diff --git a/.changeset/fix-test-route-matching.md b/.changeset/fix-test-route-matching.md
new file mode 100644
index 0000000000..4f69688f86
--- /dev/null
+++ b/.changeset/fix-test-route-matching.md
@@ -0,0 +1,5 @@
+---
+'@backstage/frontend-test-utils': patch
+---
+
+Fixed `renderInTestApp` to set up React Router route matching when `mountedRoutes` are provided. Previously, mounted routes only fed the route resolution API for link generation (`useRouteRef`), but did not create `<Route>` elements for param extraction (`useParams`). This meant that `initialRouteEntries` had no effect on route param availability. The test element is now wrapped in `<Routes>` with a `<Route>` for each mounted path, matching the behavior of the real `AppRoutes` extension.
diff --git a/packages/frontend-test-utils/src/app/renderInTestApp.tsx b/packages/frontend-test-utils/src/app/renderInTestApp.tsx
index 170d6d7294..07dccd9eee 100644
--- a/packages/frontend-test-utils/src/app/renderInTestApp.tsx
+++ b/packages/frontend-test-utils/src/app/renderInTestApp.tsx
@@ -135,6 +135,7 @@ export function renderInTestApp<const TApiPairs extends any[] = any[]>(
       output: [coreExtensionData.reactElement],
       factory: () => {
         let content: JSX.Element = element;
+
         if (mountedPaths.length > 0) {
           content = (
             <Routes>
@@ -142,13 +143,14 @@ export function renderInTestApp<const TApiPairs extends any[] = any[]>(
                 <Route
                   key={path}
                   path={path === '/' ? path : `${path.replace(/\/$/, '')}/*`}
-                  element={element}
+                  element={content}
                 />
               ))}
-              <Route path="*" element={element} />
+              <Route path="*" element={content} />
             </Routes>
           );
         }
+
         return [coreExtensionData.reactElement(content)];
       },
     }),