diff --git a/com.unity.render-pipelines.high-definition/CHANGELOG.md b/com.unity.render-pipelines.high-definition/CHANGELOG.md
index 7881ba03b68..de2aa97bfca 100644
--- a/com.unity.render-pipelines.high-definition/CHANGELOG.md
+++ b/com.unity.render-pipelines.high-definition/CHANGELOG.md
@@ -259,6 +259,7 @@ and this project adheres to [Semantic Versioning](http://semver.org/spec/v2.0.0.
 - Fixed an issue with resolution dependence for physically based depth of field.
 - Fixed the shader graph files that was still dirty after the first save (case 1342039).
 - Fixed cases in which object and camera motion vectors would cancel out, but didn't.
+- Fixed HDRP material upgrade failing when there is a texture inside the builtin resources assigned in the material (case 1339865).
 
 ### Changed
 - Changed Window/Render Pipeline/HD Render Pipeline Wizard to Window/Rendering/HDRP Wizard
diff --git a/com.unity.render-pipelines.high-definition/Editor/Core/TextureCombiner/TextureCombiner.cs b/com.unity.render-pipelines.high-definition/Editor/Core/TextureCombiner/TextureCombiner.cs
index 0377c33f18f..3afd04fc641 100644
--- a/com.unity.render-pipelines.high-definition/Editor/Core/TextureCombiner/TextureCombiner.cs
+++ b/com.unity.render-pipelines.high-definition/Editor/Core/TextureCombiner/TextureCombiner.cs
@@ -246,7 +246,7 @@ public Texture2D Combine(string savePath)
             //cleanup "raw" textures
             foreach (KeyValuePair<Texture, Texture> prop in m_RawTextures)
             {
-                if (AssetDatabase.Contains(prop.Value))
+                if (prop.Key != prop.Value && AssetDatabase.Contains(prop.Value))
                     AssetDatabase.DeleteAsset(AssetDatabase.GetAssetPath(prop.Value));
             }
 
@@ -262,13 +262,12 @@ private Texture GetRawTexture(Texture original, bool sRGBFallback = false)
             if (m_RawTextures == null) m_RawTextures = new Dictionary<Texture, Texture>();
             if (!m_RawTextures.ContainsKey(original))
             {
-                if (AssetDatabase.Contains(original))
-                {
-                    string path = AssetDatabase.GetAssetPath(original);
-                    string rawPath = "Assets/raw_" + Path.GetFileName(path);
-
-                    AssetDatabase.CopyAsset(path, rawPath);
+                string path = AssetDatabase.GetAssetPath(original);
+                string rawPath = "Assets/raw_" + Path.GetFileName(path);
+                bool isBuiltinResource = path.Contains("unity_builtin");
 
+                if (!isBuiltinResource && AssetDatabase.Contains(original) && AssetDatabase.CopyAsset(path, rawPath))
+                {
                     AssetDatabase.ImportAsset(rawPath);
 
                     TextureImporter rawImporter = (TextureImporter)AssetImporter.GetAtPath(rawPath);