diff --git a/pkg/state/helmx.go b/pkg/state/helmx.go
index bf7bd46a..d8edd80a 100644
--- a/pkg/state/helmx.go
+++ b/pkg/state/helmx.go
@@ -448,7 +448,8 @@ func (st *HelmState) PrepareChartify(helm helmexec.Interface, release *ReleaseSp
 
 	for _, d := range release.Dependencies {
 		chart := d.Chart
-		if st.fs.DirectoryExistsAt(chart) {
+		normalizedChart := normalizeChart(st.basePath, chart)
+		if st.fs.DirectoryExistsAt(normalizedChart) {
 			var err error
 
 			// Otherwise helm-dependency-up on the temporary chart generated by chartify ends up errors like:
diff --git a/pkg/state/issue_2596_test.go b/pkg/state/issue_2596_test.go
new file mode 100644
index 00000000..f8685bce
--- /dev/null
+++ b/pkg/state/issue_2596_test.go
@@ -0,0 +1,138 @@
+package state
+
+import (
+	"os"
+	"path/filepath"
+	"testing"
+
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+
+	"github.com/helmfile/helmfile/pkg/filesystem"
+)
+
+// TestLocalDependencyChartPathNormalization tests that relative chart paths in
+// release dependencies (like "../chart") are normalized to absolute paths
+// relative to basePath before checking if the directory exists.
+// This is a regression test for issue #2596.
+//
+// Background: When helmfile.d/ contains multiple release files and one release
+// has a local chart dependency (chart: ../chart), the dependency chart path was
+// passed to DirectoryExistsAt without normalization, causing it to be resolved
+// relative to the CWD instead of basePath. This made helmfile fail to detect
+// the local chart and instead try to resolve it as a remote repo, resulting in
+// "failed reading adhoc dependencies: no helm list entry found for repository".
+func TestLocalDependencyChartPathNormalization(t *testing.T) {
+	tempDir := t.TempDir()
+
+	chartDir := filepath.Join(tempDir, "chart")
+	require.NoError(t, os.MkdirAll(chartDir, 0755))
+	require.NoError(t, os.WriteFile(filepath.Join(chartDir, "Chart.yaml"), []byte(`
+apiVersion: v2
+name: test-chart
+version: 0.1.0
+`), 0644))
+
+	helmfileDir := filepath.Join(tempDir, "helmfile.d")
+	require.NoError(t, os.MkdirAll(helmfileDir, 0755))
+
+	tests := []struct {
+		name        string
+		chartPath   string
+		basePath    string
+		expectLocal bool
+	}{
+		{
+			name:        "relative path ../chart normalized from helmfile.d",
+			chartPath:   "../chart",
+			basePath:    helmfileDir,
+			expectLocal: true,
+		},
+		{
+			name:        "absolute path works unchanged",
+			chartPath:   chartDir,
+			basePath:    helmfileDir,
+			expectLocal: true,
+		},
+		{
+			name:        "non-existent relative path not detected as local",
+			chartPath:   "../nonexistent",
+			basePath:    helmfileDir,
+			expectLocal: false,
+		},
+	}
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			normalizedChart := normalizeChart(tt.basePath, tt.chartPath)
+			fs := filesystem.DefaultFileSystem()
+			isLocal := fs.DirectoryExistsAt(normalizedChart)
+			assert.Equal(t, tt.expectLocal, isLocal,
+				"normalizeChart(%q, %q) = %q, DirectoryExistsAt = %v, want %v",
+				tt.basePath, tt.chartPath, normalizedChart, isLocal, tt.expectLocal)
+		})
+	}
+}
+
+// TestDependencyChartPathResolutionWithPrepareChartify verifies that the dependency
+// chart path is normalized using basePath before calling DirectoryExistsAt,
+// which is the core of the fix for issue #2596.
+func TestDependencyChartPathResolutionWithPrepareChartify(t *testing.T) {
+	tempDir := t.TempDir()
+
+	chartDir := filepath.Join(tempDir, "chart")
+	require.NoError(t, os.MkdirAll(chartDir, 0755))
+	require.NoError(t, os.WriteFile(filepath.Join(chartDir, "Chart.yaml"), []byte(`
+apiVersion: v2
+name: test-chart
+version: 0.1.0
+`), 0644))
+
+	helmfileDir := filepath.Join(tempDir, "helmfile.d")
+	require.NoError(t, os.MkdirAll(helmfileDir, 0755))
+
+	fs := filesystem.DefaultFileSystem()
+
+	tests := []struct {
+		name           string
+		depChartPath   string
+		basePath       string
+		expectDetected bool
+	}{
+		{
+			name:           "relative ../chart from helmfile.d detected as local",
+			depChartPath:   "../chart",
+			basePath:       helmfileDir,
+			expectDetected: true,
+		},
+		{
+			name:           "absolute path detected as local",
+			depChartPath:   chartDir,
+			basePath:       helmfileDir,
+			expectDetected: true,
+		},
+		{
+			name:           "non-existent relative path not detected",
+			depChartPath:   "../nonexistent",
+			basePath:       helmfileDir,
+			expectDetected: false,
+		},
+	}
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			normalizedChart := normalizeChart(tt.basePath, tt.depChartPath)
+			isLocal := fs.DirectoryExistsAt(normalizedChart)
+			assert.Equal(t, tt.expectDetected, isLocal,
+				"normalizeChart(%q, %q) = %q, DirectoryExistsAt = %v, want %v",
+				tt.basePath, tt.depChartPath, normalizedChart, isLocal, tt.expectDetected)
+
+			if tt.expectDetected && !filepath.IsAbs(tt.depChartPath) {
+				absChart, err := filepath.Abs(filepath.Join(tt.basePath, tt.depChartPath))
+				require.NoError(t, err)
+				assert.Equal(t, absChart, normalizedChart,
+					"normalized path should match expected absolute path")
+			}
+		})
+	}
+}
diff --git a/test/integration/run.sh b/test/integration/run.sh
index be0a9c26..4f44bf12 100755
--- a/test/integration/run.sh
+++ b/test/integration/run.sh
@@ -143,6 +143,7 @@ ${kubectl} create namespace ${test_ns} || fail "Could not create namespace ${tes
 . ${dir}/test-cases/issue-2424-sequential-values-paths.sh
 . ${dir}/test-cases/issue-2431.sh
 . ${dir}/test-cases/issue-2544.sh
+. ${dir}/test-cases/issue-2596-local-deps-multiple-files.sh
 . ${dir}/test-cases/kubedog-tracking.sh
 
 # ALL DONE -----------------------------------------------------------------------------------------------------------
diff --git a/test/integration/test-cases/issue-2596-local-deps-multiple-files.sh b/test/integration/test-cases/issue-2596-local-deps-multiple-files.sh
new file mode 100644
index 00000000..84a06443
--- /dev/null
+++ b/test/integration/test-cases/issue-2596-local-deps-multiple-files.sh
@@ -0,0 +1,49 @@
+# Integration test for issue #2596: Local dependencies with multiple release files
+# https://github.com/helmfile/helmfile/issues/2596
+# Reproduction: https://github.com/vgivanov/helmfile-deps-local-chart
+#
+# This test uses the exact same structure as the reproduction repo:
+#   chart/Chart.yaml
+#   helmfile.d/release1.yaml  (chart: ../chart with dependencies)
+#   helmfile.d/release2.yaml  (chart: ../chart without dependencies)
+#
+# Before the fix, running `helmfile template` from this directory would fail with:
+#   "failed reading adhoc dependencies: no helm list entry found for repository"
+# because the relative dependency chart path "../chart" was not normalized against
+# basePath before calling DirectoryExistsAt.
+
+issue_2596_input_dir="${cases_dir}/issue-2596-local-deps-multiple-files/input"
+issue_2596_tmp=""
+
+cleanup_issue_2596() {
+  if [ -n "${issue_2596_tmp}" ] && [ -d "${issue_2596_tmp}" ]; then
+    rm -rf "${issue_2596_tmp}"
+  fi
+}
+trap cleanup_issue_2596 EXIT
+
+issue_2596_tmp=$(mktemp -d)
+helmfile_real="$(pwd)/${helmfile}"
+
+test_start "issue #2596: local deps with multiple release files"
+
+info "Testing helmfile template with local chart dependencies across multiple release files"
+
+cd "${issue_2596_input_dir}"
+
+${helmfile_real} template > "${issue_2596_tmp}/output.yaml" 2>&1
+result=$?
+
+cd - > /dev/null
+
+if [ $result -ne 0 ]; then
+    cat "${issue_2596_tmp}/output.yaml"
+    fail "helmfile template with local chart dependencies should not fail"
+fi
+
+info "Local chart dependencies with multiple release files works correctly"
+
+cleanup_issue_2596
+trap - EXIT
+
+test_pass "issue #2596: local deps with multiple release files"
diff --git a/test/integration/test-cases/issue-2596-local-deps-multiple-files/input/chart/Chart.yaml b/test/integration/test-cases/issue-2596-local-deps-multiple-files/input/chart/Chart.yaml
new file mode 100644
index 00000000..df2d97f9
--- /dev/null
+++ b/test/integration/test-cases/issue-2596-local-deps-multiple-files/input/chart/Chart.yaml
@@ -0,0 +1,24 @@
+apiVersion: v2
+name: chart
+description: A Helm chart for Kubernetes
+
+# A chart can be either an 'application' or a 'library' chart.
+#
+# Application charts are a collection of templates that can be packaged into versioned archives
+# to be deployed.
+#
+# Library charts provide useful utilities or functions for the chart developer. They're included as
+# a dependency of application charts to inject those utilities and functions into the rendering
+# pipeline. Library charts do not define any templates and therefore cannot be deployed.
+type: application
+
+# This is the chart version. This version number should be incremented each time you make changes
+# to the chart and its templates, including the app version.
+# Versions are expected to follow Semantic Versioning (https://semver.org/)
+version: 0.1.0
+
+# This is the version number of the application being deployed. This version number should be
+# incremented each time you make changes to the application. Versions are not expected to
+# follow Semantic Versioning. They should reflect the version the application is using.
+# It is recommended to use it with quotes.
+appVersion: "1.16.0"
diff --git a/test/integration/test-cases/issue-2596-local-deps-multiple-files/input/helmfile.d/release1.yaml b/test/integration/test-cases/issue-2596-local-deps-multiple-files/input/helmfile.d/release1.yaml
new file mode 100644
index 00000000..f2fbfe41
--- /dev/null
+++ b/test/integration/test-cases/issue-2596-local-deps-multiple-files/input/helmfile.d/release1.yaml
@@ -0,0 +1,8 @@
+---
+releases:
+  - name: release1
+    chart: ../chart
+    version: "*"
+    dependencies:
+      - chart: ../chart
+        version: "*"
diff --git a/test/integration/test-cases/issue-2596-local-deps-multiple-files/input/helmfile.d/release2.yaml b/test/integration/test-cases/issue-2596-local-deps-multiple-files/input/helmfile.d/release2.yaml
new file mode 100644
index 00000000..4182b9c6
--- /dev/null
+++ b/test/integration/test-cases/issue-2596-local-deps-multiple-files/input/helmfile.d/release2.yaml
@@ -0,0 +1,5 @@
+---
+releases:
+  - name: release2
+    chart: ../chart
+    version: "*"