diff --git a/python_modules/dagster/dagster/_cli/project.py b/python_modules/dagster/dagster/_cli/project.py
index cb37c3f555151..a026849fea4b0 100644
--- a/python_modules/dagster/dagster/_cli/project.py
+++ b/python_modules/dagster/dagster/_cli/project.py
@@ -117,7 +117,14 @@ def scaffold_repository_command(name: str):
     type=click.STRING,
     help="Name of the new Dagster code location",
 )
-def scaffold_code_location_command(name: str):
+@click.option(
+    '--excludes',
+    multiple=True,
+    type=click.STRING,
+    default=[],
+    help="Exclude file patterns from the project template",
+)
+def scaffold_code_location_command(name: str, excludes: list):
     dir_abspath = os.path.abspath(name)
     if os.path.isdir(dir_abspath) and os.path.exists(dir_abspath):
         click.echo(
@@ -126,7 +133,7 @@ def scaffold_code_location_command(name: str):
         )
         sys.exit(1)
 
-    generate_code_location(dir_abspath)
+    generate_code_location(dir_abspath, excludes)
     click.echo(_styled_success_statement(name, dir_abspath))
 
 
diff --git a/python_modules/dagster/dagster/_generate/generate.py b/python_modules/dagster/dagster/_generate/generate.py
index 07e336fc58a86..7087d97ff80d7 100644
--- a/python_modules/dagster/dagster/_generate/generate.py
+++ b/python_modules/dagster/dagster/_generate/generate.py
@@ -1,3 +1,4 @@
+from __future__ import annotations
 import os
 import posixpath
 
@@ -26,7 +27,7 @@ def generate_repository(path: str):
     click.echo(f"Generated files for Dagster repository in {path}.")
 
 
-def generate_code_location(path: str):
+def generate_code_location(path: str, excludes: list = []):
     CODE_LOCATION_NAME_PLACEHOLDER = "CODE_LOCATION_NAME_PLACEHOLDER"
 
     click.echo(f"Creating a Dagster code location at {path}.")
@@ -38,6 +39,7 @@ def generate_code_location(path: str):
         project_template_path=os.path.join(
             os.path.dirname(__file__), "templates", CODE_LOCATION_NAME_PLACEHOLDER
         ),
+        excludes=excludes,
     )
 
     click.echo(f"Generated files for Dagster code location in {path}.")
@@ -65,7 +67,11 @@ def generate_project(path: str):
 
 
 def _generate_files_from_template(
-    path: str, name_placeholder: str, project_template_path: str, skip_mkdir: bool = False
+    path: str,
+    name_placeholder: str,
+    project_template_path: str,
+    skip_mkdir: bool = False,
+    excludes: list[str] = [],
 ):
     normalized_path = os.path.normpath(path)
     code_location_name = os.path.basename(normalized_path).replace("-", "_")
@@ -76,11 +82,13 @@ def _generate_files_from_template(
     loader = jinja2.FileSystemLoader(searchpath=project_template_path)
     env = jinja2.Environment(loader=loader)
 
+    # merge custom skip_files with the default list
+    excludes = IGNORE_PATTERN_LIST + excludes
     for root, dirs, files in os.walk(project_template_path):
         # For each subdirectory in the source template, create a subdirectory in the destination.
         for dirname in dirs:
             src_dir_path = os.path.join(root, dirname)
-            if _should_skip_file(src_dir_path):
+            if _should_skip_file(src_dir_path, excludes):
                 continue
 
             src_relative_dir_path = os.path.relpath(src_dir_path, project_template_path)
@@ -96,7 +104,7 @@ def _generate_files_from_template(
         # For each file in the source template, render a file in the destination.
         for filename in files:
             src_file_path = os.path.join(root, filename)
-            if _should_skip_file(src_file_path):
+            if _should_skip_file(src_file_path, excludes):
                 continue
 
             src_relative_file_path = os.path.relpath(src_file_path, project_template_path)
@@ -124,13 +132,13 @@ def _generate_files_from_template(
                 f.write("\n")
 
 
-def _should_skip_file(path):
+def _should_skip_file(path: str, excludes: list[str]):
     """Given a file path `path` in a source template, returns whether or not the file should be skipped
     when generating destination files.
 
     Technically, `path` could also be a directory path that should be skipped.
     """
-    for pattern in IGNORE_PATTERN_LIST:
+    for pattern in excludes:
         if pattern in path:
             return True
 
diff --git a/python_modules/dagster/dagster/_generate/templates/CODE_LOCATION_NAME_PLACEHOLDER/pyproject.toml.tmpl b/python_modules/dagster/dagster/_generate/templates/CODE_LOCATION_NAME_PLACEHOLDER/pyproject.toml.tmpl
index 18a4302239867..837d3c638bf18 100644
--- a/python_modules/dagster/dagster/_generate/templates/CODE_LOCATION_NAME_PLACEHOLDER/pyproject.toml.tmpl
+++ b/python_modules/dagster/dagster/_generate/templates/CODE_LOCATION_NAME_PLACEHOLDER/pyproject.toml.tmpl
@@ -11,7 +11,7 @@ dependencies = [
 
 [project.optional-dependencies]
 dev = [
-    "dagster-webserver", 
+    "dagster-webserver",
     "pytest",
 ]
 
@@ -19,6 +19,9 @@ dev = [
 requires = ["setuptools"]
 build-backend = "setuptools.build_meta"
 
+[tool.setuptools.packages.find]
+exclude=["{{ code_location_name }}_tests"]
+
 [tool.dagster]
 module_name = "{{ code_location_name }}.definitions"
 code_location_name = "{{ code_location_name }}"