diff --git a/lib/Template/Provider.pm b/lib/Template/Provider.pm
index 3fe798b1..b55a6dba 100644
--- a/lib/Template/Provider.pm
+++ b/lib/Template/Provider.pm
@@ -711,7 +711,7 @@ sub _refresh {
                 if $self->{ DEBUG };
 
             ($data, $error) = $self->_load($slot->[ NAME ], $slot->[ DATA ]->{ name });
-            ($data, $error) = $self->_compile($data)
+            ($data, $error) = $self->_compile($data, $self->_compiled_filename($slot->[ NAME ]))
                 unless $error;
 
             if ($error) {
diff --git a/t/compile6.t b/t/compile6.t
new file mode 100644
index 00000000..c6ce8a7b
--- /dev/null
+++ b/t/compile6.t
@@ -0,0 +1,116 @@
+#============================================================= -*-perl-*-
+#
+# t/compile6.t
+#
+# Test that when a template source file changes on disk and is
+# recompiled via _refresh(), the compiled file on disk is also
+# updated (not just the in-memory cache).
+#
+# This is a regression test for the bug described in:
+#   https://github.com/abw/Template2/issues/98
+#   https://github.com/abw/Template2/pull/197
+#
+#========================================================================
+
+use strict;
+use warnings;
+use lib qw( ./lib ../lib );
+use File::Temp qw( tempdir );
+use File::Path qw( mkpath rmtree );
+use File::Spec;
+use Template;
+use Test::More tests => 8;
+
+# Set up temp directories for source and compiled templates
+my $srcdir  = tempdir( CLEANUP => 1 );
+my $compdir = tempdir( CLEANUP => 1 );
+
+my $src_file  = File::Spec->catfile($srcdir, 'hello.tt');
+my $comp_ext  = '.ttc';
+
+# Step 1: Write the initial template source
+write_file($src_file, '[% "Hello, original" %]');
+
+# Step 2: Create a Template object with COMPILE_DIR + COMPILE_EXT
+my $tt = Template->new({
+    INCLUDE_PATH => $srcdir,
+    COMPILE_DIR  => $compdir,
+    COMPILE_EXT  => $comp_ext,
+    STAT_TTL     => 0,  # always stat the file
+});
+ok($tt, 'Template object created');
+
+# Step 3: Process the template for the first time (triggers _fetch + _compile with filename)
+my $output = '';
+ok($tt->process('hello.tt', {}, \$output), 'first process succeeds')
+    || diag $tt->error;
+is($output, 'Hello, original', 'first output is correct');
+
+# Step 4: Verify compiled file was written to disk
+my $comp_file = find_compiled_file($compdir, 'hello.tt' . $comp_ext);
+ok($comp_file && -f $comp_file, 'compiled file exists on disk after first compile');
+
+# Record the compiled file's content for later comparison
+my $compiled_content_v1 = read_file($comp_file);
+
+# Step 5: Modify the source template (with a newer mtime)
+# Sleep briefly to ensure the mtime changes
+sleep(1);
+write_file($src_file, '[% "Hello, updated" %]');
+
+# Step 6: Process the template again — this should trigger _refresh() which recompiles
+$output = '';
+ok($tt->process('hello.tt', {}, \$output), 'second process succeeds after source change')
+    || diag $tt->error;
+is($output, 'Hello, updated', 'second output reflects updated source');
+
+# Step 7: Verify the compiled file on disk was also updated
+my $compiled_content_v2 = read_file($comp_file);
+isnt($compiled_content_v2, $compiled_content_v1,
+    'compiled file on disk was updated after source changed');
+like($compiled_content_v2, qr/updated/,
+    'compiled file contains the new template content');
+
+# -- helpers --
+
+sub write_file {
+    my ($path, $content) = @_;
+    open(my $fh, '>', $path) or die "Cannot write $path: $!";
+    print $fh $content;
+    close($fh);
+}
+
+sub read_file {
+    my ($path) = @_;
+    return undef unless $path && -f $path;
+    open(my $fh, '<', $path) or die "Cannot read $path: $!";
+    local $/;
+    my $content = <$fh>;
+    close($fh);
+    return $content;
+}
+
+sub find_compiled_file {
+    my ($dir, $suffix) = @_;
+    # The compiled file path is $COMPILE_DIR + $src_path + $COMPILE_EXT
+    # We need to find it recursively since the full source path is embedded
+    my @found;
+    _find_files($dir, $suffix, \@found);
+    return $found[0];
+}
+
+sub _find_files {
+    my ($dir, $suffix, $found) = @_;
+    opendir(my $dh, $dir) or return;
+    while (my $entry = readdir($dh)) {
+        next if $entry eq '.' || $entry eq '..';
+        my $path = File::Spec->catfile($dir, $entry);
+        if (-d $path) {
+            _find_files($path, $suffix, $found);
+        }
+        elsif ($path =~ /\Q$suffix\E$/) {
+            push @$found, $path;
+        }
+    }
+    closedir($dh);
+}