diff --git a/pkg/reposerverextract/extract.go b/pkg/reposerverextract/extract.go
index b8c1de47..f7696849 100644
--- a/pkg/reposerverextract/extract.go
+++ b/pkg/reposerverextract/extract.go
@@ -867,6 +867,27 @@ func copyDir(src, dst string) error {
 		if info.IsDir() {
 			return os.MkdirAll(dstPath, 0o755)
 		}
+		// filepath.Walk does not follow symlinks, so info describes the link
+		// itself (IsDir() is false even when it points at a directory). Passing
+		// such a link to copyFile would os.Open() the target directory and
+		// io.Copy() it, which fails with EISDIR ("is a directory"). Resolve the
+		// link and, when it targets a directory, recurse so the directory's
+		// contents are materialized at the destination — matching how Argo CD's
+		// repo-server reads a chart's on-disk content. This is common in charts
+		// that vendor assets via directory symlinks (e.g. files/sql -> ../../sql).
+		if info.Mode()&os.ModeSymlink != 0 {
+			target, err := os.Stat(srcPath)
+			if err != nil {
+				return err
+			}
+			if target.IsDir() {
+				resolved, err := filepath.EvalSymlinks(srcPath)
+				if err != nil {
+					return err
+				}
+				return copyDir(resolved, dstPath)
+			}
+		}
 		return copyFile(srcPath, dstPath)
 	})
 }
diff --git a/pkg/reposerverextract/extract_test.go b/pkg/reposerverextract/extract_test.go
index e15759ad..91dc81b4 100644
--- a/pkg/reposerverextract/extract_test.go
+++ b/pkg/reposerverextract/extract_test.go
@@ -1354,3 +1354,31 @@ func TestCollectRepoURLs_Empty(t *testing.T) {
 	urls := collectRepoURLs([]argoapplication.ArgoResource{})
 	assert.Empty(t, urls)
 }
+
+// copyDir must follow a symlink that points at a directory and materialize its
+// contents at the destination. Before the fix it byte-copied the link, which
+// os.Open()-ed the target directory and failed with EISDIR ("is a directory").
+// Charts commonly vendor assets this way (e.g. files/sql -> ../../farm-api/sql).
+func TestCopyDir_FollowsDirectorySymlink(t *testing.T) {
+	root := t.TempDir()
+
+	// The symlink target: a real directory (outside the chart) with a file in it.
+	external := filepath.Join(root, "external", "sql")
+	require.NoError(t, os.MkdirAll(external, 0o755))
+	require.NoError(t, os.WriteFile(filepath.Join(external, "V1__init.sql"), []byte("SELECT 1;"), 0o644))
+
+	// The chart dir: a regular file plus files/sql -> the external directory.
+	chart := filepath.Join(root, "chart")
+	require.NoError(t, os.MkdirAll(filepath.Join(chart, "files"), 0o755))
+	require.NoError(t, os.WriteFile(filepath.Join(chart, "Chart.yaml"), []byte("name: c\n"), 0o644))
+	require.NoError(t, os.Symlink(external, filepath.Join(chart, "files", "sql")))
+
+	dst := filepath.Join(root, "dst")
+	require.NoError(t, copyDir(chart, dst))
+
+	// The regular file and the symlinked directory's contents are both present.
+	assert.FileExists(t, filepath.Join(dst, "Chart.yaml"))
+	got, err := os.ReadFile(filepath.Join(dst, "files", "sql", "V1__init.sql"))
+	require.NoError(t, err)
+	assert.Equal(t, "SELECT 1;", string(got))
+}