diff --git a/packages/agent/extcmd.go b/packages/agent/extcmd.go
index 0a7d3cb..8e5503e 100644
--- a/packages/agent/extcmd.go
+++ b/packages/agent/extcmd.go
@@ -269,12 +269,24 @@ func extInstall(args []string) error {
 	if _, err := os.Stat(filepath.Join(src, "extension.json")); err != nil {
 		return fmt.Errorf("source lacks extension.json")
 	}
-	name := filepath.Base(src)
+	// Resolve to an absolute, cleaned path before deriving the install
+	// name. Otherwise relative sources like "." or "./" collapse to a
+	// basename of ".", and the destination wrongly resolves to the
+	// extensions/ parent directory (which zot creates on first run),
+	// triggering a false "already exists" failure.
+	absSrc, err := filepath.Abs(src)
+	if err != nil {
+		return err
+	}
+	name := filepath.Base(absSrc)
+	if name == "." || name == ".." || name == string(filepath.Separator) || name == "" {
+		return fmt.Errorf("cannot derive extension name from %q", src)
+	}
 	out := filepath.Join(dest, name)
 	if _, err := os.Stat(out); err == nil {
 		return fmt.Errorf("destination %s already exists; remove it first", out)
 	}
-	if err := copyDir(src, out); err != nil {
+	if err := copyDir(absSrc, out); err != nil {
 		return err
 	}
 	fmt.Fprintf(os.Stderr, "installed %s\n", out)
diff --git a/packages/agent/extcmd_test.go b/packages/agent/extcmd_test.go
new file mode 100644
index 0000000..e0e3e5f
--- /dev/null
+++ b/packages/agent/extcmd_test.go
@@ -0,0 +1,71 @@
+package agent
+
+import (
+	"os"
+	"path/filepath"
+	"testing"
+)
+
+// TestExtInstallDotSource verifies that `zot ext install .` derives the
+// extension name from the resolved directory name rather than collapsing
+// to the extensions/ parent directory (the false "already exists" bug).
+func TestExtInstallDotSource(t *testing.T) {
+	home := t.TempDir()
+	t.Setenv("ZOT_HOME", home)
+
+	// Pre-create extensions/ to mimic a normal first run.
+	if err := os.MkdirAll(filepath.Join(home, "extensions"), 0o755); err != nil {
+		t.Fatal(err)
+	}
+
+	srcParent := t.TempDir()
+	src := filepath.Join(srcParent, "kagi")
+	if err := os.MkdirAll(src, 0o755); err != nil {
+		t.Fatal(err)
+	}
+	if err := os.WriteFile(filepath.Join(src, "extension.json"), []byte(`{"name":"kagi"}`), 0o644); err != nil {
+		t.Fatal(err)
+	}
+
+	cwd, err := os.Getwd()
+	if err != nil {
+		t.Fatal(err)
+	}
+	defer os.Chdir(cwd)
+	if err := os.Chdir(src); err != nil {
+		t.Fatal(err)
+	}
+
+	if err := extInstall([]string{"."}); err != nil {
+		t.Fatalf("install with '.' failed: %v", err)
+	}
+
+	out := filepath.Join(home, "extensions", "kagi")
+	if _, err := os.Stat(filepath.Join(out, "extension.json")); err != nil {
+		t.Fatalf("expected installed extension at %s: %v", out, err)
+	}
+}
+
+// TestExtInstallRejectsParentName guards against deriving a name of ".."
+// from a source that resolves to a filesystem root edge case. A normal
+// directory always yields a real basename, so this just ensures the
+// guard logic does not crash for well-formed input.
+func TestExtInstallNamedDir(t *testing.T) {
+	home := t.TempDir()
+	t.Setenv("ZOT_HOME", home)
+
+	src := filepath.Join(t.TempDir(), "myext")
+	if err := os.MkdirAll(src, 0o755); err != nil {
+		t.Fatal(err)
+	}
+	if err := os.WriteFile(filepath.Join(src, "extension.json"), []byte(`{"name":"myext"}`), 0o644); err != nil {
+		t.Fatal(err)
+	}
+
+	if err := extInstall([]string{src}); err != nil {
+		t.Fatalf("install failed: %v", err)
+	}
+	if _, err := os.Stat(filepath.Join(home, "extensions", "myext", "extension.json")); err != nil {
+		t.Fatalf("expected installed extension: %v", err)
+	}
+}