diff --git a/cmd/bd/dep.go b/cmd/bd/dep.go
index 39dfcdb3..90ddd8ad 100644
--- a/cmd/bd/dep.go
+++ b/cmd/bd/dep.go
@@ -639,6 +639,21 @@ func (r *treeRenderer) renderNode(node *types.TreeNode, children map[string][]*t
 
 // formatTreeNode formats a single tree node with status, ready indicator, etc.
 func formatTreeNode(node *types.TreeNode) string {
+	// Handle external dependencies specially (bd-vks2)
+	if IsExternalRef(node.ID) {
+		// External deps use their title directly which includes the status indicator
+		var idStr string
+		switch node.Status {
+		case types.StatusClosed:
+			idStr = ui.StatusClosedStyle.Render(node.Title)
+		case types.StatusBlocked:
+			idStr = ui.StatusBlockedStyle.Render(node.Title)
+		default:
+			idStr = node.Title
+		}
+		return fmt.Sprintf("%s (external)", idStr)
+	}
+
 	// Color the ID based on status
 	var idStr string
 	switch node.Status {
diff --git a/internal/storage/sqlite/dependencies.go b/internal/storage/sqlite/dependencies.go
index 24bce118..72321618 100644
--- a/internal/storage/sqlite/dependencies.go
+++ b/internal/storage/sqlite/dependencies.go
@@ -625,9 +625,97 @@ func (s *SQLiteStorage) GetDependencyTree(ctx context.Context, issueID string, m
 		nodes = append(nodes, &node)
 	}
 
+	// Fetch external dependencies for all issues in the tree (bd-vks2)
+	// External deps like "external:project:capability" don't exist in the issues
+	// table, so the recursive CTE above doesn't find them. We add them as
+	// synthetic leaf nodes here.
+	if len(nodes) > 0 && !reverse {
+		// Collect all issue IDs in the tree
+		issueIDs := make([]string, len(nodes))
+		depthByID := make(map[string]int)
+		for i, n := range nodes {
+			issueIDs[i] = n.ID
+			depthByID[n.ID] = n.Depth
+		}
+
+		// Query for external dependencies
+		externalDeps, err := s.getExternalDepsForIssues(ctx, issueIDs)
+		if err != nil {
+			// Non-fatal: just skip external deps if query fails
+			_ = err
+		} else {
+			// Create synthetic TreeNode for each external dep
+			for parentID, extRefs := range externalDeps {
+				parentDepth, ok := depthByID[parentID]
+				if !ok {
+					continue
+				}
+				// Skip if we've exceeded maxDepth
+				if parentDepth >= maxDepth {
+					continue
+				}
+
+				for _, ref := range extRefs {
+					// Parse external ref for display
+					_, capability := parseExternalRefParts(ref)
+					if capability == "" {
+						capability = ref // fallback to full ref
+					}
+
+					// Check resolution status
+					status := CheckExternalDep(ctx, ref)
+					var nodeStatus types.Status
+					var title string
+					if status.Satisfied {
+						nodeStatus = types.StatusClosed
+						title = fmt.Sprintf("✓ %s", capability)
+					} else {
+						nodeStatus = types.StatusBlocked
+						title = fmt.Sprintf("⏳ %s", capability)
+					}
+
+					extNode := &types.TreeNode{
+						Issue: types.Issue{
+							ID:        ref,
+							Title:     title,
+							Status:    nodeStatus,
+							Priority:  0, // External deps don't have priority
+							IssueType: types.TypeTask,
+						},
+						Depth:    parentDepth + 1,
+						ParentID: parentID,
+					}
+
+					// Apply deduplication if needed
+					if !showAllPaths {
+						if _, exists := seen[ref]; exists {
+							continue
+						}
+						seen[ref] = extNode.Depth
+					}
+
+					nodes = append(nodes, extNode)
+				}
+			}
+		}
+	}
+
 	return nodes, nil
 }
 
+// parseExternalRefParts parses "external:project:capability" and returns (project, capability).
+// Returns empty strings if the format is invalid.
+func parseExternalRefParts(ref string) (project, capability string) {
+	if !strings.HasPrefix(ref, "external:") {
+		return "", ""
+	}
+	parts := strings.SplitN(ref, ":", 3)
+	if len(parts) != 3 {
+		return "", ""
+	}
+	return parts[1], parts[2]
+}
+
 // DetectCycles finds circular dependencies and returns the actual cycle paths
 // Note: relates-to dependencies are excluded because they are intentionally bidirectional
 // ("see also" relationships) and do not represent problematic cycles.
diff --git a/internal/storage/sqlite/dependencies_test.go b/internal/storage/sqlite/dependencies_test.go
index 185c6207..82de5508 100644
--- a/internal/storage/sqlite/dependencies_test.go
+++ b/internal/storage/sqlite/dependencies_test.go
@@ -1657,3 +1657,161 @@ func TestRemoveDependencyExternal(t *testing.T) {
 		t.Errorf("Expected 0 dependencies after removal, got %d", len(deps))
 	}
 }
+
+// TestGetDependencyTreeExternalDeps verifies that external dependencies
+// appear in the dependency tree as synthetic leaf nodes (bd-vks2).
+func TestGetDependencyTreeExternalDeps(t *testing.T) {
+	store, cleanup := setupTestDB(t)
+	defer cleanup()
+
+	ctx := context.Background()
+
+	// Create a root issue
+	root := &types.Issue{
+		Title:     "Root issue",
+		Status:    types.StatusOpen,
+		Priority:  1,
+		IssueType: types.TypeTask,
+	}
+	if err := store.CreateIssue(ctx, root, "test-user"); err != nil {
+		t.Fatalf("CreateIssue failed: %v", err)
+	}
+
+	// Create a blocking local issue
+	blocker := &types.Issue{
+		Title:     "Local blocker",
+		Status:    types.StatusOpen,
+		Priority:  1,
+		IssueType: types.TypeTask,
+	}
+	if err := store.CreateIssue(ctx, blocker, "test-user"); err != nil {
+		t.Fatalf("CreateIssue failed: %v", err)
+	}
+
+	// Add local dependency
+	localDep := &types.Dependency{
+		IssueID:     root.ID,
+		DependsOnID: blocker.ID,
+		Type:        types.DepBlocks,
+	}
+	if err := store.AddDependency(ctx, localDep, "test-user"); err != nil {
+		t.Fatalf("AddDependency (local) failed: %v", err)
+	}
+
+	// Add external dependency to root
+	extRef := "external:test-project:test-capability"
+	extDep := &types.Dependency{
+		IssueID:     root.ID,
+		DependsOnID: extRef,
+		Type:        types.DepBlocks,
+	}
+	if err := store.AddDependency(ctx, extDep, "test-user"); err != nil {
+		t.Fatalf("AddDependency (external) failed: %v", err)
+	}
+
+	// Get dependency tree
+	tree, err := store.GetDependencyTree(ctx, root.ID, 10, false, false)
+	if err != nil {
+		t.Fatalf("GetDependencyTree failed: %v", err)
+	}
+
+	// Should have 3 nodes: root, local blocker, and external dep
+	if len(tree) != 3 {
+		t.Errorf("Expected 3 nodes in tree (root, local, external), got %d", len(tree))
+		for _, node := range tree {
+			t.Logf("Node: id=%s title=%s depth=%d", node.ID, node.Title, node.Depth)
+		}
+	}
+
+	// Find the external dep node
+	var extNode *types.TreeNode
+	for _, node := range tree {
+		if node.ID == extRef {
+			extNode = node
+			break
+		}
+	}
+
+	if extNode == nil {
+		t.Fatal("External dependency not found in tree")
+	}
+
+	// Verify external node properties
+	if extNode.Depth != 1 {
+		t.Errorf("Expected external dep at depth 1, got %d", extNode.Depth)
+	}
+	if extNode.ParentID != root.ID {
+		t.Errorf("Expected external dep parent to be root, got %s", extNode.ParentID)
+	}
+	// External deps should show blocked status when not configured
+	if extNode.Status != types.StatusBlocked {
+		t.Errorf("Expected external dep status to be blocked (not configured), got %s", extNode.Status)
+	}
+}
+
+// TestCycleDetectionWithExternalRefs verifies that external dependencies
+// don't participate in cycle detection (they can't form cycles with local issues).
+func TestCycleDetectionWithExternalRefs(t *testing.T) {
+	store, cleanup := setupTestDB(t)
+	defer cleanup()
+
+	ctx := context.Background()
+
+	// Create two issues
+	issueA := &types.Issue{
+		Title:     "Issue A",
+		Status:    types.StatusOpen,
+		Priority:  1,
+		IssueType: types.TypeTask,
+	}
+	if err := store.CreateIssue(ctx, issueA, "test-user"); err != nil {
+		t.Fatalf("CreateIssue A failed: %v", err)
+	}
+
+	issueB := &types.Issue{
+		Title:     "Issue B",
+		Status:    types.StatusOpen,
+		Priority:  1,
+		IssueType: types.TypeTask,
+	}
+	if err := store.CreateIssue(ctx, issueB, "test-user"); err != nil {
+		t.Fatalf("CreateIssue B failed: %v", err)
+	}
+
+	// A depends on B
+	if err := store.AddDependency(ctx, &types.Dependency{
+		IssueID:     issueA.ID,
+		DependsOnID: issueB.ID,
+		Type:        types.DepBlocks,
+	}, "test-user"); err != nil {
+		t.Fatalf("AddDependency A->B failed: %v", err)
+	}
+
+	// B depends on external ref (should succeed - external refs don't form cycles)
+	extRef := "external:project:capability"
+	if err := store.AddDependency(ctx, &types.Dependency{
+		IssueID:     issueB.ID,
+		DependsOnID: extRef,
+		Type:        types.DepBlocks,
+	}, "test-user"); err != nil {
+		t.Fatalf("AddDependency B->external failed: %v", err)
+	}
+
+	// A depends on same external ref (should also succeed - no cycle with external)
+	if err := store.AddDependency(ctx, &types.Dependency{
+		IssueID:     issueA.ID,
+		DependsOnID: extRef,
+		Type:        types.DepBlocks,
+	}, "test-user"); err != nil {
+		t.Fatalf("AddDependency A->external failed: %v", err)
+	}
+
+	// Verify DetectCycles doesn't find any cycles
+	cycles, err := store.DetectCycles(ctx)
+	if err != nil {
+		t.Fatalf("DetectCycles failed: %v", err)
+	}
+	if len(cycles) != 0 {
+		t.Errorf("Expected no cycles with external deps, got %d", len(cycles))
+	}
+}
diff --git a/internal/storage/sqlite/ready_test.go b/internal/storage/sqlite/ready_test.go
index 59d88dda..131e7b9c 100644
--- a/internal/storage/sqlite/ready_test.go
+++ b/internal/storage/sqlite/ready_test.go
@@ -1652,3 +1652,115 @@ func TestGetBlockedIssuesPartialExternalDeps(t *testing.T) {
 		}
 	}
 }
+
+// TestCheckExternalDepNoBeadsDirectory verifies that CheckExternalDep
+// correctly reports "no beads database" when the target project exists
+// but has no .beads directory (bd-mv6h).
+func TestCheckExternalDepNoBeadsDirectory(t *testing.T) {
+	ctx := context.Background()
+
+	// Create a project directory WITHOUT .beads
+	projectDir, err := os.MkdirTemp("", "beads-no-beads-test-*")
+	if err != nil {
+		t.Fatalf("failed to create temp dir: %v", err)
+	}
+	defer os.RemoveAll(projectDir)
+
+	// Initialize config if not already done
+	if err := config.Initialize(); err != nil {
+		t.Fatalf("failed to initialize config: %v", err)
+	}
+
+	// Configure external_projects to point to the directory
+	oldProjects := config.GetExternalProjects()
+	defer func() {
+		if oldProjects != nil {
+			config.Set("external_projects", oldProjects)
+		} else {
+			config.Set("external_projects", map[string]string{})
+		}
+	}()
+
+	config.Set("external_projects", map[string]string{
+		"no-beads-project": projectDir,
+	})
+
+	// Check the external dep - should report "no beads database"
+	status := CheckExternalDep(ctx, "external:no-beads-project:some-capability")
+
+	if status.Satisfied {
+		t.Error("Expected external dep to be unsatisfied when target has no .beads directory")
+	}
+	if status.Reason != "project has no beads database" {
+		t.Errorf("Expected reason 'project has no beads database', got: %s", status.Reason)
+	}
+}
+
+// TestCheckExternalDepInvalidFormats verifies that CheckExternalDep
+// correctly handles various invalid external ref formats (bd-mv6h).
+func TestCheckExternalDepInvalidFormats(t *testing.T) {
+	ctx := context.Background()
+
+	tests := []struct {
+		name       string
+		ref        string
+		wantReason string
+	}{
+		{
+			name:       "not external prefix",
+			ref:        "bd-xyz",
+			wantReason: "not an external reference",
+		},
+		{
+			name:       "missing capability",
+			ref:        "external:project",
+			wantReason: "invalid format (expected external:project:capability)",
+		},
+		{
+			name:       "empty project",
+			ref:        "external::capability",
+			wantReason: "missing project or capability",
+		},
+		{
+			name:       "empty capability",
+			ref:        "external:project:",
+			wantReason: "missing project or capability",
+		},
+		{
+			name:       "only external prefix",
+			ref:        "external:",
+			wantReason: "invalid format (expected external:project:capability)",
+		},
+		{
+			name:       "unconfigured project",
+			ref:        "external:unconfigured-project:capability",
+			wantReason: "project not configured in external_projects",
+		},
+	}
+
+	// Initialize config if not already done
+	if err := config.Initialize(); err != nil {
+		t.Fatalf("failed to initialize config: %v", err)
+	}
+
+	// Ensure no external projects are configured for some tests
+	oldProjects := config.GetExternalProjects()
+	defer func() {
+		if oldProjects != nil {
+			config.Set("external_projects", oldProjects)
+		}
+	}()
+	config.Set("external_projects", map[string]string{})
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			status := CheckExternalDep(ctx, tt.ref)
+			if status.Satisfied {
+				t.Errorf("Expected unsatisfied for %q", tt.ref)
+			}
+			if status.Reason != tt.wantReason {
+				t.Errorf("Expected reason %q, got %q", tt.wantReason, status.Reason)
+			}
+		})
+	}
+}