diff --git a/src/runtime/cli/init_command.rs b/src/runtime/cli/init_command.rs
index 9e5f947a2265..546629cae024 100644
--- a/src/runtime/cli/init_command.rs
+++ b/src/runtime/cli/init_command.rs
@@ -966,15 +966,6 @@ impl Assets {
         Self::create_full_inner(asset, asset_name, "", is_template, args)
     }
 
-    pub fn create_with_contents(
-        asset_name: &[u8],
-        contents: &'static [u8],
-        args: &[(&[u8], &[u8])],
-    ) -> Result<(), Error> {
-        let is_template = !args.is_empty();
-        Self::create_full_with_contents(asset_name, contents, "", is_template, args)
-    }
-
     /// Substitutes named placeholders `{[key]s}` in `template` with the
     /// corresponding value from `args`.
     fn substitute(template: &[u8], args: &[(&[u8], &[u8])]) -> Vec<u8> {
@@ -1064,40 +1055,6 @@ impl Assets {
         Output::flush();
         Ok(())
     }
-
-    fn create_full_with_contents(
-        // name of asset file to create
-        filename: &[u8],
-        contents: &'static [u8],
-        // optionally add a suffix to the end of the `+ filename` message. Must have a leading space.
-        message_suffix: &'static str,
-        // Treat the asset as a format string, using `args` to populate it. Only applies to known assets.
-        is_template: bool,
-        // Format arguments
-        args: &[(&[u8], &[u8])],
-    ) -> Result<(), Error> {
-        let file = bun_sys::File::openat(
-            Fd::cwd(),
-            filename,
-            bun_sys::O::WRONLY | bun_sys::O::CREAT | bun_sys::O::TRUNC,
-            0o666,
-        )?;
-
-        if is_template {
-            let buf = Self::substitute(contents, args);
-            file.write_all(&buf)?;
-        } else {
-            file.write_all(contents)?;
-        }
-
-        bun_core::prettyln!(
-            " + <r><d>{}{}<r>",
-            bstr::BStr::new(filename),
-            message_suffix,
-        );
-        Output::flush();
-        Ok(())
-    }
 }
 
 // ──────────────────────────────────────────────────────────────────────────
@@ -1656,14 +1613,18 @@ impl Template {
             let contents = file.contents;
 
             let result = if path == b"README.md" {
-                Assets::create_with_contents(
-                    b"README.md",
-                    contents,
-                    &[
-                        (b"name", self.name()),
-                        (b"bunVersion", Environment::VERSION_STRING.as_bytes()),
-                    ],
-                )
+                if exists_z(b"README") || exists_z(b"README.txt") || exists_z(b"README.mdx") {
+                    Err(crate::Error::Sys(bun_errno::SystemErrno::EEXIST))
+                } else {
+                    let buf = Assets::substitute(
+                        contents,
+                        &[
+                            (b"name", self.name()),
+                            (b"bunVersion", Environment::VERSION_STRING.as_bytes()),
+                        ],
+                    );
+                    Assets::create_new(ZStr::from_slice_with_nul(b"README.md\0"), &buf)
+                }
             } else {
                 let mut p = path.to_vec();
                 p.push(0);
diff --git a/test/cli/init/init.test.ts b/test/cli/init/init.test.ts
index 15e602586d74..d00115ef309c 100644
--- a/test/cli/init/init.test.ts
+++ b/test/cli/init/init.test.ts
@@ -271,6 +271,50 @@ const initEnv = { ...bunEnv, BUN_AGENT_RULE_DISABLED: "1" };
     expect(fs.existsSync(path.join(temp, "tsconfig.json"))).toBe(true);
   }, 30_000);
 
+  test("bun init --react does not overwrite an existing README.md", async () => {
+    // https://github.com/oven-sh/bun/issues/2892
+    const temp = tempDirWithFiles("bun-init--react-preserve-readme", {
+      "README.md": "MY README - do not lose me\n",
+      "src/index.ts": "export const mine = 1;\n",
+    });
+
+    await using proc = Bun.spawn({
+      cmd: [bunExe(), "init", "--react"],
+      cwd: temp,
+      stdio: ["ignore", "pipe", "pipe"],
+      env: initEnv,
+    });
+    const [stdout, stderr, exitCode] = await Promise.all([proc.stdout.text(), proc.stderr.text(), proc.exited]);
+
+    expect(stdout).toContain("README.md (already exists, skipping)");
+    expect(stdout).toContain("src/index.ts (already exists, skipping)");
+    expect(stderr).not.toContain("error");
+
+    expect(fs.readFileSync(path.join(temp, "README.md"), "utf8")).toBe("MY README - do not lose me\n");
+    expect(fs.readFileSync(path.join(temp, "src/index.ts"), "utf8")).toBe("export const mine = 1;\n");
+    // a file the user did *not* have should still be created
+    expect(fs.existsSync(path.join(temp, "src/index.html"))).toBe(true);
+    expect(exitCode).toBe(0);
+  }, 30_000);
+
+  test("bun init --react into an empty dir still writes a templated README.md", async () => {
+    const temp = tempDirWithFiles("bun-init--react-fresh-readme", {});
+
+    await using proc = Bun.spawn({
+      cmd: [bunExe(), "init", "--react"],
+      cwd: temp,
+      stdio: ["ignore", "pipe", "pipe"],
+      env: initEnv,
+    });
+    const [stdout, , exitCode] = await Promise.all([proc.stdout.text(), proc.stderr.text(), proc.exited]);
+
+    expect(stdout).toMatch(/\+ README\.md/);
+    const readme = fs.readFileSync(path.join(temp, "README.md"), "utf8");
+    expect(readme).toStartWith("# bun-react-template");
+    expect(readme).toInclude("v" + Bun.version.replaceAll("-debug", ""));
+    expect(exitCode).toBe(0);
+  }, 30_000);
+
   test("bun init --react=tailwind works", async () => {
     const temp = tempDirWithFiles("bun-init--react=tailwind-works", {});