diff --git a/cmd/helm/dependency.go b/cmd/helm/dependency.go
index b22c3926e..fe1cde114 100644
--- a/cmd/helm/dependency.go
+++ b/cmd/helm/dependency.go
@@ -127,7 +127,7 @@ func (l *dependencyListCmd) run() error {
 	r, err := chartutil.LoadRequirements(c)
 	if err != nil {
 		if err == chartutil.ErrRequirementsNotFound {
-			fmt.Fprintf(l.out, "WARNING: no requirements at %s/charts", l.chartpath)
+			fmt.Fprintf(l.out, "WARNING: no requirements at %s/charts\n", l.chartpath)
 			return nil
 		}
 		return err
diff --git a/pkg/downloader/manager.go b/pkg/downloader/manager.go
index a6106796d..60b8518ff 100644
--- a/pkg/downloader/manager.go
+++ b/pkg/downloader/manager.go
@@ -116,7 +116,6 @@ func (m *Manager) Update() error {
 		}
 		return err
 	}
-
 	// Check that all of the repos we're dependent on actually exist and
 	// the repo index names.
 	repoNames, err := m.getRepoNames(req.Dependencies)
@@ -201,6 +200,17 @@ func (m *Manager) downloadAll(deps []*chartutil.Dependency) error {
 		if err := m.safeDeleteDep(dep.Name, destPath); err != nil {
 			return err
 		}
+
+		if strings.HasPrefix(dep.Repository, "file://") {
+			fmt.Fprintf(m.Out, "Archiving %s from repo %s\n", dep.Name, dep.Repository)
+			ver, err := tarFromLocalDir(m.ChartPath, dep.Name, dep.Repository, dep.Version)
+			if err != nil {
+				return err
+			}
+			dep.Version = ver
+			continue
+		}
+
 		fmt.Fprintf(m.Out, "Downloading %s from repo %s\n", dep.Name, dep.Repository)
 
 		// Any failure to resolve/download a chart should fail:
@@ -257,10 +267,16 @@ func (m *Manager) hasAllRepos(deps []*chartutil.Dependency) error {
 		return err
 	}
 	repos := rf.Repositories
+
 	// Verify that all repositories referenced in the deps are actually known
 	// by Helm.
 	missing := []string{}
 	for _, dd := range deps {
+		// If repo is from local path, continue
+		if strings.HasPrefix(dd.Repository, "file://") {
+			continue
+		}
+
 		found := false
 		if dd.Repository == "" {
 			found = true
@@ -295,6 +311,22 @@ func (m *Manager) getRepoNames(deps []*chartutil.Dependency) (map[string]string,
 	// by Helm.
 	missing := []string{}
 	for _, dd := range deps {
+		// if dep chart is from local path, verify the path is valid
+		if strings.HasPrefix(dd.Repository, "file://") {
+			depPath, err := filepath.Abs(dd.Repository[7:])
+			if err != nil {
+				return nil, err
+			}
+
+			if _, err = os.Stat(depPath); os.IsNotExist(err) {
+				return nil, fmt.Errorf("directory %s not found: %s", depPath, err)
+			}
+
+			fmt.Fprintf(m.Out, "Repository from local path: %s\n", dd.Repository)
+			reposMap[dd.Name] = dd.Repository
+			continue
+		}
+
 		found := false
 
 		for _, repo := range repos {
@@ -480,3 +512,38 @@ func writeLock(chartpath string, lock *chartutil.RequirementsLock) error {
 	dest := filepath.Join(chartpath, "requirements.lock")
 	return ioutil.WriteFile(dest, data, 0644)
 }
+
+// archive a dep chart from local directory and save it into charts/
+func tarFromLocalDir(chartpath string, name string, repo string, version string) (string, error) {
+	destPath := filepath.Join(chartpath, "charts")
+	origPath, err := filepath.Abs(repo[7:])
+	if err != nil {
+		return "", err
+	}
+
+	if _, err = os.Stat(origPath); os.IsNotExist(err) {
+		return "", fmt.Errorf("directory %s not found: %s", origPath, err)
+	}
+
+	ch, err := chartutil.LoadDir(origPath)
+	if err != nil {
+		return "", err
+	}
+
+	constraint, err := semver.NewConstraint(version)
+	if err != nil {
+		return "", fmt.Errorf("dependency %s has an invalid version/constraint format: %s", name, err)
+	}
+
+	v, err := semver.NewVersion(ch.Metadata.Version)
+	if err != nil {
+		return "", err
+	}
+
+	if constraint.Check(v) {
+		_, err = chartutil.Save(ch, destPath)
+		return ch.Metadata.Version, err
+	}
+
+	return "", fmt.Errorf("Can't get a valid version for dependency %s.", name)
+}
diff --git a/pkg/downloader/manager_test.go b/pkg/downloader/manager_test.go
index 7224ccc41..4b15e6e09 100644
--- a/pkg/downloader/manager_test.go
+++ b/pkg/downloader/manager_test.go
@@ -113,6 +113,13 @@ func TestGetRepoNames(t *testing.T) {
 			},
 			expect: map[string]string{"oedipus-rex": "testing"},
 		},
+		{
+			name: "repo from local path",
+			req: []*chartutil.Dependency{
+				{Name: "local-dep", Repository: "file://./testdata/signtest"},
+			},
+			expect: map[string]string{"local-dep": "file://./testdata/signtest"},
+		},
 	}
 
 	for _, tt := range tests {
diff --git a/pkg/resolver/resolver.go b/pkg/resolver/resolver.go
index 480cea674..294ff33e7 100644
--- a/pkg/resolver/resolver.go
+++ b/pkg/resolver/resolver.go
@@ -19,6 +19,8 @@ import (
 	"bytes"
 	"encoding/json"
 	"fmt"
+	"os"
+	"path/filepath"
 	"strings"
 	"time"
 
@@ -55,6 +57,23 @@ func (r *Resolver) Resolve(reqs *chartutil.Requirements, repoNames map[string]st
 	locked := make([]*chartutil.Dependency, len(reqs.Dependencies))
 	missing := []string{}
 	for i, d := range reqs.Dependencies {
+		if strings.HasPrefix(d.Repository, "file://") {
+			depPath, err := filepath.Abs(d.Repository[7:])
+			if err != nil {
+				return nil, err
+			}
+
+			if _, err = os.Stat(depPath); os.IsNotExist(err) {
+				return nil, fmt.Errorf("directory %s not found", depPath)
+			}
+
+			locked[i] = &chartutil.Dependency{
+				Name:       d.Name,
+				Repository: d.Repository,
+				Version:    d.Version,
+			}
+			continue
+		}
 		constraint, err := semver.NewConstraint(d.Version)
 		if err != nil {
 			return nil, fmt.Errorf("dependency %q has an invalid version/constraint format: %s", d.Name, err)
diff --git a/pkg/resolver/resolver_test.go b/pkg/resolver/resolver_test.go
index 1f5409985..c284597a1 100644
--- a/pkg/resolver/resolver_test.go
+++ b/pkg/resolver/resolver_test.go
@@ -77,6 +77,15 @@ func TestResolve(t *testing.T) {
 				},
 			},
 		},
+		{
+			name: "repo from local invalid path",
+			req: &chartutil.Requirements{
+				Dependencies: []*chartutil.Dependency{
+					{Name: "notexist", Repository: "file://../testdata/notexist", Version: "0.1.0"},
+				},
+			},
+			err: true,
+		},
 	}
 
 	repoNames := map[string]string{"alpine": "kubernetes-charts", "redis": "kubernetes-charts"}