diff --git a/README.md b/README.md
index 29ba108d..c47512fc 100644
--- a/README.md
+++ b/README.md
@@ -94,6 +94,16 @@ To create a new K3k cluster, use the following command:
 ```bash
 k3kcli cluster create mycluster
 ```
+> [!NOTE]
+> **Creating a K3k Cluster on a Rancher-Managed Host Cluster**
+>
+> If your *host* Kubernetes cluster is managed by Rancher (e.g., your kubeconfig's `server` address includes a Rancher URL), use the `--kubeconfig-server` flag when creating your K3k cluster:
+>
+>```bash
+>k3kcli cluster create --kubeconfig-server <host_node_IP_or_load_balancer_IP> mycluster
+>```
+>
+> This ensures the generated kubeconfig connects to the correct endpoint.
 
 When the K3s server is ready, `k3kcli` will generate the necessary kubeconfig file and print instructions on how to use it.