diff --git a/changelogs/fragments/65198-ansibleundefined-is-not-unsafe.yml b/changelogs/fragments/65198-ansibleundefined-is-not-unsafe.yml
new file mode 100644
index 00000000000..6ba2a1636a4
--- /dev/null
+++ b/changelogs/fragments/65198-ansibleundefined-is-not-unsafe.yml
@@ -0,0 +1,4 @@
+bugfixes:
+- >-
+  ``AnsibleUnsafe``/``AnsibleContext``/``Templar`` - Do not treat ``AnsibleUndefined`` as being "unsafe"
+  (https://github.com/ansible/ansible/issues/65198)
diff --git a/lib/ansible/template/__init__.py b/lib/ansible/template/__init__.py
index 7189dbc6a2d..700a9bbd944 100644
--- a/lib/ansible/template/__init__.py
+++ b/lib/ansible/template/__init__.py
@@ -236,6 +236,10 @@ class AnsibleUndefined(StrictUndefined):
     rather than throwing an exception.
     '''
     def __getattr__(self, name):
+        if name == '__UNSAFE__':
+            # AnsibleUndefined should never be assumed to be unsafe
+            # This prevents ``hasattr(val, '__UNSAFE__')`` from evaluating to ``True``
+            raise AttributeError(name)
         # Return original Undefined object to preserve the first failure context
         return self
 
@@ -273,7 +277,7 @@ class AnsibleContext(Context):
             for item in val:
                 if self._is_unsafe(item):
                     return True
-        elif hasattr(val, '__UNSAFE__'):
+        elif getattr(val, '__UNSAFE__', False) is True:
             return True
         return False
 
diff --git a/test/units/template/test_templar.py b/test/units/template/test_templar.py
index 6ba90e29271..dd6985ce3bd 100644
--- a/test/units/template/test_templar.py
+++ b/test/units/template/test_templar.py
@@ -27,7 +27,7 @@ from units.compat.mock import patch
 from ansible import constants as C
 from ansible.errors import AnsibleError, AnsibleUndefinedVariable
 from ansible.module_utils.six import string_types
-from ansible.template import Templar, AnsibleContext, AnsibleEnvironment
+from ansible.template import Templar, AnsibleContext, AnsibleEnvironment, AnsibleUndefined
 from ansible.utils.unsafe_proxy import AnsibleUnsafe, wrap_var
 from units.mock.loader import DictDataLoader
 
@@ -56,31 +56,10 @@ class BaseTemplar(object):
             "/path/to/my_file.txt": "foo\n",
         })
         self.templar = Templar(loader=self.fake_loader, variables=self.test_vars)
+        self._ansible_context = AnsibleContext(self.templar.environment, {}, {}, {})
 
     def is_unsafe(self, obj):
-        if obj is None:
-            return False
-
-        if hasattr(obj, '__UNSAFE__'):
-            return True
-
-        if isinstance(obj, AnsibleUnsafe):
-            return True
-
-        if isinstance(obj, dict):
-            for key in obj.keys():
-                if self.is_unsafe(key) or self.is_unsafe(obj[key]):
-                    return True
-
-        if isinstance(obj, list):
-            for item in obj:
-                if self.is_unsafe(item):
-                    return True
-
-        if isinstance(obj, string_types) and hasattr(obj, '__UNSAFE__'):
-            return True
-
-        return False
+        return self._ansible_context._is_unsafe(obj)
 
 
 # class used for testing arbitrary objects passed to template
@@ -461,3 +440,7 @@ class TestAnsibleContext(BaseTemplar, unittest.TestCase):
         # self.assertNotIsInstance(res, AnsibleUnsafe)
         self.assertFalse(self.is_unsafe(res),
                          'return of AnsibleContext.resolve (%s) was not expected to be marked unsafe but was' % res)
+
+    def test_is_unsafe(self):
+        context = self._context()
+        self.assertFalse(context._is_unsafe(AnsibleUndefined()))
diff --git a/test/units/template/test_template_utilities.py b/test/units/template/test_template_utilities.py
index e57a4aba94c..1044895f03d 100644
--- a/test/units/template/test_template_utilities.py
+++ b/test/units/template/test_template_utilities.py
@@ -22,7 +22,7 @@ __metaclass__ = type
 import jinja2
 from units.compat import unittest
 
-from ansible.template import _escape_backslashes, _count_newlines_from_end
+from ansible.template import AnsibleUndefined, _escape_backslashes, _count_newlines_from_end
 
 # These are internal utility functions only needed for templating.  They're
 # algorithmic so good candidates for unittesting by themselves
@@ -106,3 +106,12 @@ class TestCountNewlines(unittest.TestCase):
 
     def test_mostly_newlines(self):
         self.assertEqual(_count_newlines_from_end(u'The quick brown fox jumped over the lazy dog' + u'\n' * 1000), 1000)
+
+
+class TestAnsibleUndefined(unittest.TestCase):
+    def test_getattr(self):
+        val = AnsibleUndefined()
+
+        self.assertIs(getattr(val, 'foo'), val)
+
+        self.assertRaises(AttributeError, getattr, val, '__UNSAFE__')