers.cs
index ddf6ce654..b35c00183 100644
--- a/src/Cli/func/Helpers/DotnetHelpers.cs
+++ b/src/Cli/func/Helpers/DotnetHelpers.cs
@@ -5,6 +5,7 @@
 using System.Runtime.InteropServices;
 using System.Text;
 using Azure.Functions.Cli.Common;
+using Azure.Functions.Cli.Exceptions;
 using Colors.Net;
 using Microsoft.Azure.WebJobs.Extensions.Http;
 using static Azure.Functions.Cli.Common.OutputTheme;
@@ -149,7 +150,7 @@ await TemplateOperation(
             "daprpublishoutputbinding" => "daprPublishOutputBinding",
             "daprserviceinvocationtrigger" => "daprServiceInvocationTrigger",
             "daprtopictrigger" => "daprTopicTrigger",
-            _ => throw new ArgumentException($"Unknown template '{templateName}'", nameof(templateName))
+            _ => throw new CsTemplateNotFoundException(templateName)
         };
 
         internal static IEnumerable<string> GetTemplates(WorkerRuntime workerRuntime)
@@ -256,14 +257,14 @@ public static async Task<bool> BuildDotnetProject(string outputPath, string dotn
         public static string GetCsprojOrFsproj()
         {
             EnsureDotnet();
-            var csProjFiles = FileSystemHelpers.GetFiles(Environment.CurrentDirectory, searchPattern: "*.csproj").ToList();
+            var csProjFiles = FileSystemHelpers.GetFiles(Environment.CurrentDirectory, searchPattern: "*.csproj", excludedDirectories: ["obj"]).ToList();
             if (csProjFiles.Count == 1)
             {
                 return csProjFiles.First();
             }
             else
             {
-                var fsProjFiles = FileSystemHelpers.GetFiles(Environment.CurrentDirectory, searchPattern: "*.fsproj").ToList();
+                var fsProjFiles = FileSystemHelpers.GetFiles(Environment.CurrentDirectory, searchPattern: "*.fsproj", excludedDirectories: ["obj"]).ToList();
                 if (fsProjFiles.Count == 1)
                 {
                     return fsProjFiles.First();