diff --git a/cmd/helm/install.go b/cmd/helm/install.go
index 088d05106..218ad7c22 100644
--- a/cmd/helm/install.go
+++ b/cmd/helm/install.go
@@ -85,7 +85,7 @@ There are five different ways you can express the chart you want to install:
 2. By path to a packaged chart: helm install ./nginx-1.2.3.tgz
 3. By path to an unpacked chart directory: helm install ./nginx
 4. By absolute URL: helm install https://example.com/charts/nginx-1.2.3.tgz
-5. By chart reference and repo url: helm install --repo https://example.com/charts nginx
+5. By chart reference and repo url: helm install --repo https://example.com/charts/ nginx
 
 CHART REFERENCES
 
@@ -425,22 +425,7 @@ func locateChartPath(repoURL, name, version string, verify bool, keyring,
 		if err != nil {
 			return "", err
 		}
-
-		parsedChartURL, err := url.Parse(chartURL)
-		if err != nil {
-			return "", err
-		}
-
-		if parsedChartURL.IsAbs() {
-			name = chartURL
-		} else {
-			parsedRepoURL, err := url.Parse(repoURL)
-			if err != nil {
-				return "", err
-			}
-			name = parsedRepoURL.ResolveReference(parsedChartURL).String()
-		}
-
+		name = chartURL
 	}
 
 	if _, err := os.Stat(settings.Home.Archive()); os.IsNotExist(err) {
@@ -459,7 +444,7 @@ func locateChartPath(repoURL, name, version string, verify bool, keyring,
 		return filename, err
 	}
 
-	return filename, fmt.Errorf("file %q not found", name)
+	return filename, fmt.Errorf("failed to download %q", name)
 }
 
 func generateName(nameTemplate string) (string, error) {
diff --git a/docs/helm/helm_install.md b/docs/helm/helm_install.md
index 6ddb56cee..7e206f721 100644
--- a/docs/helm/helm_install.md
+++ b/docs/helm/helm_install.md
@@ -46,7 +46,7 @@ There are five different ways you can express the chart you want to install:
 2. By path to a packaged chart: helm install ./nginx-1.2.3.tgz
 3. By path to an unpacked chart directory: helm install ./nginx
 4. By absolute URL: helm install https://example.com/charts/nginx-1.2.3.tgz
-5. By chart reference and repo url: helm install --repo https://example.com/charts nginx
+5. By chart reference and repo url: helm install --repo https://example.com/charts/ nginx
 
 CHART REFERENCES
 
diff --git a/pkg/repo/chartrepo.go b/pkg/repo/chartrepo.go
index 236032eef..a7e0305c5 100644
--- a/pkg/repo/chartrepo.go
+++ b/pkg/repo/chartrepo.go
@@ -184,7 +184,7 @@ func (r *ChartRepository) generateIndex() error {
 }
 
 // FindChartInRepoURL finds chart in chart repository pointed by repoURL
-// without adding repo to repostiories
+// without adding repo to repositories
 func FindChartInRepoURL(repoURL, chartName, chartVersion, certFile, keyFile, caFile string, getters getter.Providers) (string, error) {
 
 	// Download and write the index file to a temporary location
@@ -227,5 +227,28 @@ func FindChartInRepoURL(repoURL, chartName, chartVersion, certFile, keyFile, caF
 		return "", fmt.Errorf("%s has no downloadable URLs", errMsg)
 	}
 
-	return cv.URLs[0], nil
+	chartURL := cv.URLs[0]
+
+	absoluteChartURL, err := MakeAbsoluteChartURL(repoURL, chartURL)
+	if err != nil {
+		return "", err
+	}
+
+	return absoluteChartURL, nil
+}
+
+// MakeAbsoluteChartURL resolves chartURL relative to repoURL.
+// If chartURL is absolute, it returns chartURL.
+func MakeAbsoluteChartURL(repoURL, chartURL string) (string, error) {
+	parsedRepoURL, err := url.Parse(repoURL)
+	if err != nil {
+		return "", err
+	}
+
+	parsedChartURL, err := url.Parse(chartURL)
+	if err != nil {
+		return "", err
+	}
+
+	return parsedRepoURL.ResolveReference(parsedChartURL).String(), nil
 }
diff --git a/pkg/repo/chartrepo_test.go b/pkg/repo/chartrepo_test.go
index 9f1bc995a..cc19fd0b0 100644
--- a/pkg/repo/chartrepo_test.go
+++ b/pkg/repo/chartrepo_test.go
@@ -277,3 +277,21 @@ func TestErrorFindChartInRepoURL(t *testing.T) {
 		t.Errorf("Expected error for chart not found, but got a different error (%v)", err)
 	}
 }
+
+func TestMakeAbsoluteChartURL(t *testing.T) {
+	chartURL, err := MakeAbsoluteChartURL("http://localhost:8123/charts/", "nginx-0.2.0.tgz")
+	if err != nil {
+		t.Errorf("%s", err)
+	}
+	if chartURL != "http://localhost:8123/charts/nginx-0.2.0.tgz" {
+		t.Errorf("%s", chartURL)
+	}
+
+	chartURL, err = MakeAbsoluteChartURL("http://localhost:8123", "https://kubernetes-charts.storage.googleapis.com/nginx-0.2.0.tgz")
+	if err != nil {
+		t.Errorf("%s", err)
+	}
+	if chartURL != "https://kubernetes-charts.storage.googleapis.com/nginx-0.2.0.tgz" {
+		t.Errorf("%s", chartURL)
+	}
+}