diff --git a/src/ProjectTemplates/Shared/ArgConstants.cs b/src/ProjectTemplates/Shared/ArgConstants.cs
index eafa09fe6f86..7f680300aae9 100644
--- a/src/ProjectTemplates/Shared/ArgConstants.cs
+++ b/src/ProjectTemplates/Shared/ArgConstants.cs
@@ -24,6 +24,7 @@ internal static class ArgConstants
     public const string UseLocalDb = "-uld";
     public const string NoHttps = "--no-https";
     public const string PublishNativeAot = "--aot";
+    public const string LocalhostTld = "--localhost-tld";
     public const string NoInteractivity = "--interactivity none";
     public const string WebAssemblyInteractivity = "--interactivity WebAssembly";
     public const string AutoInteractivity = "--interactivity Auto";
diff --git a/src/ProjectTemplates/Shared/Project.cs b/src/ProjectTemplates/Shared/Project.cs
index 308da1f9a8c8..7a2e752ddba3 100644
--- a/src/ProjectTemplates/Shared/Project.cs
+++ b/src/ProjectTemplates/Shared/Project.cs
@@ -71,6 +71,11 @@ internal async Task RunDotNetNewAsync(
         // Used to set special options in MSBuild
         IDictionary<string, string> environmentVariables = null)
     {
+        if (templateName.Contains(' '))
+        {
+            throw new ArgumentException("Template name cannot contain spaces.");
+        }
+
         var hiveArg = $"--debug:disable-sdk-templates --debug:custom-hive \"{TemplatePackageInstaller.CustomHivePath}\"";
         var argString = $"new {templateName} {hiveArg}";
         environmentVariables ??= new Dictionary<string, string>();
@@ -111,6 +116,13 @@ internal async Task RunDotNetNewAsync(
         // We omit the hive argument and the template output dir as they are not relevant and add noise.
         ProjectArguments = argString.Replace(hiveArg, "");
 
+        // Only add -n parameter if ProjectName is set and args doesn't already contain -n or --name
+        if (!string.IsNullOrEmpty(ProjectName) &&
+            args?.Any(a => a.Contains("-n ") || a.Contains("--name ") || a == "-n" || a == "--name") != true)
+        {
+            argString += $" -n \"{ProjectName}\"";
+        }
+
         argString += $" -o {TemplateOutputDir}";
 
         if (Directory.Exists(TemplateOutputDir))
@@ -350,6 +362,42 @@ public async Task VerifyLaunchSettings(string[] expectedLaunchProfileNames)
         }
     }
 
+    public async Task VerifyDnsCompliantHostname(string expectedHostname)
+    {
+        var launchSettingsPath = Path.Combine(TemplateOutputDir, "Properties", "launchSettings.json");
+        Assert.True(File.Exists(launchSettingsPath), $"launchSettings.json not found at {launchSettingsPath}");
+
+        var launchSettingsContent = await File.ReadAllTextAsync(launchSettingsPath);
+        using var launchSettings = JsonDocument.Parse(launchSettingsContent);
+
+        var profiles = launchSettings.RootElement.GetProperty("profiles");
+
+        foreach (var profile in profiles.EnumerateObject())
+        {
+            if (profile.Value.TryGetProperty("applicationUrl", out var applicationUrl))
+            {
+                var urls = applicationUrl.GetString();
+                if (!string.IsNullOrEmpty(urls))
+                {
+                    // Verify the hostname in the URL matches expected DNS-compliant format
+                    Assert.Contains($"{expectedHostname}.dev.localhost:", urls);
+
+                    // Verify no underscores in hostname (RFC 952/1123 compliance)
+                    var hostnamePattern = @"://([^:]+)\.dev\.localhost:";
+                    var matches = System.Text.RegularExpressions.Regex.Matches(urls, hostnamePattern);
+                    foreach (System.Text.RegularExpressions.Match match in matches)
+                    {
+                        var hostname = match.Groups[1].Value;
+                        Assert.DoesNotContain("_", hostname);
+                        Assert.DoesNotContain(".", hostname);
+                        Assert.False(hostname.StartsWith("-", StringComparison.Ordinal), $"Hostname '{hostname}' should not start with hyphen (RFC 952/1123 violation)");
+                        Assert.False(hostname.EndsWith("-", StringComparison.Ordinal), $"Hostname '{hostname}' should not end with hyphen (RFC 952/1123 violation)");
+                    }
+                }
+            }
+        }
+    }
+
     public async Task VerifyHasProperty(string propertyName, string expectedValue)
     {
         var projectFile = Directory.EnumerateFiles(TemplateOutputDir, "*proj").FirstOrDefault();
diff --git a/src/ProjectTemplates/Shared/ProjectFactoryFixture.cs b/src/ProjectTemplates/Shared/ProjectFactoryFixture.cs
index 0de11acd780e..30f9b617c067 100644
--- a/src/ProjectTemplates/Shared/ProjectFactoryFixture.cs
+++ b/src/ProjectTemplates/Shared/ProjectFactoryFixture.cs
@@ -39,7 +39,22 @@ public async Task<Project> CreateProject(ITestOutputHelper output)
         return project;
     }
 
-    private Project CreateProjectImpl(ITestOutputHelper output)
+    public async Task<Project> CreateProject(ITestOutputHelper output, string projectName)
+    {
+        await TemplatePackageInstaller.EnsureTemplatingEngineInitializedAsync(output);
+
+        var project = CreateProjectImpl(output, projectName);
+
+        var projectKey = Guid.NewGuid().ToString().Substring(0, 10).ToLowerInvariant();
+        if (!_projects.TryAdd(projectKey, project))
+        {
+            throw new InvalidOperationException($"Project key collision in {nameof(ProjectFactoryFixture)}.{nameof(CreateProject)}!");
+        }
+
+        return project;
+    }
+
+    private Project CreateProjectImpl(ITestOutputHelper output, string projectName = null)
     {
         var project = new Project
         {
@@ -49,11 +64,20 @@ private Project CreateProjectImpl(ITestOutputHelper output)
             // declarations (i.e. make it more stable for testing)
             ProjectGuid = GetRandomLetter() + Path.GetRandomFileName().Replace(".", string.Empty)
         };
-        project.ProjectName = $"AspNet.{project.ProjectGuid}";
+        
+        if (string.IsNullOrEmpty(projectName))
+        {
+            project.ProjectName = $"AspNet.{project.ProjectGuid}";
+        }
+        else
+        {
+            project.ProjectName = projectName;
+        }
 
         var assemblyPath = GetType().Assembly;
         var basePath = GetTemplateFolderBasePath(assemblyPath);
-        project.TemplateOutputDir = Path.Combine(basePath, project.ProjectName);
+        // Use ProjectGuid for directory to avoid filesystem issues with invalid characters in projectName
+        project.TemplateOutputDir = Path.Combine(basePath, $"AspNet.{project.ProjectGuid}");
 
         return project;
     }
diff --git a/src/ProjectTemplates/Web.ProjectTemplates/content/BlazorWeb-CSharp/.template.config/template.json b/src/ProjectTemplates/Web.ProjectTemplates/content/BlazorWeb-CSharp/.template.config/template.json
index df16332f7827..9152b23c8be3 100644
--- a/src/ProjectTemplates/Web.ProjectTemplates/content/BlazorWeb-CSharp/.template.config/template.json
+++ b/src/ProjectTemplates/Web.ProjectTemplates/content/BlazorWeb-CSharp/.template.config/template.json
@@ -202,7 +202,39 @@
       ]
     }
   ],
+  "forms": {
+    "lowerCaseInvariantWithHyphens": {
+      "identifier": "chain",
+      "steps": [
+        "lowerCaseInvariant",
+        "replaceDnsInvalidChars",
+        "trimLeadingHyphens",
+        "trimTrailingHyphens"
+      ]
+    },
+    "replaceDnsInvalidChars": {
+      "identifier": "replace",
+      "pattern": "[^a-z0-9-]",
+      "replacement": "-"
+    },
+    "trimLeadingHyphens": {
+      "identifier": "replace",
+      "pattern": "^-+",
+      "replacement": ""
+    },
+    "trimTrailingHyphens": {
+      "identifier": "replace",
+      "pattern": "-+$",
+      "replacement": ""
+    }
+  },
   "symbols": {
+    "hostName": {
+      "type": "derived",
+      "valueSource": "name",
+      "valueTransform": "lowerCaseInvariantWithHyphens",
+      "replaces": "LocalhostTldHostNamePrefix"
+    },
     "Framework": {
       "type": "parameter",
       "description": "The target framework for the project.",
diff --git a/src/ProjectTemplates/Web.ProjectTemplates/content/BlazorWeb-CSharp/BlazorWebCSharp.1/Properties/launchSettings.json b/src/ProjectTemplates/Web.ProjectTemplates/content/BlazorWeb-CSharp/BlazorWebCSharp.1/Properties/launchSettings.json
index e86aed770617..c4b5b76926e4 100644
--- a/src/ProjectTemplates/Web.ProjectTemplates/content/BlazorWeb-CSharp/BlazorWebCSharp.1/Properties/launchSettings.json
+++ b/src/ProjectTemplates/Web.ProjectTemplates/content/BlazorWeb-CSharp/BlazorWebCSharp.1/Properties/launchSettings.json
@@ -10,7 +10,7 @@
         "inspectUri": "{wsProtocol}://{url.hostname}:{url.port}/_framework/debug/ws-proxy?browser={browserInspectUri}",
         //#endif
         //#if (LocalhostTld)
-        "applicationUrl": "http://blazorwebcsharp__1.dev.localhost:5500",
+        "applicationUrl": "http://LocalhostTldHostNamePrefix.dev.localhost:5500",
         //#else
         "applicationUrl": "http://localhost:5500",
         //#endif
@@ -32,7 +32,7 @@
         "inspectUri": "{wsProtocol}://{url.hostname}:{url.port}/_framework/debug/ws-proxy?browser={browserInspectUri}",
         //#endif
         //#if (LocalhostTld)
-        "applicationUrl": "https://blazorwebcsharp__1.dev.localhost:5501;http://blazorwebcsharp__1.dev.localhost:5500",
+        "applicationUrl": "https://LocalhostTldHostNamePrefix.dev.localhost:5501;http://LocalhostTldHostNamePrefix.dev.localhost:5500",
         //#else
         "applicationUrl": "https://localhost:5501;http://localhost:5500",
         //#endif
diff --git a/src/ProjectTemplates/Web.ProjectTemplates/content/EmptyWeb-CSharp/.template.config/template.json b/src/ProjectTemplates/Web.ProjectTemplates/content/EmptyWeb-CSharp/.template.config/template.json
index b2249e8d99bc..cbc4c861d3c6 100644
--- a/src/ProjectTemplates/Web.ProjectTemplates/content/EmptyWeb-CSharp/.template.config/template.json
+++ b/src/ProjectTemplates/Web.ProjectTemplates/content/EmptyWeb-CSharp/.template.config/template.json
@@ -48,7 +48,39 @@
       ]
     }
   ],
+  "forms": {
+    "lowerCaseInvariantWithHyphens": {
+      "identifier": "chain",
+      "steps": [
+        "lowerCaseInvariant",
+        "replaceDnsInvalidChars",
+        "trimLeadingHyphens",
+        "trimTrailingHyphens"
+      ]
+    },
+    "replaceDnsInvalidChars": {
+      "identifier": "replace",
+      "pattern": "[^a-z0-9-]",
+      "replacement": "-"
+    },
+    "trimLeadingHyphens": {
+      "identifier": "replace",
+      "pattern": "^-+",
+      "replacement": ""
+    },
+    "trimTrailingHyphens": {
+      "identifier": "replace",
+      "pattern": "-+$",
+      "replacement": ""
+    }
+  },
   "symbols": {
+    "hostName": {
+      "type": "derived",
+      "valueSource": "name",
+      "valueTransform": "lowerCaseInvariantWithHyphens",
+      "replaces": "LocalhostTldHostNamePrefix"
+    },
     "ExcludeLaunchSettings": {
       "type": "parameter",
       "datatype": "bool",
diff --git a/src/ProjectTemplates/Web.ProjectTemplates/content/EmptyWeb-CSharp/Properties/launchSettings.json b/src/ProjectTemplates/Web.ProjectTemplates/content/EmptyWeb-CSharp/Properties/launchSettings.json
index ed5e05d0ab13..3ec9bd7f720f 100644
--- a/src/ProjectTemplates/Web.ProjectTemplates/content/EmptyWeb-CSharp/Properties/launchSettings.json
+++ b/src/ProjectTemplates/Web.ProjectTemplates/content/EmptyWeb-CSharp/Properties/launchSettings.json
@@ -6,7 +6,7 @@
       "dotnetRunMessages": true,
       "launchBrowser": true,
       //#if (LocalhostTld)
-      "applicationUrl": "http://company_webapplication1.dev.localhost:5000",
+      "applicationUrl": "http://LocalhostTldHostNamePrefix.dev.localhost:5000",
       //#else
       "applicationUrl": "http://localhost:5000",
       //#endif
@@ -24,7 +24,7 @@
       "dotnetRunMessages": true,
       "launchBrowser": true,
       //#if (LocalhostTld)
-      "applicationUrl": "https://company_webapplication1.dev.localhost:5001;http://company_webapplication1.dev.localhost:5000",
+      "applicationUrl": "https://LocalhostTldHostNamePrefix.dev.localhost:5001;http://LocalhostTldHostNamePrefix.dev.localhost:5000",
       //#else
       "applicationUrl": "https://localhost:5001;http://localhost:5000",
       //#endif
diff --git a/src/ProjectTemplates/test/Templates.Blazor.Tests/BlazorWebTemplateTest.cs b/src/ProjectTemplates/test/Templates.Blazor.Tests/BlazorWebTemplateTest.cs
index cff83ab7b3fb..e4e511e5e19f 100644
--- a/src/ProjectTemplates/test/Templates.Blazor.Tests/BlazorWebTemplateTest.cs
+++ b/src/ProjectTemplates/test/Templates.Blazor.Tests/BlazorWebTemplateTest.cs
@@ -2,7 +2,9 @@
 // The .NET Foundation licenses this file to you under the MIT license.
 
 using System.Net;
+using System.Text.Json;
 using Microsoft.AspNetCore.BrowserTesting;
+using Microsoft.AspNetCore.InternalTesting;
 using Templates.Test.Helpers;
 
 namespace BlazorTemplates.Tests;
@@ -88,4 +90,22 @@ private async Task TestProjectCoreAsync(Project project, BrowserKind browserKind
             await TestBasicInteractionInNewPageAsync(browserKind, aspNetProcess.ListeningUri.AbsoluteUri, appName, pagesToExclude, authenticationFeatures);
         }
     }
+
+    [ConditionalTheory]
+    [InlineData("my.namespace.blazor", "my-namespace-blazor")]
+    [InlineData(".StartWithDot", "startwithdot")]
+    [InlineData("EndWithDot.", "endwithdot")]
+    [InlineData("My..Test__Project", "my--test--project")]
+    [InlineData("Project123.Test456", "project123-test456")]
+    [SkipOnHelix("Cert failure, https://github.com/dotnet/aspnetcore/issues/28090", Queues = "All.OSX;" + HelixConstants.Windows10Arm64 + HelixConstants.DebianArm64)]
+    public async Task BlazorWebTemplateLocalhostTld_GeneratesDnsCompliantHostnames(string projectName, string expectedHostname)
+    {
+        var project = await ProjectFactory.CreateProject(Output, projectName);
+
+        await project.RunDotNetNewAsync("blazor", args: new[] { ArgConstants.LocalhostTld, ArgConstants.NoInteractivity });
+
+        var expectedLaunchProfileNames = new[] { "http", "https" };
+        await project.VerifyLaunchSettings(expectedLaunchProfileNames);
+        await project.VerifyDnsCompliantHostname(expectedHostname);
+    }
 }
diff --git a/src/ProjectTemplates/test/Templates.Tests/EmptyWebTemplateTest.cs b/src/ProjectTemplates/test/Templates.Tests/EmptyWebTemplateTest.cs
index afab0feb7d21..222c22a51681 100644
--- a/src/ProjectTemplates/test/Templates.Tests/EmptyWebTemplateTest.cs
+++ b/src/ProjectTemplates/test/Templates.Tests/EmptyWebTemplateTest.cs
@@ -1,6 +1,7 @@
 // Licensed to the .NET Foundation under one or more agreements.
 // The .NET Foundation licenses this file to you under the MIT license.
 
+using System.Text.Json;
 using System.Threading.Tasks;
 using Microsoft.AspNetCore.InternalTesting;
 using Templates.Test.Helpers;
@@ -73,6 +74,24 @@ public async Task EmptyWebTemplateNoHttpsFSharp()
         await EmtpyTemplateCore("F#", args: new[] { ArgConstants.NoHttps });
     }
 
+    [ConditionalTheory]
+    [InlineData("my.namespace.web", "my-namespace-web")]
+    [InlineData(".StartWithDot", "startwithdot")]
+    [InlineData("EndWithDot.", "endwithdot")]
+    [InlineData("My..Test__Project", "my--test--project")]
+    [InlineData("Project123.Test456", "project123-test456")]
+    [SkipOnHelix("Cert failure, https://github.com/dotnet/aspnetcore/issues/28090", Queues = "All.OSX;" + HelixConstants.Windows10Arm64 + HelixConstants.DebianArm64)]
+    public async Task EmptyWebTemplateLocalhostTld_GeneratesDnsCompliantHostnames(string projectName, string expectedHostname)
+    {
+        var project = await ProjectFactory.CreateProject(Output, projectName);
+
+        await project.RunDotNetNewAsync("web", args: new[] { ArgConstants.LocalhostTld });
+
+        var expectedLaunchProfileNames = new[] { "http", "https" };
+        await project.VerifyLaunchSettings(expectedLaunchProfileNames);
+        await project.VerifyDnsCompliantHostname(expectedHostname);
+    }
+
     private async Task EmtpyTemplateCore(string languageOverride, string[] args = null)
     {
         var project = await ProjectFactory.CreateProject(Output);
diff --git a/src/ProjectTemplates/test/Templates.Tests/ItemTemplateTests/BlazorServerTests.cs b/src/ProjectTemplates/test/Templates.Tests/ItemTemplateTests/BlazorServerTests.cs
index c50e7e7f9a5a..c92a08a4d253 100644
--- a/src/ProjectTemplates/test/Templates.Tests/ItemTemplateTests/BlazorServerTests.cs
+++ b/src/ProjectTemplates/test/Templates.Tests/ItemTemplateTests/BlazorServerTests.cs
@@ -29,7 +29,7 @@ public async Task BlazorServerItemTemplate()
     {
         Project = await ProjectFactory.CreateProject(Output);
 
-        await Project.RunDotNetNewAsync("razorcomponent --name Different", isItemTemplate: true);
+        await Project.RunDotNetNewAsync("razorcomponent", isItemTemplate: true, args: ["--name", "Different"]);
 
         Project.AssertFileExists("Different.razor", shouldExist: true);
         Assert.Contains("<h3>Different</h3>", Project.ReadFile("Different.razor"));