diff --git a/packages/edit-site/src/components/template-actions/rename-menu-item.js b/packages/edit-site/src/components/template-actions/rename-menu-item.js
index 9c6368ced17bf8..9f897fcd2e9433 100644
--- a/packages/edit-site/src/components/template-actions/rename-menu-item.js
+++ b/packages/edit-site/src/components/template-actions/rename-menu-item.js
@@ -17,10 +17,8 @@ import { store as noticesStore } from '@wordpress/notices';
 import { decodeEntities } from '@wordpress/html-entities';
 
 export default function RenameMenuItem( { template, onClose } ) {
-	const [ title, setTitle ] = useState(
-		decodeEntities( template.title.rendered )
-	);
-
+	const title = decodeEntities( template.title.rendered );
+	const [ editedTitle, setEditedTitle ] = useState( title );
 	const [ isModalOpen, setIsModalOpen ] = useState( false );
 
 	const {
@@ -39,11 +37,11 @@ export default function RenameMenuItem( { template, onClose } ) {
 
 		try {
 			await editEntityRecord( 'postType', template.type, template.id, {
-				title,
+				title: editedTitle,
 			} );
 
 			// Update state before saving rerenders the list.
-			setTitle( '' );
+			setEditedTitle( '' );
 			setIsModalOpen( false );
 			onClose();
 
@@ -73,7 +71,12 @@ export default function RenameMenuItem( { template, onClose } ) {
 
 	return (
 		<>
-			<MenuItem onClick={ () => setIsModalOpen( true ) }>
+			<MenuItem
+				onClick={ () => {
+					setIsModalOpen( true );
+					setEditedTitle( title );
+				} }
+			>
 				{ __( 'Rename' ) }
 			</MenuItem>
 			{ isModalOpen && (
@@ -89,8 +92,8 @@ export default function RenameMenuItem( { template, onClose } ) {
 							<TextControl
 								__nextHasNoMarginBottom
 								label={ __( 'Name' ) }
-								value={ title }
-								onChange={ setTitle }
+								value={ editedTitle }
+								onChange={ setEditedTitle }
 								required
 							/>