diff --git a/lib/reactionview/template/handlers/erb.rb b/lib/reactionview/template/handlers/erb.rb
index f932c1d..e5eb2d1 100644
--- a/lib/reactionview/template/handlers/erb.rb
+++ b/lib/reactionview/template/handlers/erb.rb
@@ -7,12 +7,31 @@ class ERB < ActionView::Template::Handlers::ERB
         autoload :Herb, "reactionview/template/handlers/herb/herb"
 
         def call(template, source)
-          if template.format == :html && ReActionView.config.intercept_erb
+          if intercept_template?(template)
             ::ReActionView::Template::Handlers::Herb.call(template, source)
           else
             super
           end
         end
+
+        private
+
+        def intercept_template?(template)
+          template.format == :html && ReActionView.config.intercept_erb && local_template?(template)
+        end
+
+        def local_template?(template)
+          return true unless template.respond_to?(:identifier) && template.identifier
+          return false if vendored_template?(template)
+
+          template.identifier.start_with?(Rails.root.to_s)
+        end
+
+        def vendored_template?(template)
+          return false unless defined?(Bundler)
+
+          template.identifier.start_with?(Bundler.bundle_path.to_s)
+        end
       end
     end
   end
diff --git a/test/template/handlers/herb_test.rb b/test/template/handlers/herb_test.rb
index b01a4b8..44cee8d 100644
--- a/test/template/handlers/herb_test.rb
+++ b/test/template/handlers/herb_test.rb
@@ -99,7 +99,7 @@ def @view_context.user_path(id)
       "/users/#{id}"
     end
 
-    template_obj = ActionView::Template.new(
+    template_object = ActionView::Template.new(
       template,
       "test_template",
       ReActionView::Template::Handlers::ERB,
@@ -107,7 +107,7 @@ def @view_context.user_path(id)
       format: :html,
       locals: []
     )
-    compiled_source = template_obj.handler.call(template_obj, template)
+    compiled_source = template_object.handler.call(template_object, template)
 
     @view_context.instance_variable_set(:@user, {
       name: "John Doe",
@@ -160,7 +160,7 @@ def @view_context.ui_badge(count, **_options)
       "<span class=\"badge\">#{count}</span>".html_safe
     end
 
-    template_obj = ActionView::Template.new(
+    template_object = ActionView::Template.new(
       template,
       "test_template",
       ReActionView::Template::Handlers::ERB,
@@ -168,7 +168,7 @@ def @view_context.ui_badge(count, **_options)
       format: :html,
       locals: []
     )
-    compiled_source = template_obj.handler.call(template_obj, template)
+    compiled_source = template_object.handler.call(template_object, template)
 
     @view_context.instance_variable_set(:@show_countries, true)
     result = @view_context.instance_eval(compiled_source).to_s
@@ -365,4 +365,75 @@ def @view_context.ui_badge(count, **_options)
 
     assert_compiled_snapshot(template)
   end
+
+  test "does not process templates that are not local" do
+    ReActionView.config.intercept_erb = true
+
+    template = %(<p><h2>I am invalid</h2></p>)
+    template_object = ActionView::Template.new(
+      template,
+      "test_template",
+      ReActionView::Template::Handlers::ERB,
+      virtual_path: "test",
+      format: :html,
+      locals: []
+    )
+
+    compiled_source = Rails.stub(:root, Pathname.new("/local/template")) do
+      template_object.handler.call(template_object, template)
+    end
+
+    result = @view_context.instance_eval(compiled_source).to_s
+
+    normalized_result = result.gsub(/>\s+</, "><").gsub(/\s+/, " ").strip
+    assert_equal "<p><h2>I am invalid</h2></p>", normalized_result
+  end
+
+  test "does not process templates from gems vendored inside the application" do
+    ReActionView.config.intercept_erb = true
+
+    template = %(<p><h2>I am invalid</h2></p>)
+    template_object = ActionView::Template.new(
+      template,
+      "/app/vendor/bundle/ruby/3.4.0/gems/actionpack-8.1.2/lib/action_dispatch/middleware/templates/rescues/routing_error.html.erb",
+      ReActionView::Template::Handlers::ERB,
+      virtual_path: "rescues/routing_error",
+      format: :html,
+      locals: []
+    )
+
+    compiled_source = Rails.stub(:root, Pathname.new("/app")) do
+      Bundler.stub(:bundle_path, Pathname.new("/app/vendor/bundle")) do
+        template_object.handler.call(template_object, template)
+      end
+    end
+
+    result = @view_context.instance_eval(compiled_source).to_s
+
+    normalized_result = result.gsub(/>\s+</, "><").gsub(/\s+/, " ").strip
+    assert_equal "<p><h2>I am invalid</h2></p>", normalized_result
+  end
+
+  test "processes application templates when gems are vendored inside the application" do
+    ReActionView.config.intercept_erb = true
+    ReActionView.config.debug_mode = true
+
+    template = %(<div><h1>Hello</h1></div>)
+    template_object = ActionView::Template.new(
+      template,
+      "/app/app/views/users/show.html.erb",
+      ReActionView::Template::Handlers::ERB,
+      virtual_path: "users/show",
+      format: :html,
+      locals: []
+    )
+
+    compiled_source = Rails.stub(:root, Pathname.new("/app")) do
+      Bundler.stub(:bundle_path, Pathname.new("/app/vendor/bundle")) do
+        template_object.handler.call(template_object, template)
+      end
+    end
+
+    assert_includes compiled_source, %(data-herb-debug-file-full-path="/app/app/views/users/show.html.erb")
+  end
 end