diff --git a/cmd/helm/repo_index.go b/cmd/helm/repo_index.go
index 95e4b8aac..540057eb8 100644
--- a/cmd/helm/repo_index.go
+++ b/cmd/helm/repo_index.go
@@ -19,6 +19,7 @@ package main
 import (
 	"fmt"
 	"io"
+	"os"
 	"path/filepath"
 
 	"github.com/spf13/cobra"
@@ -86,9 +87,16 @@ func index(dir, url, mergeTo string) error {
 		return err
 	}
 	if mergeTo != "" {
-		i2, err := repo.LoadIndexFile(mergeTo)
-		if err != nil {
-			return fmt.Errorf("Merge failed: %s", err)
+		// if index.yaml is missing then create an empty one to merge into
+		var i2 *repo.IndexFile
+		if _, err := os.Stat(mergeTo); os.IsNotExist(err) {
+			i2 = repo.NewIndexFile()
+			i2.WriteFile(mergeTo, 0755)
+		} else {
+			i2, err = repo.LoadIndexFile(mergeTo)
+			if err != nil {
+				return fmt.Errorf("Merge failed: %s", err)
+			}
 		}
 		i.Merge(i2)
 	}
diff --git a/cmd/helm/repo_index_test.go b/cmd/helm/repo_index_test.go
index bd1010dd7..4d6313f6c 100644
--- a/cmd/helm/repo_index_test.go
+++ b/cmd/helm/repo_index_test.go
@@ -112,6 +112,36 @@ func TestRepoIndexCmd(t *testing.T) {
 	if vs[0].Version != expectedVersion {
 		t.Errorf("expected %q, got %q", expectedVersion, vs[0].Version)
 	}
+
+	// test that index.yaml gets generated on merge even when it doesn't exist
+	if err := os.Remove(destIndex); err != nil {
+		t.Fatal(err)
+	}
+
+	c.ParseFlags([]string{"--merge", destIndex})
+	if err := c.RunE(c, []string{dir}); err != nil {
+		t.Error(err)
+	}
+
+	_, err = repo.LoadIndexFile(destIndex)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	// verify it didn't create an empty index.yaml and the merged happened
+	if len(index.Entries) != 2 {
+		t.Errorf("expected 2 entries, got %d: %#v", len(index.Entries), index.Entries)
+	}
+
+	vs = index.Entries["compressedchart"]
+	if len(vs) != 3 {
+		t.Errorf("expected 3 versions, got %d: %#v", len(vs), vs)
+	}
+
+	expectedVersion = "0.3.0"
+	if vs[0].Version != expectedVersion {
+		t.Errorf("expected %q, got %q", expectedVersion, vs[0].Version)
+	}
 }
 
 func linkOrCopy(old, new string) error {