diff --git a/CHANGELOG.md b/CHANGELOG.md
index 708c9831236b2..97464c7659f75 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -32,6 +32,7 @@ The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/),
 ### Fixed
 - Fix constraint bug which allows more primary shards than average primary shards per index ([#14908](https://github.com/opensearch-project/OpenSearch/pull/14908))
 - Fix missing value of FieldSort for unsigned_long ([#14963](https://github.com/opensearch-project/OpenSearch/pull/14963))
+- Fix delete index template failed when the index template matches a data stream but is unused ([#15080](https://github.com/opensearch-project/OpenSearch/pull/15080))
 
 ### Security
 
diff --git a/rest-api-spec/src/main/resources/rest-api-spec/test/indices.delete_index_template/10_basic.yml b/rest-api-spec/src/main/resources/rest-api-spec/test/indices.delete_index_template/10_basic.yml
new file mode 100644
index 0000000000000..c90e83ab59859
--- /dev/null
+++ b/rest-api-spec/src/main/resources/rest-api-spec/test/indices.delete_index_template/10_basic.yml
@@ -0,0 +1,52 @@
+setup:
+  - do:
+      indices.put_index_template:
+        name: test_template_1
+        body:
+          index_patterns: test-*
+          template:
+            settings:
+              number_of_shards:   1
+              number_of_replicas: 0
+          "priority": 50
+
+  - do:
+      indices.put_index_template:
+        name: test_template_2
+        body:
+          index_patterns: test-*
+          data_stream: {}
+          template:
+            settings:
+              number_of_shards:   1
+              number_of_replicas: 0
+          "priority": 51
+
+---
+teardown:
+  - do:
+      indices.delete_data_stream:
+        name: test-1
+        ignore: 404
+  - do:
+      indices.delete_index_template:
+        name: test_template_1
+        ignore: 404
+  - do:
+      indices.delete_index_template:
+        name: test_template_2
+        ignore: 404
+
+---
+"Delete index template which is not used by data stream but index pattern matches":
+  - skip:
+      version: " - 2.99.99"
+      reason: "fixed in 3.0.0"
+
+  - do:
+      indices.create_data_stream:
+        name: test-1
+
+  - do:
+      indices.delete_index_template:
+        name: test_template_1
diff --git a/server/src/main/java/org/opensearch/cluster/metadata/MetadataIndexTemplateService.java b/server/src/main/java/org/opensearch/cluster/metadata/MetadataIndexTemplateService.java
index 7bc3d279513cd..6b638c9920c27 100644
--- a/server/src/main/java/org/opensearch/cluster/metadata/MetadataIndexTemplateService.java
+++ b/server/src/main/java/org/opensearch/cluster/metadata/MetadataIndexTemplateService.java
@@ -944,7 +944,7 @@ static ClusterState innerRemoveIndexTemplateV2(ClusterState currentState, String
 
     static Set<String> dataStreamsUsingTemplate(final ClusterState state, final String templateName) {
         final ComposableIndexTemplate template = state.metadata().templatesV2().get(templateName);
-        if (template == null) {
+        if (template == null || template.getDataStreamTemplate() == null) {
             return Collections.emptySet();
         }
         final Set<String> dataStreams = state.metadata().dataStreams().keySet();
diff --git a/server/src/test/java/org/opensearch/cluster/metadata/MetadataIndexTemplateServiceTests.java b/server/src/test/java/org/opensearch/cluster/metadata/MetadataIndexTemplateServiceTests.java
index f26f45b69d133..cb98c34988cbe 100644
--- a/server/src/test/java/org/opensearch/cluster/metadata/MetadataIndexTemplateServiceTests.java
+++ b/server/src/test/java/org/opensearch/cluster/metadata/MetadataIndexTemplateServiceTests.java
@@ -560,6 +560,64 @@ public void testRemoveIndexTemplateV2() throws Exception {
 
         ClusterState updatedState = MetadataIndexTemplateService.innerRemoveIndexTemplateV2(state, "foo");
         assertNull(updatedState.metadata().templatesV2().get("foo"));
+
+        // test remove a template which is not used by a data stream but index patterns can match
+        Settings settings = Settings.builder()
+            .put(IndexMetadata.SETTING_BLOCKS_READ, randomBoolean())
+            .put(IndexMetadata.SETTING_BLOCKS_WRITE, randomBoolean())
+            .put(IndexMetadata.SETTING_NUMBER_OF_SHARDS, randomIntBetween(1, 10))
+            .put(IndexMetadata.SETTING_NUMBER_OF_REPLICAS, randomIntBetween(0, 5))
+            .put(IndexMetadata.SETTING_BLOCKS_WRITE, randomBoolean())
+            .put(IndexMetadata.SETTING_PRIORITY, randomIntBetween(0, 100000))
+            .build();
+        CompressedXContent mappings = new CompressedXContent(
+            "{\"properties\":{\"" + randomAlphaOfLength(5) + "\":{\"type\":\"keyword\"}}}"
+        );
+
+        Map<String, Object> meta = Collections.singletonMap(randomAlphaOfLength(4), randomAlphaOfLength(4));
+        List<String> indexPatterns = List.of("foo*");
+        List<String> componentTemplates = randomList(0, 10, () -> randomAlphaOfLength(5));
+        ComposableIndexTemplate templateToRemove = new ComposableIndexTemplate(
+            indexPatterns,
+            new Template(settings, mappings, null),
+            componentTemplates,
+            randomBoolean() ? null : randomNonNegativeLong(),
+            randomBoolean() ? null : randomNonNegativeLong(),
+            meta,
+            null
+        );
+
+        ClusterState stateWithDS = ClusterState.builder(state)
+            .metadata(
+                Metadata.builder(state.metadata())
+                    .put(
+                        new DataStream(
+                            "foo",
+                            new DataStream.TimestampField("@timestamp"),
+                            Collections.singletonList(new Index(".ds-foo-000001", "uuid2"))
+                        )
+                    )
+                    .put(
+                        IndexMetadata.builder(".ds-foo-000001")
+                            .settings(
+                                Settings.builder()
+                                    .put(IndexMetadata.SETTING_INDEX_UUID, "uuid2")
+                                    .put(IndexMetadata.SETTING_NUMBER_OF_SHARDS, 1)
+                                    .put(IndexMetadata.SETTING_NUMBER_OF_REPLICAS, 0)
+                                    .put(IndexMetadata.SETTING_VERSION_CREATED, Version.CURRENT)
+                                    .build()
+                            )
+                    )
+                    .build()
+            )
+            .build();
+
+        final ClusterState clusterState = metadataIndexTemplateService.addIndexTemplateV2(stateWithDS, false, "foo", templateToRemove);
+        assertNotNull(clusterState.metadata().templatesV2().get("foo"));
+        assertTemplatesEqual(clusterState.metadata().templatesV2().get("foo"), templateToRemove);
+
+        updatedState = MetadataIndexTemplateService.innerRemoveIndexTemplateV2(clusterState, "foo");
+        assertNull(updatedState.metadata().templatesV2().get("foo"));
     }
 
     /**