diff --git a/internal/build/build_test.go b/internal/build/build_test.go
index 3e007cec..bbd0aa6d 100644
--- a/internal/build/build_test.go
+++ b/internal/build/build_test.go
@@ -744,3 +744,68 @@ data:
 		t.Errorf("source directory was modified: (-got +want)%s", diff)
 	}
 }
+
+func Test_inMemoryBackend_Generate_parentRef(t *testing.T) {
+	// tmpDir/
+	//   configmap.yaml                  (referenced as ../../configmap.yaml)
+	//   overlay/sub/kustomization.yaml
+	tmpDir := t.TempDir()
+
+	cmYAML := `apiVersion: v1
+kind: ConfigMap
+metadata:
+  name: parent-cm
+data:
+  key: value
+`
+	if err := os.WriteFile(filepath.Join(tmpDir, "configmap.yaml"), []byte(cmYAML), 0o644); err != nil {
+		t.Fatalf("write: %v", err)
+	}
+
+	overlayDir := filepath.Join(tmpDir, "overlay", "sub")
+	if err := os.MkdirAll(overlayDir, 0o755); err != nil {
+		t.Fatalf("mkdir: %v", err)
+	}
+
+	kusYAML := `apiVersion: kustomize.config.k8s.io/v1beta1
+kind: Kustomization
+resources:
+- ../../configmap.yaml
+`
+	if err := os.WriteFile(filepath.Join(overlayDir, "kustomization.yaml"), []byte(kusYAML), 0o644); err != nil {
+		t.Fatalf("write: %v", err)
+	}
+
+	ks := unstructured.Unstructured{Object: map[string]interface{}{
+		"apiVersion": "kustomize.toolkit.fluxcd.io/v1",
+		"kind":       "Kustomization",
+		"metadata":   map[string]interface{}{"name": "test", "namespace": "default"},
+		"spec": map[string]interface{}{
+			"targetNamespace": "parent-ns",
+		},
+	}}
+	gen := kustomize.NewGenerator(overlayDir, ks)
+
+	backend := inMemoryBackend{}
+	fs, dir, _, err := backend.Generate(gen, overlayDir)
+	if err != nil {
+		t.Fatalf("Generate: %v", err)
+	}
+
+	// ../../configmap.yaml must resolve through the overlay
+	m, err := kustomize.Build(fs, dir)
+	if err != nil {
+		t.Fatalf("kustomize.Build failed (parent ref not resolved): %v", err)
+	}
+
+	resources := m.Resources()
+	if len(resources) != 1 {
+		t.Fatalf("expected 1 resource, got %d", len(resources))
+	}
+	if resources[0].GetName() != "parent-cm" {
+		t.Errorf("expected resource name parent-cm, got %s", resources[0].GetName())
+	}
+	if resources[0].GetNamespace() != "parent-ns" {
+		t.Errorf("expected namespace parent-ns, got %s", resources[0].GetNamespace())
+	}
+}