Method, system and computer program product for template-based vertical microcode instruction trace generation. An exemplary embodiment includes an instruction trace generation method, including generating a testcase for a millicoded instruction in an instruction trace pool, wherein the millicoded instruction is included in a parent instruction trace, processing the testcase to generate a millicode instruction trace snippet, editing the millicode instruction trace snippet to generate a templatized millimode snippet, processing the parent instruction trace, accessing the templatized millimode snippet, updating the templatized millimode snippet with a value from the parent instruction trace, and generating a millicoded instruction trace from the updated templatized millimode snippet.