diff --git a/arm-ttk/testcases/CreateUIDefinition/Parameters-Without-Default-Must-Exist-In-CreateUIDefinition.test.ps1 b/arm-ttk/testcases/CreateUIDefinition/Parameters-Without-Default-Must-Exist-In-CreateUIDefinition.test.ps1
index e67d11b6..4fefcaa4 100644
--- a/arm-ttk/testcases/CreateUIDefinition/Parameters-Without-Default-Must-Exist-In-CreateUIDefinition.test.ps1
+++ b/arm-ttk/testcases/CreateUIDefinition/Parameters-Without-Default-Must-Exist-In-CreateUIDefinition.test.ps1
@@ -12,9 +12,16 @@ $TemplateObject,
 
 [Parameter(Mandatory=$true)]
 [PSObject]
-$CreateUIDefinitionObject
+$CreateUIDefinitionObject,
+
+# If set, the TemplateObject is an inner template.
+[switch]
+$IsInnerTemplate
 )
 
+# We do not need to consider if inner template parameters exist in CreateUIDefinition.
+if ($IsInnerTemplate) { return }
+
 foreach ($parameter in $TemplateObject.parameters.psobject.properties) {
     $parameterName = $parameter.Name
     $parameterInfo = $parameter.Value
diff --git a/unit-tests/Parameters-Without-Default-Must-Exist-In-CreateUIDefinition/Pass/nestedParameter/CreateUIDefinition.json b/unit-tests/Parameters-Without-Default-Must-Exist-In-CreateUIDefinition/Pass/nestedParameter/CreateUIDefinition.json
new file mode 100644
index 00000000..3899d72e
--- /dev/null
+++ b/unit-tests/Parameters-Without-Default-Must-Exist-In-CreateUIDefinition/Pass/nestedParameter/CreateUIDefinition.json
@@ -0,0 +1,13 @@
+{
+    "$schema": "https://schema.management.azure.com/schemas/0.1.2-preview/CreateUIDefinition.MultiVm.json#",
+    "handler": "Microsoft.Azure.CreateUIDef",
+    "version": "0.1.2-preview",
+    "parameters": {
+      "basics": [
+        {}
+      ],
+      "outputs": {
+        "mainParameter": "value-from-ui"
+      }
+    }
+  }
\ No newline at end of file
diff --git a/unit-tests/Parameters-Without-Default-Must-Exist-In-CreateUIDefinition/Pass/nestedParameter/azureDeploy.json b/unit-tests/Parameters-Without-Default-Must-Exist-In-CreateUIDefinition/Pass/nestedParameter/azureDeploy.json
new file mode 100644
index 00000000..fdb2311f
--- /dev/null
+++ b/unit-tests/Parameters-Without-Default-Must-Exist-In-CreateUIDefinition/Pass/nestedParameter/azureDeploy.json
@@ -0,0 +1,52 @@
+{
+    "$schema": "https://schema.management.azure.com/schemas/2019-04-01/deploymentTemplate.json#",
+    "contentVersion": "1.0.0.0",
+    "metadata": {
+      "_generator": {
+        "name": "bicep",
+        "version": "0.9.1.41621",
+        "templateHash": "4551264275492999207"
+      }
+    },
+    "parameters": {
+      "mainParameter": {
+        "type": "string",
+        "defaultValue": "default-value"
+      }
+    },
+    "resources": [
+      {
+        "type": "Microsoft.Resources/deployments",
+        "apiVersion": "2020-10-01",
+        "name": "Module",
+        "properties": {
+          "expressionEvaluationOptions": {
+            "scope": "inner"
+          },
+          "mode": "Incremental",
+          "parameters": {
+            "moduleParameter": {
+              "value": "[parameters('mainParameter')]"
+            }
+          },
+          "template": {
+            "$schema": "https://schema.management.azure.com/schemas/2019-04-01/deploymentTemplate.json#",
+            "contentVersion": "1.0.0.0",
+            "metadata": {
+              "_generator": {
+                "name": "bicep",
+                "version": "0.9.1.41621",
+                "templateHash": "15490559216858461434"
+              }
+            },
+            "parameters": {
+              "moduleParameter": {
+                "type": "string"
+              }
+            },
+            "resources": []
+          }
+        }
+      }
+    ]
+  }
\ No newline at end of file