diff --git a/modules/angular2/src/core/compiler/change_definition_factory.ts b/modules/angular2/src/core/compiler/change_definition_factory.ts
index 1aff05b978..d8a2dede10 100644
--- a/modules/angular2/src/core/compiler/change_definition_factory.ts
+++ b/modules/angular2/src/core/compiler/change_definition_factory.ts
@@ -58,6 +58,7 @@ class ProtoViewVisitor implements TemplateAstVisitor {
 
   visitEmbeddedTemplate(ast: EmbeddedTemplateAst, context: any): any {
     this.boundElementCount++;
+    templateVisitAll(this, ast.outputs);
     for (var i = 0; i < ast.directives.length; i++) {
       ast.directives[i].visit(this, i);
     }
diff --git a/modules/angular2/src/core/compiler/template_ast.ts b/modules/angular2/src/core/compiler/template_ast.ts
index facd422a5a..cbe80268cb 100644
--- a/modules/angular2/src/core/compiler/template_ast.ts
+++ b/modules/angular2/src/core/compiler/template_ast.ts
@@ -77,7 +77,7 @@ export class ElementAst implements TemplateAst {
 }
 
 export class EmbeddedTemplateAst implements TemplateAst {
-  constructor(public attrs: AttrAst[], public vars: VariableAst[],
+  constructor(public attrs: AttrAst[], public outputs: BoundEventAst[], public vars: VariableAst[],
               public directives: DirectiveAst[], public children: TemplateAst[],
               public ngContentIndex: number, public sourceInfo: string) {}
   visit(visitor: TemplateAstVisitor, context: any): any {
diff --git a/modules/angular2/src/core/compiler/template_parser.ts b/modules/angular2/src/core/compiler/template_parser.ts
index 7847b457d3..d1918833a7 100644
--- a/modules/angular2/src/core/compiler/template_parser.ts
+++ b/modules/angular2/src/core/compiler/template_parser.ts
@@ -223,7 +223,7 @@ class TemplateParseVisitor implements HtmlAstVisitor {
       this._assertAllEventsPublishedByDirectives(directives, events, element.sourceInfo);
       this._assertNoComponentsNorElementBindingsOnTemplate(directives, elementProps,
                                                            element.sourceInfo);
-      parsedElement = new EmbeddedTemplateAst(attrs, vars, directives, children,
+      parsedElement = new EmbeddedTemplateAst(attrs, events, vars, directives, children,
                                               elementNgContentIndex, element.sourceInfo);
     } else {
       this._assertOnlyOneComponent(directives, element.sourceInfo);
@@ -241,9 +241,9 @@ class TemplateParseVisitor implements HtmlAstVisitor {
           element.name, templateElementOrDirectiveProps, templateDirectives);
       this._assertNoComponentsNorElementBindingsOnTemplate(templateDirectives, templateElementProps,
                                                            element.sourceInfo);
-      parsedElement = new EmbeddedTemplateAst([], templateVars, templateDirectives, [parsedElement],
-                                              component.findNgContentIndex(templateCssSelector),
-                                              element.sourceInfo);
+      parsedElement = new EmbeddedTemplateAst(
+          [], [], templateVars, templateDirectives, [parsedElement],
+          component.findNgContentIndex(templateCssSelector), element.sourceInfo);
     }
     return parsedElement;
   }
diff --git a/modules/angular2/test/core/compiler/change_definition_factory_spec.ts b/modules/angular2/test/core/compiler/change_definition_factory_spec.ts
index 970eccf577..0aeb2f0e88 100644
--- a/modules/angular2/test/core/compiler/change_definition_factory_spec.ts
+++ b/modules/angular2/test/core/compiler/change_definition_factory_spec.ts
@@ -90,7 +90,7 @@ export function main() {
       expect(dispatcher.log).toEqual(['textNode(null)=someValue']);
     });
 
-    it('should handle events', () => {
+    it('should handle events on regular elements', () => {
       var changeDetector = createChangeDetector('<div on-click="onEvent($event)">', [], 0);
 
       eventLocals.set('$event', 'click');
@@ -98,6 +98,20 @@ export function main() {
       expect(context.eventLog).toEqual(['click']);
     });
 
+    it('should handle events on template elements', () => {
+      var dirMeta = CompileDirectiveMetadata.create({
+        type: new CompileTypeMetadata({name: 'SomeDir'}),
+        selector: 'template',
+        outputs: ['click']
+      });
+      var changeDetector =
+          createChangeDetector('<template on-click="onEvent($event)">', [dirMeta], 0);
+
+      eventLocals.set('$event', 'click');
+      changeDetector.handleEvent('click', 0, eventLocals);
+      expect(context.eventLog).toEqual(['click']);
+    });
+
     it('should handle events with targets', () => {
       var changeDetector = createChangeDetector('<div (window:click)="onEvent($event)">', [], 0);
 
diff --git a/modules/angular2/test/core/compiler/template_parser_spec.ts b/modules/angular2/test/core/compiler/template_parser_spec.ts
index 50ed6dfea4..efa1b8aa44 100644
--- a/modules/angular2/test/core/compiler/template_parser_spec.ts
+++ b/modules/angular2/test/core/compiler/template_parser_spec.ts
@@ -277,6 +277,7 @@ export function main() {
              expect(humanizeTemplateAsts(parse('<template (e)="f"></template>', [dirA])))
                  .toEqual([
                    [EmbeddedTemplateAst, 'TestComp > template:nth-child(0)'],
+                   [BoundEventAst, 'e', null, 'f', 'TestComp > template:nth-child(0)[(e)=f]'],
                    [DirectiveAst, dirA, 'TestComp > template:nth-child(0)'],
                  ]);
            });
@@ -978,6 +979,7 @@ class TemplateHumanizer implements TemplateAstVisitor {
   visitEmbeddedTemplate(ast: EmbeddedTemplateAst, context: any): any {
     this.result.push([EmbeddedTemplateAst, ast.sourceInfo]);
     templateVisitAll(this, ast.attrs);
+    templateVisitAll(this, ast.outputs);
     templateVisitAll(this, ast.vars);
     templateVisitAll(this, ast.directives);
     templateVisitAll(this, ast.children);
diff --git a/modules/angular2/test/core/linker/integration_spec.ts b/modules/angular2/test/core/linker/integration_spec.ts
index 3ad977abf4..910e07de5c 100644
--- a/modules/angular2/test/core/linker/integration_spec.ts
+++ b/modules/angular2/test/core/linker/integration_spec.ts
@@ -827,22 +827,26 @@ export function main() {
 
       it('should support events via EventEmitter on template elements',
          inject([TestComponentBuilder, AsyncTestCompleter], (tcb: TestComponentBuilder, async) => {
-           tcb.overrideView(MyComp, new ViewMetadata({
-                              template: '<template emitter listener></template>',
-                              directives: [DirectiveEmitingEvent, DirectiveListeningEvent]
-                            }))
+           tcb.overrideView(
+                  MyComp, new ViewMetadata({
+                    template: '<template emitter listener (event)="ctxProp=$event"></template>',
+                    directives: [DirectiveEmitingEvent, DirectiveListeningEvent]
+                  }))
 
                .createAsync(MyComp)
                .then((rootTC) => {
 
                  var tc = rootTC.debugElement.componentViewChildren[0];
                  var emitter = tc.inject(DirectiveEmitingEvent);
+                 var myComp = tc.inject(MyComp);
                  var listener = tc.inject(DirectiveListeningEvent);
 
+                 myComp.ctxProp = '';
                  expect(listener.msg).toEqual('');
 
                  ObservableWrapper.subscribe(emitter.event, (_) => {
                    expect(listener.msg).toEqual('fired !');
+                   expect(myComp.ctxProp).toEqual('fired !');
                    async.done();
                  });