diff --git a/docs/changelog.rst b/docs/changelog.rst
index 0d1a14a2..63b4da12 100644
--- a/docs/changelog.rst
+++ b/docs/changelog.rst
@@ -21,6 +21,8 @@ To avail of fixes in an unreleased version, please download a ZIP file
 Unreleased
 ----------
 
+* :gh:issue:`1087` Fix :exc:`mitogen.core.StreamError` when Ansible template
+  module is called with a ``dest:`` filename that has an extension
 
 
 v0.3.9 (2024-08-13)
diff --git a/docs/contributors.rst b/docs/contributors.rst
index ed7fef11..1a590869 100644
--- a/docs/contributors.rst
+++ b/docs/contributors.rst
@@ -125,6 +125,7 @@ sponsorship and outstanding future-thinking of its early adopters.
     <li><a href="https://www.channable.com">rkrzr</a></li>
     <li>jgadling</li>
     <li>John F Wall &mdash; <em>Making Ansible Great with Massive Parallelism</em></li>
+    <li><a href="https://github.com/jrosser">Jonathan Rosser</a></li>
     <li>KennethC</li>
     <li><a href="https://github.com/lberruti">Luca Berruti</li>
     <li>Lewis Bellwood &mdash; <em>Happy to be apart of a great project.</em></li>
diff --git a/tests/ansible/regression/all.yml b/tests/ansible/regression/all.yml
index 31541e9f..a4272805 100644
--- a/tests/ansible/regression/all.yml
+++ b/tests/ansible/regression/all.yml
@@ -16,3 +16,4 @@
 - import_playbook: issue_776__load_plugins_called_twice.yml
 - import_playbook: issue_952__ask_become_pass.yml
 - import_playbook: issue_1066__add_host__host_key_checking.yml
+- import_playbook: issue_1087__template_streamerror.yml
diff --git a/tests/ansible/regression/issue_1087__template_streamerror.yml b/tests/ansible/regression/issue_1087__template_streamerror.yml
new file mode 100644
index 00000000..fa950ea4
--- /dev/null
+++ b/tests/ansible/regression/issue_1087__template_streamerror.yml
@@ -0,0 +1,43 @@
+- name: regression/issue_1087__template_streamerror.yml
+  # Ansible's template module has been seen to raise mitogen.core.StreamError
+  # iif  there is a with_items loop and the destination path has an extension.
+  # This printed an error message and left file permissions incorrect,
+  # but did not cause the task/playbook to fail.
+  hosts: test-targets
+  gather_facts: false
+  become: false
+  vars:
+    foos:
+      - dest: /tmp/foo
+      - dest: /tmp/foo.txt
+    foo: Foo
+    bar: Bar
+  tasks:
+    - block:
+        - name: Test template does not cause StreamError
+          delegate_to: localhost
+          run_once: true
+          environment:
+            ANSIBLE_VERBOSITY: "{{ ansible_verbosity }}"
+          command:
+            cmd: >
+              ansible-playbook
+              {% for inv in ansible_inventory_sources %}
+              -i "{{ inv }}"
+              {% endfor %}
+              regression/template_test.yml
+            chdir: ../
+          register: issue_1087_cmd
+          failed_when:
+            - issue_1087_cmd is failed
+              or issue_1087_cmd.stdout is search('ERROR|mitogen\.core\.CallError')
+              or issue_1087_cmd.stderr is search('ERROR|mitogen\.core\.CallError')
+
+      always:
+        - name: Cleanup
+          file:
+            path: "{{ item.dest }}"
+            state: absent
+          with_items: "{{ foos }}"
+  tags:
+    - issue_1087
diff --git a/tests/ansible/regression/template_test.yml b/tests/ansible/regression/template_test.yml
new file mode 100644
index 00000000..0b7dd36d
--- /dev/null
+++ b/tests/ansible/regression/template_test.yml
@@ -0,0 +1,28 @@
+- name: regression/template_test.yml
+  # Ansible's template module has been seen to raise mitogen.core.StreamError
+  # iif  there is a with_items loop and the destination path has an extension
+  hosts: test-targets
+  gather_facts: false
+  become: false
+  vars:
+    foos:
+      - dest: /tmp/foo
+      - dest: /tmp/foo.txt
+    foo: Foo
+    bar: Bar
+  tasks:
+    - block:
+        - name: Template files
+          template:
+            src: foo.bar.j2
+            dest: "{{ item.dest }}"
+            mode: u=rw,go=r
+          # This has to be with_items, loop: doesn't trigger the bug
+          with_items: "{{ foos }}"
+
+      always:
+        - name: Cleanup
+          file:
+            path: "{{ item.dest }}"
+            state: absent
+          with_items: "{{ foos }}"
diff --git a/tests/ansible/regression/templates/foo.bar.j2 b/tests/ansible/regression/templates/foo.bar.j2
new file mode 100644
index 00000000..ca51a6f4
--- /dev/null
+++ b/tests/ansible/regression/templates/foo.bar.j2
@@ -0,0 +1 @@
+A {{ foo }} walks into a {{ bar }}. Ow!