diff --git a/changelogs/fragments/template_override.yml b/changelogs/fragments/template_override.yml
new file mode 100644
index 00000000000..92f513b114f
--- /dev/null
+++ b/changelogs/fragments/template_override.yml
@@ -0,0 +1,3 @@
+bugfixes:
+  - More gracefully handle separator errors in jinja2 template overrides (https://github.com/ansible/ansible/pull/77495).
+  - Support colons in jinja2 template override values (https://github.com/ansible/ansible/pull/77495).
diff --git a/lib/ansible/template/__init__.py b/lib/ansible/template/__init__.py
index e605a7f6e9c..56fd2857d70 100644
--- a/lib/ansible/template/__init__.py
+++ b/lib/ansible/template/__init__.py
@@ -1054,7 +1054,10 @@ class Templar:
                 line = data[len(JINJA2_OVERRIDE):eol]
                 data = data[eol + 1:]
                 for pair in line.split(','):
-                    (key, val) = pair.split(':')
+                    if ':' not in pair:
+                        raise AnsibleError("failed to parse jinja2 override '%s'."
+                                           " Did you use something different from colon as key-value separator?" % pair.strip())
+                    (key, val) = pair.split(':', 1)
                     key = key.strip()
                     setattr(myenv, key, ast.literal_eval(val.strip()))
 
diff --git a/test/integration/targets/template/files/override_colon_value.expected b/test/integration/targets/template/files/override_colon_value.expected
new file mode 100644
index 00000000000..257cc5642cb
--- /dev/null
+++ b/test/integration/targets/template/files/override_colon_value.expected
@@ -0,0 +1 @@
+foo
diff --git a/test/integration/targets/template/tasks/main.yml b/test/integration/targets/template/tasks/main.yml
index e8a2b9a82a0..94fe9abdfc3 100644
--- a/test/integration/targets/template/tasks/main.yml
+++ b/test/integration/targets/template/tasks/main.yml
@@ -761,3 +761,35 @@
       - test
   vars:
     test: "{{ lookup('file', '{{ output_dir }}/empty_template.templated')|length == 0 }}"
+
+- name: test jinja2 override without colon throws proper error
+  block:
+  - template:
+      src: override_separator.j2
+      dest: "{{ output_dir }}/override_separator.templated"
+  - assert:
+      that:
+        - False
+  rescue:
+  - assert:
+      that:
+        - "'failed to parse jinja2 override' in ansible_failed_result.msg"
+
+- name: test jinja2 override with colon in value
+  template:
+    src: override_colon_value.j2
+    dest: "{{ output_dir }}/override_colon_value.templated"
+  ignore_errors: yes
+  register: override_colon_value_task
+
+- copy:
+    src: override_colon_value.expected
+    dest: "{{output_dir}}/override_colon_value.expected"
+
+- command: "diff {{ output_dir }}/override_colon_value.templated {{ output_dir}}/override_colon_value.expected"
+  register: override_colon_value_diff
+
+- assert:
+    that:
+      - override_colon_value_task is success
+      - override_colon_value_diff.rc == 0
diff --git a/test/integration/targets/template/templates/override_colon_value.j2 b/test/integration/targets/template/templates/override_colon_value.j2
new file mode 100644
index 00000000000..2ca9bb86580
--- /dev/null
+++ b/test/integration/targets/template/templates/override_colon_value.j2
@@ -0,0 +1,4 @@
+#jinja2: line_statement_prefix:":"
+: if true
+foo
+: endif
diff --git a/test/integration/targets/template/templates/override_separator.j2 b/test/integration/targets/template/templates/override_separator.j2
new file mode 100644
index 00000000000..7589cc300da
--- /dev/null
+++ b/test/integration/targets/template/templates/override_separator.j2
@@ -0,0 +1 @@
+#jinja2: lstrip_blocks=True