diff --git a/codemcp/main.py b/codemcp/main.py
index 478a37e..d485398 100644
--- a/codemcp/main.py
+++ b/codemcp/main.py
@@ -7,6 +7,7 @@
 from typing import List, Optional
 
 import click
+import pathspec
 import uvicorn
 from fastapi.middleware.cors import CORSMiddleware
 from mcp.server.fastmcp import FastMCP
@@ -396,6 +397,78 @@ def normalize_newlines(s: object) -> object:
     return "Unknown subtool or operation"
 
 
+def get_files_respecting_gitignore(dir_path: Path, pattern: str = "**/*") -> List[Path]:
+    """Get files in a directory respecting .gitignore rules in all subdirectories.
+
+    Args:
+        dir_path: The directory path to search in
+        pattern: The glob pattern to match files against (default: "**/*")
+
+    Returns:
+        A list of Path objects for files that match the pattern and respect .gitignore
+    """
+    # First collect all files and directories
+    all_paths = list(dir_path.glob(pattern))
+    all_files = [p for p in all_paths if p.is_file()]
+    all_dirs = [dir_path] + [p for p in all_paths if p.is_dir()]
+
+    # Find all .gitignore files in the directory and subdirectories
+    gitignore_specs = {}
+
+    # Process .gitignore files from root to leaf directories
+    for directory in sorted(all_dirs, key=lambda d: str(d)):
+        gitignore_path = directory / ".gitignore"
+        if gitignore_path.exists() and gitignore_path.is_file():
+            try:
+                with open(gitignore_path, "r") as ignore_file:
+                    ignore_lines = ignore_file.readlines()
+                    gitignore_specs[directory] = pathspec.GitIgnoreSpec.from_lines(
+                        ignore_lines
+                    )
+            except Exception as e:
+                # Log error but continue processing
+                logging.warning(f"Error reading .gitignore in {directory}: {e}")
+
+    # If no .gitignore files found, return all files
+    if not gitignore_specs:
+        return [f for f in all_files if f.is_file()]
+
+    # Helper function to check if a path is ignored by any relevant .gitignore
+    def is_ignored(path: Path) -> bool:
+        """
+        Check if a path should be ignored according to .gitignore rules.
+
+        This checks the path against all .gitignore files in its parent directories.
+        """
+        # For files, we need to check if any parent directory is ignored first
+        if path.is_file():
+            # Check if any parent directory is ignored
+            current_dir = path.parent
+            while current_dir.is_relative_to(dir_path):
+                if is_ignored(current_dir):
+                    return True
+                current_dir = current_dir.parent
+
+        # Now check the path against all relevant .gitignore specs
+        for spec_dir, spec in gitignore_specs.items():
+            # Only apply specs from parent directories of the path
+            if path.is_relative_to(spec_dir):
+                # Get the path relative to the directory containing the .gitignore
+                rel_path = str(path.relative_to(spec_dir))
+                # Empty string means the directory itself
+                if not rel_path:
+                    rel_path = "."
+                # Check if path matches any pattern in the .gitignore
+                if spec.match_file(rel_path):
+                    return True
+
+        return False
+
+    # Filter out ignored files
+    result = [f for f in all_files if not is_ignored(f)]
+    return result
+
+
 def configure_logging(log_file: str = "codemcp.log") -> None:
     """Configure logging to write to both a file and the console.
 
@@ -567,9 +640,10 @@ def process_file(template_file, template_root, output_root):
         print(f"Created file: {rel_path}")
         return rel_path
 
-    # Recursively process template directory
-    for template_file in templates_dir.glob("**/*"):
-        if template_file.is_file() and template_file.name != ".gitkeep":
+    # Recursively process template directory respecting .gitignore
+    template_files = get_files_respecting_gitignore(templates_dir, "**/*")
+    for template_file in template_files:
+        if template_file.name != ".gitkeep":
             # Process template file
             try:
                 rel_path = process_file(template_file, templates_dir, project_path)