diff --git a/.changeset/good-pigs-roll.md b/.changeset/good-pigs-roll.md
new file mode 100644
index 00000000000..21f9021e263
--- /dev/null
+++ b/.changeset/good-pigs-roll.md
@@ -0,0 +1,5 @@
+---
+"effect": patch
+---
+
+Support template literals in Schema.Config
diff --git a/packages/effect/dtslint/Schema.ts b/packages/effect/dtslint/Schema.ts
index 19d387ce2b6..9605d4cdab9 100644
--- a/packages/effect/dtslint/Schema.ts
+++ b/packages/effect/dtslint/Schema.ts
@@ -2922,3 +2922,19 @@ S.NullOr(S.Never)
 
 // $ExpectType NullishOr<typeof Never>
 S.NullishOr(S.Never)
+
+// ---------------------------------------------
+// Config
+// ---------------------------------------------
+
+// $ExpectType Config<string>
+S.Config("A", S.String)
+
+// $ExpectType Config<boolean>
+S.Config("A", S.BooleanFromString)
+
+// $ExpectType Config<`a${string}`>
+S.Config("A", S.TemplateLiteral(S.Literal("a"), S.String))
+
+// @ts-expect-error
+S.Config("A", S.Boolean)
diff --git a/packages/effect/src/Schema.ts b/packages/effect/src/Schema.ts
index 89cb8071dc2..7fea7310485 100644
--- a/packages/effect/src/Schema.ts
+++ b/packages/effect/src/Schema.ts
@@ -9495,12 +9495,12 @@ export class BooleanFromString extends transform(
  * @category Config validations
  * @since 3.10.0
  */
-export const Config = <A>(name: string, schema: Schema<A, string>): config_.Config<A> => {
-  const decodeEither_ = decodeEither(schema)
+export const Config = <A, I extends string>(name: string, schema: Schema<A, I>): config_.Config<A> => {
+  const decodeUnknownEither = ParseResult.decodeUnknownEither(schema)
   return config_.string(name).pipe(
-    config_.mapOrFail((a) =>
-      decodeEither_(a).pipe(
-        either_.mapLeft((error) => configError_.InvalidData([], ParseResult.TreeFormatter.formatErrorSync(error)))
+    config_.mapOrFail((s) =>
+      decodeUnknownEither(s).pipe(
+        either_.mapLeft((error) => configError_.InvalidData([], ParseResult.TreeFormatter.formatIssueSync(error)))
       )
     )
   )
diff --git a/packages/effect/test/Schema/Schema/Config/Config.test.ts b/packages/effect/test/Schema/Schema/Config/Config.test.ts
index 4196525f796..13ec9edf107 100644
--- a/packages/effect/test/Schema/Schema/Config/Config.test.ts
+++ b/packages/effect/test/Schema/Schema/Config/Config.test.ts
@@ -56,4 +56,17 @@ describe("Config", () => {
       )
     )
   })
+
+  it("should work with a template literal", () => {
+    const config = Schema.Config("A", Schema.TemplateLiteral("a", Schema.Number))
+    assertSuccess(config, [["A", "a1"]], "a1")
+    assertFailure(
+      config,
+      [["A", "ab"]],
+      ConfigError.InvalidData(
+        ["A"],
+        `Expected \`a$\{number}\`, actual "ab"`
+      )
+    )
+  })
 })