diff --git a/flux_local/values.py b/flux_local/values.py
index a8ee86a3..eb341740 100644
--- a/flux_local/values.py
+++ b/flux_local/values.py
@@ -174,6 +174,22 @@ def _lookup_value_reference(
     return found_value
 
 
+def _deep_merge(base: dict[str, Any], override: dict[str, Any]) -> dict[str, Any]:
+    """Recursively merge two dictionaries, similar to how Helm merges values. Lists are replaced entirely (Helm behavior)."""
+    result = base.copy()
+    for key, override_value in override.items():
+        base_value = result.get(key)
+        if (
+            base_value is not None
+            and isinstance(base_value, dict)
+            and isinstance(override_value, dict)
+        ):
+            result[key] = _deep_merge(base_value, override_value)
+        else:
+            result[key] = override_value
+    return result
+
+
 def _update_helmrelease_values(
     ref: ValuesReference,
     found_value: str,
@@ -196,11 +212,14 @@ def _update_helmrelease_values(
         inner_values[parts[-1]] = found_value
     else:
         obj = yaml.load(found_value, Loader=yaml.SafeLoader)
-        if not obj or not isinstance(obj, dict):
+        # Handle empty YAML file case
+        if obj is None:
+            obj = {}
+        if not isinstance(obj, dict):
             raise InputException(
                 f"Expected '{ref.name}' field '{ref.target_path}' values to be valid yaml, found {type(values)}"
             )
-        values.update(obj)
+        values = _deep_merge(values, obj)
 
     return values
 
diff --git a/tests/testdata/cluster8/apps/podinfo-values.yaml b/tests/testdata/cluster8/apps/podinfo-values.yaml
index 1c6a9b8b..b4f3e312 100644
--- a/tests/testdata/cluster8/apps/podinfo-values.yaml
+++ b/tests/testdata/cluster8/apps/podinfo-values.yaml
@@ -9,7 +9,7 @@ data:
     redis:
       enabled: true
       repository: public.ecr.aws/docker/library/redis
-      tag: 7.0.6
+      tag: 7.0.5
     ingress:
       enabled: true
       className: nginx
@@ -18,3 +18,7 @@ data:
           paths:
             - path: /
               pathType: ImplementationSpecific
+  empty-values.yaml: ""
+  patch-values.yaml: |-
+    redis:
+      tag: 7.0.6
diff --git a/tests/testdata/cluster8/apps/podinfo.yaml b/tests/testdata/cluster8/apps/podinfo.yaml
index 20389087..214f6378 100644
--- a/tests/testdata/cluster8/apps/podinfo.yaml
+++ b/tests/testdata/cluster8/apps/podinfo.yaml
@@ -31,6 +31,12 @@ spec:
   valuesFrom:
     - kind: ConfigMap
       name: podinfo-values
+    - kind: ConfigMap
+      name: podinfo-values
+      valuesKey: empty-values.yaml
+    - kind: ConfigMap
+      name: podinfo-values
+      valuesKey: patch-values.yaml
     - kind: Secret
       name: podinfo-tls-values
       valuesKey: crt
diff --git a/tests/tool/__snapshots__/test_build.ambr b/tests/tool/__snapshots__/test_build.ambr
index 4d71a5c9..db48e61c 100644
--- a/tests/tool/__snapshots__/test_build.ambr
+++ b/tests/tool/__snapshots__/test_build.ambr
@@ -948,6 +948,12 @@
     valuesFrom:
     - kind: ConfigMap
       name: podinfo-values
+    - kind: ConfigMap
+      name: podinfo-values
+      valuesKey: empty-values.yaml
+    - kind: ConfigMap
+      name: podinfo-values
+      valuesKey: patch-values.yaml
     - kind: Secret
       name: podinfo-tls-values
       optional: true
@@ -956,11 +962,15 @@
   ---
   apiVersion: v1
   data:
+    empty-values.yaml: ""
+    patch-values.yaml: |-
+      redis:
+        tag: 7.0.6
     values.yaml: |-
       redis:
         enabled: true
         repository: public.ecr.aws/docker/library/redis
-        tag: 7.0.6
+        tag: 7.0.5
       ingress:
         enabled: true
         className: nginx
@@ -6333,6 +6343,12 @@
     valuesFrom:
     - kind: ConfigMap
       name: podinfo-values
+    - kind: ConfigMap
+      name: podinfo-values
+      valuesKey: empty-values.yaml
+    - kind: ConfigMap
+      name: podinfo-values
+      valuesKey: patch-values.yaml
     - kind: Secret
       name: podinfo-tls-values
       optional: true
@@ -6341,11 +6357,15 @@
   ---
   apiVersion: v1
   data:
+    empty-values.yaml: ""
+    patch-values.yaml: |-
+      redis:
+        tag: 7.0.6
     values.yaml: |-
       redis:
         enabled: true
         repository: public.ecr.aws/docker/library/redis
-        tag: 7.0.6
+        tag: 7.0.5
       ingress:
         enabled: true
         className: nginx