diff --git a/CHANGELOG.md b/CHANGELOG.md
index ec7d3e4d..1413ea43 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -4,11 +4,12 @@
 
 ### Added
 
-- Typing support. [#698](https://github.com/NLeSC/python-template/pull/698)
+* Typing support. [#698](https://github.com/NLeSC/python-template/pull/698)
 
 ### Changed
 
 * Recommend `ruff format` instead of `yapf` for fixing code style readability [#695](https://github.com/NLeSC/python-template/pull/695)
+* Replace optional dependencies with dependency groups in template [#705](https://github.com/NLeSC/python-template/pull/705)
 
 ### Removed
 
diff --git a/template/pyproject.toml.jinja b/template/pyproject.toml.jinja
index 1a854574..6c155b8c 100644
--- a/template/pyproject.toml.jinja
+++ b/template/pyproject.toml.jinja
@@ -41,7 +41,7 @@ readme = {file = "README.md", content-type = "text/markdown"}
 requires-python = ">=3.10"
 version = "{{ version }}"
 
-[project.optional-dependencies]
+[dependency-groups]
 dev = [
     "build",  # build is not only used in publishing (below), but also in the template's test suite
     "bump-my-version",
@@ -104,16 +104,16 @@ command_line = "-m pytest"
 {%- endif %}
 
 [tool.tox]
-legacy_tox_ini = """
-[tox]
-envlist = py310,py311,py312
+requires = ["tox>=4.22"]
+env_list = [ "py310", "py311", "py312" ]
 skip_missing_interpreters = true
 {% if AddLocalTests -%}
-[testenv]
-commands = pytest
-extras = dev
+[tool.box.testenv]
+description = "Run test under {base_python}"
+commands = [["pytest"]]
+[tool.tox.env_run_base]
+dependency_groups = [ "dev" ]
 {%- endif %}
-"""
 
 [tool.ruff]
 line-length = 79
diff --git a/template/{% if AddDevDoc %}README.dev.md{% endif %}.jinja b/template/{% if AddDevDoc %}README.dev.md{% endif %}.jinja
index ebcb751a..f0d46201 100644
--- a/template/{% if AddDevDoc %}README.dev.md{% endif %}.jinja	
+++ b/template/{% if AddDevDoc %}README.dev.md{% endif %}.jinja	
@@ -18,9 +18,9 @@ python -m pip install --upgrade pip setuptools
 # install {{ package_name }} as an editable package
 python -m pip install --no-cache-dir --editable .
 # install development dependencies
-python -m pip install --no-cache-dir --editable .[dev]
+python -m pip install --no-cache-dir --editable . --group dev
 # install documentation dependencies only
-python -m pip install --no-cache-dir --editable .[docs]
+python -m pip install --no-cache-dir --editable . --group docs
 ```
 
 Afterwards check that the install directory is present in the `PATH` environment variable.
diff --git a/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddGitHubActionBuild %}build.yml{% endif %}.jinja b/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddGitHubActionBuild %}build.yml{% endif %}.jinja
index 4bddbb36..a03678fa 100644
--- a/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddGitHubActionBuild %}build.yml{% endif %}.jinja	
+++ b/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddGitHubActionBuild %}build.yml{% endif %}.jinja	
@@ -32,7 +32,7 @@ jobs:
       - name: Upgrade pip and install dependencies
         run: |
           python -m pip install --upgrade pip setuptools
-          python -m pip install .[dev,publishing]
+          python -m pip install . --group dev --group publishing
       - name: Run unit tests
         run: python -m pytest -v
       - name: Verify that we can build the package
@@ -58,7 +58,7 @@ jobs:
       - name: Upgrade pip and install dependencies
         run: |
           python -m pip install --upgrade pip setuptools
-          python -m pip install .[dev,publishing]
+          python -m pip install . --group dev
       - name: Check style against standards using ruff
         run: |
           ruff check .
@@ -78,7 +78,7 @@ jobs:
       - name: Upgrade pip and install dependencies
         run: |
           python -m pip install --upgrade pip setuptools
-          python -m pip install .[dev]
+          python -m pip install . --group dev
       - name: Run {{ SelectTypeChecker }}
         run: |
           {{ SelectTypeChecker }}
diff --git a/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddGitHubActionDocumentation %}documentation.yml{% endif %} b/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddGitHubActionDocumentation %}documentation.yml{% endif %}
index af2d22b3..2c3096bb 100644
--- a/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddGitHubActionDocumentation %}documentation.yml{% endif %}	
+++ b/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddGitHubActionDocumentation %}documentation.yml{% endif %}	
@@ -28,7 +28,7 @@ jobs:
       - name: Upgrade pip and install dependencies
         run: |
           python -m pip install --upgrade pip setuptools
-          python -m pip install .[dev,publishing]
+          python -m pip install . --group dev --group docs
       - name: Install pandoc using apt
         run: sudo apt install pandoc
       - name: Build documentation
diff --git a/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddSonarCloud %}sonarcloud.yml{% endif %} b/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddSonarCloud %}sonarcloud.yml{% endif %}
index c28505a4..3d3b10ad 100644
--- a/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddSonarCloud %}sonarcloud.yml{% endif %}	
+++ b/template/{% if HasWorkflows %}.github{% endif %}/workflows/{% if AddSonarCloud %}sonarcloud.yml{% endif %}	
@@ -28,7 +28,7 @@ jobs:
           which python
           python --version
       - name: Install dependencies
-        run: python -m pip install .[dev]
+        run: python -m pip install . --group dev
       - name: Run unit tests with coverage
         run: python -m pytest --cov --cov-report term --cov-report xml --junitxml=xunit-result.xml tests/
       - name: Correct coverage paths
diff --git a/tests/test_project.py b/tests/test_project.py
index a2b5a35f..78ef3012 100644
--- a/tests/test_project.py
+++ b/tests/test_project.py
@@ -64,7 +64,7 @@ def baked_with_development_dependencies(copie_session, project_env_bin_dir, copi
     bin_dir = project_env_bin_dir
     latest_pip_output = run([f'{bin_dir}python', '-m', 'pip', 'install', '--upgrade', 'pip', 'setuptools'], project_dir)
     assert latest_pip_output.returncode == 0
-    pip_output = run([f'{bin_dir}python', '-m', 'pip', 'install', '--editable', '.[dev]'], project_dir)
+    pip_output = run([f'{bin_dir}python', '-m', 'pip', 'install', '--editable', '.', '--group', 'dev'], project_dir)
     assert pip_output.returncode == 0
     return project_dir
 
@@ -91,7 +91,7 @@ def test_tox(baked_with_development_dependencies, project_env_bin_dir):
     bin_dir = project_env_bin_dir
     result = run([f'{bin_dir}tox'], project_dir)
     assert result.returncode == 0
-    assert '== 3 passed in' in result.stdout
+    assert 'congratulations :)' in result.stdout
     # assert (project_dir / '.tox' / 'dist' / 'my_python_package-0.1.0.zip').exists()
     assert (project_dir / '.tox' / '.pkg'  / 'dist'/ 'my_python_package-0.1.0.tar.gz').exists()