diff --git a/dvc/parsing/context.py b/dvc/parsing/context.py
index a9abbf5661..b911ab8fc4 100644
--- a/dvc/parsing/context.py
+++ b/dvc/parsing/context.py
@@ -62,7 +62,7 @@ def __init__(self, key, new, into):
         )
 
 
-class ParamsFileNotFound(ContextError):
+class ParamsLoadError(ContextError):
     pass
 
 
@@ -349,7 +349,9 @@ def select(
     def load_from(cls, tree, path: PathInfo, select_keys=None) -> "Context":
         file = relpath(path)
         if not tree.exists(path):
-            raise ParamsFileNotFound(f"'{file}' does not exist")
+            raise ParamsLoadError(f"'{file}' does not exist")
+        if tree.isdir(path):
+            raise ParamsLoadError(f"'{file}' is a directory")
 
         _, ext = os.path.splitext(file)
         loader = LOADERS[ext]
@@ -357,7 +359,7 @@ def load_from(cls, tree, path: PathInfo, select_keys=None) -> "Context":
         data = loader(path, tree=tree)
         if not isinstance(data, Mapping):
             typ = type(data).__name__
-            raise ContextError(
+            raise ParamsLoadError(
                 f"expected a dictionary, got '{typ}' in file '{file}'"
             )
 
@@ -367,7 +369,7 @@ def load_from(cls, tree, path: PathInfo, select_keys=None) -> "Context":
                 data = {key: data[key] for key in select_keys}
             except KeyError as exc:
                 key, *_ = exc.args
-                raise ContextError(
+                raise ParamsLoadError(
                     f"could not find '{key}' in '{file}'"
                 ) from exc
 
diff --git a/tests/unit/test_context.py b/tests/unit/test_context.py
index 2cab30d18f..eae4dc056e 100644
--- a/tests/unit/test_context.py
+++ b/tests/unit/test_context.py
@@ -1,5 +1,6 @@
 from dataclasses import asdict
 from math import pi
+from unittest.mock import mock_open
 
 import pytest
 
@@ -10,13 +11,13 @@
     CtxList,
     KeyNotInContext,
     MergeError,
-    ParamsFileNotFound,
+    ParamsLoadError,
     Value,
     recurse_not_a_node,
 )
 from dvc.tree.local import LocalTree
 from dvc.utils import relpath
-from dvc.utils.serialize import dump_yaml
+from dvc.utils.serialize import dump_yaml, dumps_yaml
 
 
 def test_context():
@@ -216,17 +217,13 @@ def test_overwrite_with_setitem():
 
 
 def test_load_from(mocker):
-    def _yaml_load(*args, **kwargs):
-        return {"x": {"y": {"z": 5}, "lst": [1, 2, 3]}, "foo": "foo"}
-
-    mocker.patch("dvc.parsing.context.LOADERS", {".yaml": _yaml_load})
-
-    class tree:
-        def exists(self, _):
-            return True
-
+    d = {"x": {"y": {"z": 5}, "lst": [1, 2, 3]}, "foo": "foo"}
+    tree = mocker.Mock(
+        open=mock_open(read_data=dumps_yaml(d)),
+        **{"exists.return_value": True, "isdir.return_value": False},
+    )
     file = "params.yaml"
-    c = Context.load_from(tree(), file)
+    c = Context.load_from(tree, file)
 
     assert asdict(c["x"].meta) == {
         "source": file,
@@ -430,7 +427,18 @@ def test_resolve_resolves_boolean_value():
     assert context.resolve_str("--flag ${disabled}") == "--flag false"
 
 
-def test_merge_from_raises_if_file_not_exist(tmp_dir, dvc):
-    context = Context(foo="bar")
-    with pytest.raises(ParamsFileNotFound):
-        context.merge_from(dvc.tree, DEFAULT_PARAMS_FILE, tmp_dir)
+def test_load_from_raises_if_file_not_exist(tmp_dir, dvc):
+    with pytest.raises(ParamsLoadError) as exc_info:
+        Context.load_from(dvc.tree, tmp_dir / DEFAULT_PARAMS_FILE)
+
+    assert str(exc_info.value) == "'params.yaml' does not exist"
+
+
+def test_load_from_raises_if_file_is_directory(tmp_dir, dvc):
+    data_dir = tmp_dir / "data"
+    data_dir.mkdir()
+
+    with pytest.raises(ParamsLoadError) as exc_info:
+        Context.load_from(dvc.tree, data_dir)
+
+    assert str(exc_info.value) == "'data' is a directory"