diff --git a/pkg/state/issue_2296_test.go b/pkg/state/issue_2296_test.go
index 549ad7c9..ebcce047 100644
--- a/pkg/state/issue_2296_test.go
+++ b/pkg/state/issue_2296_test.go
@@ -149,60 +149,74 @@ func (h *updateRepoTracker) UpdateRepo() error {
 // TestRunHelmDepBuilds_HelmDefaultsSkipRefresh verifies that when
 // helmDefaults.skipRefresh=true, runHelmDepBuilds skips the UpdateRepo call
 // even when opts.SkipRefresh is false. This is a regression test for issue #2269.
+// It also verifies that UpdateRepo is skipped when only OCI repos are configured,
+// as OCI repos don't need `helm repo update` (they use `helm registry login` instead).
 func TestRunHelmDepBuilds_HelmDefaultsSkipRefresh(t *testing.T) {
 	tests := []struct {
 		name                    string
 		optsSkipRefresh         bool
 		helmDefaultsSkipRefresh bool
-		hasRepos                bool
+		repos                   []RepositorySpec
 		expectUpdateRepo        bool
 	}{
 		{
 			name:                    "no skip flags and repos exist - UpdateRepo called",
 			optsSkipRefresh:         false,
 			helmDefaultsSkipRefresh: false,
-			hasRepos:                true,
+			repos:                   []RepositorySpec{{Name: "stable", URL: "https://example.com"}},
 			expectUpdateRepo:        true,
 		},
 		{
 			name:                    "opts.SkipRefresh=true - UpdateRepo skipped",
 			optsSkipRefresh:         true,
 			helmDefaultsSkipRefresh: false,
-			hasRepos:                true,
+			repos:                   []RepositorySpec{{Name: "stable", URL: "https://example.com"}},
 			expectUpdateRepo:        false,
 		},
 		{
 			name:                    "helmDefaults.skipRefresh=true - UpdateRepo skipped",
 			optsSkipRefresh:         false,
 			helmDefaultsSkipRefresh: true,
-			hasRepos:                true,
+			repos:                   []RepositorySpec{{Name: "stable", URL: "https://example.com"}},
 			expectUpdateRepo:        false,
 		},
 		{
 			name:                    "no repos configured - UpdateRepo skipped",
 			optsSkipRefresh:         false,
 			helmDefaultsSkipRefresh: false,
-			hasRepos:                false,
+			repos:                   nil,
 			expectUpdateRepo:        false,
 		},
+		{
+			name:                    "only OCI repos configured - UpdateRepo skipped",
+			optsSkipRefresh:         false,
+			helmDefaultsSkipRefresh: false,
+			repos:                   []RepositorySpec{{Name: "karpenter", URL: "public.ecr.aws/karpenter", OCI: true}},
+			expectUpdateRepo:        false,
+		},
+		{
+			name:                    "mixed repos (OCI + non-OCI) - UpdateRepo called",
+			optsSkipRefresh:         false,
+			helmDefaultsSkipRefresh: false,
+			repos: []RepositorySpec{
+				{Name: "karpenter", URL: "public.ecr.aws/karpenter", OCI: true},
+				{Name: "stable", URL: "https://charts.helm.sh/stable"},
+			},
+			expectUpdateRepo: true,
+		},
 	}
 
 	for _, tt := range tests {
 		t.Run(tt.name, func(t *testing.T) {
 			helm := &updateRepoTracker{}
 
-			var repos []RepositorySpec
-			if tt.hasRepos {
-				repos = []RepositorySpec{{Name: "stable", URL: "https://example.com"}}
-			}
-
 			st := &HelmState{
 				logger: logger,
 				ReleaseSetSpec: ReleaseSetSpec{
 					HelmDefaults: HelmSpec{
 						SkipRefresh: tt.helmDefaultsSkipRefresh,
 					},
-					Repositories: repos,
+					Repositories: tt.repos,
 				},
 			}
 
@@ -284,3 +298,58 @@ func TestSkipReposLogic(t *testing.T) {
 		})
 	}
 }
+
+// TestNeedsRepoUpdate tests the NeedsRepoUpdate function.
+// This is a regression test for issue #2418.
+func TestNeedsRepoUpdate(t *testing.T) {
+	tests := []struct {
+		name     string
+		repos    []RepositorySpec
+		expected bool
+	}{
+		{
+			name:     "no repos configured",
+			repos:    nil,
+			expected: false,
+		},
+		{
+			name:     "only non-OCI repos",
+			repos:    []RepositorySpec{{Name: "stable", URL: "https://charts.helm.sh/stable"}},
+			expected: true,
+		},
+		{
+			name:     "only OCI repos",
+			repos:    []RepositorySpec{{Name: "karpenter", URL: "public.ecr.aws/karpenter", OCI: true}},
+			expected: false,
+		},
+		{
+			name: "mixed repos (OCI + non-OCI)",
+			repos: []RepositorySpec{
+				{Name: "karpenter", URL: "public.ecr.aws/karpenter", OCI: true},
+				{Name: "stable", URL: "https://charts.helm.sh/stable"},
+			},
+			expected: true,
+		},
+		{
+			name: "multiple OCI repos",
+			repos: []RepositorySpec{
+				{Name: "karpenter", URL: "public.ecr.aws/karpenter", OCI: true},
+				{Name: "nginx", URL: "registry.example.com/nginx", OCI: true},
+			},
+			expected: false,
+		},
+	}
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			st := &HelmState{
+				ReleaseSetSpec: ReleaseSetSpec{
+					Repositories: tt.repos,
+				},
+			}
+			result := st.NeedsRepoUpdate()
+			assert.Equal(t, tt.expected, result,
+				"NeedsRepoUpdate mismatch: expected %v, got %v", tt.expected, result)
+		})
+	}
+}
diff --git a/pkg/state/state.go b/pkg/state/state.go
index 28967852..5b1c1ade 100644
--- a/pkg/state/state.go
+++ b/pkg/state/state.go
@@ -1860,8 +1860,9 @@ func (st *HelmState) runHelmDepBuilds(helm helmexec.Interface, concurrency int,
 	// Perform an update of repos once before running `helm dep build` so that we
 	// can safely pass --skip-refresh to the command to avoid doing a repo update
 	// for every iteration of the loop where charts have external dependencies.
-	// Only do this if there are repositories configured.
-	if len(builds) > 0 && !opts.SkipRefresh && !st.HelmDefaults.SkipRefresh && len(st.Repositories) > 0 {
+	// Only do this if there are non-OCI repositories configured.
+	// OCI repositories don't need `helm repo update` as they use `helm registry login` instead.
+	if len(builds) > 0 && !opts.SkipRefresh && !st.HelmDefaults.SkipRefresh && st.NeedsRepoUpdate() {
 		if err := helm.UpdateRepo(); err != nil {
 			return fmt.Errorf("updating repo: %w", err)
 		}
@@ -5081,6 +5082,17 @@ func (st *HelmState) IsOCIChart(chart string) bool {
 	return repo.OCI
 }
 
+// NeedsRepoUpdate returns true if there are any repositories that require `helm repo update`.
+// OCI repositories don't need `helm repo update` as they use `helm registry login` instead.
+func (st *HelmState) NeedsRepoUpdate() bool {
+	for _, repo := range st.Repositories {
+		if !repo.OCI {
+			return true
+		}
+	}
+	return false
+}
+
 // parseOCIChartRef parses an OCI chart URL into base URL, version tag, and digest.
 // Examples:
 //
diff --git a/test/integration/run.sh b/test/integration/run.sh
index c6480baf..7661ae70 100755
--- a/test/integration/run.sh
+++ b/test/integration/run.sh
@@ -132,6 +132,7 @@ ${kubectl} create namespace ${test_ns} || fail "Could not create namespace ${tes
 . ${dir}/test-cases/unittest.sh
 . ${dir}/test-cases/issue-2409-sequential-kubecontext.sh
 . ${dir}/test-cases/issue-2269.sh
+. ${dir}/test-cases/issue-2418.sh
 
 # ALL DONE -----------------------------------------------------------------------------------------------------------
 
diff --git a/test/integration/test-cases/issue-2418.sh b/test/integration/test-cases/issue-2418.sh
new file mode 100755
index 00000000..77e81598
--- /dev/null
+++ b/test/integration/test-cases/issue-2418.sh
@@ -0,0 +1,38 @@
+#!/usr/bin/env bash
+
+# Test for issue #2418: Skip helm repo update when only OCI repos are configured
+# When using only OCI repositories combined with a local chart, helmfile should NOT
+# attempt to run `helm repo update` which would fail with "no repositories found".
+
+issue_2418_input_dir="${cases_dir}/issue-2418/input"
+issue_2418_tmp=$(mktemp -d)
+issue_2418_output="${issue_2418_tmp}/template.log"
+
+cleanup_issue_2418() {
+  rm -rf "${issue_2418_tmp}"
+}
+trap cleanup_issue_2418 EXIT
+
+test_start "issue-2418: OCI repos + local chart should skip helm repo update"
+
+# Run helmfile template - this would fail with "no repositories found" before the fix
+# because it would attempt to run `helm repo update` for OCI repos
+info "Running helmfile template with OCI repo + local chart"
+${helmfile} -f "${issue_2418_input_dir}/helmfile.yaml" template > "${issue_2418_output}" 2>&1 || {
+  code=$?
+  cat "${issue_2418_output}"
+  
+  # Check if the failure is due to "no repositories found" error
+  if grep -q "no repositories found" "${issue_2418_output}"; then
+    fail "Issue #2418 regression: helm repo update was called for OCI-only repos"
+  fi
+  
+  fail "helmfile template failed with exit code ${code}"
+}
+
+info "SUCCESS: helmfile template completed without 'no repositories found' error"
+info "Template output:"
+cat "${issue_2418_output}"
+
+trap - EXIT
+test_pass "issue-2418: OCI repos + local chart should skip helm repo update"
diff --git a/test/integration/test-cases/issue-2418/input/customresources/Chart.yaml b/test/integration/test-cases/issue-2418/input/customresources/Chart.yaml
new file mode 100644
index 00000000..f03842cf
--- /dev/null
+++ b/test/integration/test-cases/issue-2418/input/customresources/Chart.yaml
@@ -0,0 +1,6 @@
+apiVersion: v2
+name: customresources
+description: A Helm chart for custom resources
+type: application
+version: 0.1.0
+appVersion: "1.0"
diff --git a/test/integration/test-cases/issue-2418/input/customresources/templates/notes.txt b/test/integration/test-cases/issue-2418/input/customresources/templates/notes.txt
new file mode 100644
index 00000000..be5f6927
--- /dev/null
+++ b/test/integration/test-cases/issue-2418/input/customresources/templates/notes.txt
@@ -0,0 +1 @@
+{{- /* Empty templates */ -}}
diff --git a/test/integration/test-cases/issue-2418/input/customresources/values.yaml b/test/integration/test-cases/issue-2418/input/customresources/values.yaml
new file mode 100644
index 00000000..4874d147
--- /dev/null
+++ b/test/integration/test-cases/issue-2418/input/customresources/values.yaml
@@ -0,0 +1 @@
+# Default values for customresources.
diff --git a/test/integration/test-cases/issue-2418/input/helmfile.yaml b/test/integration/test-cases/issue-2418/input/helmfile.yaml
new file mode 100644
index 00000000..bc884542
--- /dev/null
+++ b/test/integration/test-cases/issue-2418/input/helmfile.yaml
@@ -0,0 +1,9 @@
+repositories:
+  - name: karpenter
+    url: public.ecr.aws/karpenter
+    oci: true
+
+releases:
+- name: custom-resources
+  chart: ./customresources
+  namespace: default