diff --git a/core/cautils/kustomizedirectory.go b/core/cautils/kustomizedirectory.go
index 31b449e3..0dcbfb13 100644
--- a/core/cautils/kustomizedirectory.go
+++ b/core/cautils/kustomizedirectory.go
@@ -9,6 +9,7 @@ import (
 	"github.com/kubescape/k8s-interface/workloadinterface"
 	"github.com/kubescape/opa-utils/objectsenvelopes/localworkload"
 	"sigs.k8s.io/kustomize/api/krusty"
+	"sigs.k8s.io/kustomize/api/types"
 	"sigs.k8s.io/kustomize/kyaml/filesys"
 )
 
@@ -75,7 +76,11 @@ func getKustomizeDirectoryName(path string) string {
 func (kd *KustomizeDirectory) GetWorkloads(kustomizeDirectoryPath string) (map[string][]workloadinterface.IMetadata, []error) {
 
 	fSys := filesys.MakeFsOnDisk()
-	kustomizer := krusty.MakeKustomizer(krusty.MakeDefaultOptions())
+	// Use LoadRestrictionsNone to allow loading resources from outside the kustomize directory.
+	// This is necessary for overlays that reference base configurations in parent directories.
+	opts := krusty.MakeDefaultOptions()
+	opts.LoadRestrictions = types.LoadRestrictionsNone
+	kustomizer := krusty.MakeKustomizer(opts)
 	resmap, err := kustomizer.Run(fSys, kustomizeDirectoryPath)
 
 	if err != nil {
diff --git a/core/cautils/kustomizedirectory_test.go b/core/cautils/kustomizedirectory_test.go
index b569a0b5..3acb31de 100644
--- a/core/cautils/kustomizedirectory_test.go
+++ b/core/cautils/kustomizedirectory_test.go
@@ -4,6 +4,8 @@ import (
 	"os"
 	"path/filepath"
 	"testing"
+
+	"github.com/stretchr/testify/assert"
 )
 
 func TestGetKustomizeDirectoryName(t *testing.T) {
@@ -61,3 +63,83 @@ func TestGetKustomizeDirectoryName(t *testing.T) {
 		})
 	}
 }
+
+func kustomizeTestdataPath() string {
+	o, _ := os.Getwd()
+	return filepath.Join(o, "testdata", "kustomize")
+}
+
+// TestKustomizeOverlayWithBase tests that kustomize overlays can properly load
+// resources from base directories. This is the main fix for issue #1617.
+func TestKustomizeOverlayWithBase(t *testing.T) {
+	overlayPath := filepath.Join(kustomizeTestdataPath(), "overlays", "prod")
+
+	// Verify it's detected as a kustomize directory
+	assert.True(t, isKustomizeDirectory(overlayPath), "overlay should be detected as kustomize directory")
+
+	// Create kustomize directory and get workloads
+	kd := NewKustomizeDirectory(overlayPath)
+	workloads, errs := kd.GetWorkloads(overlayPath)
+
+	// Should not have errors - this was failing before the fix because
+	// overlays couldn't load resources from parent base directories
+	assert.Empty(t, errs, "should not have errors loading overlay with base reference")
+
+	// Should have workloads from the rendered overlay
+	assert.NotEmpty(t, workloads, "should have workloads from rendered kustomize overlay")
+
+	// The overlay should have produced exactly one deployment with the merged configuration
+	var deploymentFound bool
+	for _, wls := range workloads {
+		for _, wl := range wls {
+			if wl.GetKind() == "Deployment" && wl.GetName() == "test-app" {
+				deploymentFound = true
+
+				// Verify the deployment has the resource limits from the base
+				obj := wl.GetObject()
+				spec, ok := obj["spec"].(map[string]interface{})
+				assert.True(t, ok, "deployment should have spec")
+
+				template, ok := spec["template"].(map[string]interface{})
+				assert.True(t, ok, "deployment should have template")
+
+				templateSpec, ok := template["spec"].(map[string]interface{})
+				assert.True(t, ok, "template should have spec")
+
+				containers, ok := templateSpec["containers"].([]interface{})
+				assert.True(t, ok, "template spec should have containers")
+				assert.NotEmpty(t, containers, "should have at least one container")
+
+				container, ok := containers[0].(map[string]interface{})
+				assert.True(t, ok, "container should be a map")
+
+				resources, ok := container["resources"].(map[string]interface{})
+				assert.True(t, ok, "container should have resources (from base)")
+
+				limits, ok := resources["limits"].(map[string]interface{})
+				assert.True(t, ok, "resources should have limits")
+				assert.Equal(t, "500m", limits["cpu"], "cpu limit should be from base")
+				assert.Equal(t, "256Mi", limits["memory"], "memory limit should be from base")
+
+				// Verify overlay modifications were applied
+				replicas, ok := spec["replicas"].(int)
+				assert.True(t, ok, "replicas should be an int")
+				assert.Equal(t, 3, replicas, "replicas should be modified by overlay")
+			}
+		}
+	}
+	assert.True(t, deploymentFound, "deployment should be found in rendered output")
+}
+
+// TestKustomizeBaseDirectory tests that base directories work on their own
+func TestKustomizeBaseDirectory(t *testing.T) {
+	basePath := filepath.Join(kustomizeTestdataPath(), "base")
+
+	assert.True(t, isKustomizeDirectory(basePath), "base should be detected as kustomize directory")
+
+	kd := NewKustomizeDirectory(basePath)
+	workloads, errs := kd.GetWorkloads(basePath)
+
+	assert.Empty(t, errs, "should not have errors loading base directory")
+	assert.NotEmpty(t, workloads, "should have workloads from base directory")
+}
diff --git a/core/cautils/testdata/kustomize/base/deployment.yaml b/core/cautils/testdata/kustomize/base/deployment.yaml
new file mode 100644
index 00000000..373e861d
--- /dev/null
+++ b/core/cautils/testdata/kustomize/base/deployment.yaml
@@ -0,0 +1,28 @@
+apiVersion: apps/v1
+kind: Deployment
+metadata:
+  name: test-app
+  labels:
+    app: test-app
+spec:
+  replicas: 1
+  selector:
+    matchLabels:
+      app: test-app
+  template:
+    metadata:
+      labels:
+        app: test-app
+    spec:
+      containers:
+        - name: test-container
+          image: nginx:1.19
+          resources:
+            limits:
+              cpu: "500m"
+              memory: "256Mi"
+            requests:
+              cpu: "100m"
+              memory: "128Mi"
+          ports:
+            - containerPort: 80
diff --git a/core/cautils/testdata/kustomize/base/kustomization.yaml b/core/cautils/testdata/kustomize/base/kustomization.yaml
new file mode 100644
index 00000000..88a04b54
--- /dev/null
+++ b/core/cautils/testdata/kustomize/base/kustomization.yaml
@@ -0,0 +1,5 @@
+apiVersion: kustomize.config.k8s.io/v1beta1
+kind: Kustomization
+
+resources:
+  - deployment.yaml
diff --git a/core/cautils/testdata/kustomize/overlays/prod/kustomization.yaml b/core/cautils/testdata/kustomize/overlays/prod/kustomization.yaml
new file mode 100644
index 00000000..611e4ae8
--- /dev/null
+++ b/core/cautils/testdata/kustomize/overlays/prod/kustomization.yaml
@@ -0,0 +1,13 @@
+apiVersion: kustomize.config.k8s.io/v1beta1
+kind: Kustomization
+
+resources:
+  - ../../base
+
+images:
+  - name: nginx
+    newTag: "1.21"
+
+replicas:
+  - name: test-app
+    count: 3