diff --git a/packages/cli/src/commands/lambda/sam.test.ts b/packages/cli/src/commands/lambda/sam.test.ts
new file mode 100644
index 00000000000..dc2744828c5
--- /dev/null
+++ b/packages/cli/src/commands/lambda/sam.test.ts
@@ -0,0 +1,32 @@
+import { afterEach, describe, expect, it } from "vitest";
+import { mkdirSync, mkdtempSync, rmSync, writeFileSync } from "node:fs";
+import { tmpdir } from "node:os";
+import { join } from "node:path";
+import { locateSamTemplate } from "./sam.js";
+
+let dir: string | undefined;
+
+afterEach(() => {
+  if (dir) rmSync(dir, { recursive: true, force: true });
+  dir = undefined;
+});
+
+describe("locateSamTemplate", () => {
+  it("returns the template path when it exists under repoRoot", () => {
+    dir = mkdtempSync(join(tmpdir(), "hf-lambda-sam-"));
+    const samDir = join(dir, "examples", "aws-lambda");
+    mkdirSync(samDir, { recursive: true });
+    const templatePath = join(samDir, "template.yaml");
+    writeFileSync(templatePath, "AWSTemplateFormatVersion: '2010-09-09'\n");
+
+    expect(locateSamTemplate(dir)).toBe(templatePath);
+  });
+
+  // No --sam-template flag exists; the error must not send users to one.
+  it("does not point users at the nonexistent --sam-template flag when the template is missing", () => {
+    dir = mkdtempSync(join(tmpdir(), "hf-lambda-sam-missing-"));
+
+    expect(() => locateSamTemplate(dir!)).toThrow(/HYPERFRAMES_REPO_ROOT/);
+    expect(() => locateSamTemplate(dir!)).not.toThrow(/--sam-template/);
+  });
+});
diff --git a/packages/cli/src/commands/lambda/sam.ts b/packages/cli/src/commands/lambda/sam.ts
index e2b2af54462..1f52ad4c697 100644
--- a/packages/cli/src/commands/lambda/sam.ts
+++ b/packages/cli/src/commands/lambda/sam.ts
@@ -60,17 +60,16 @@ export interface DeployOptions {
 }
 
 /**
- * Resolve the SAM template path relative to `repoRoot`. We look for the
- * `examples/aws-lambda/template.yaml` first (development checkout) and
- * fall back to the installed-package layout when running from a globally
- * installed `hyperframes` CLI.
+ * Resolve the SAM template path relative to `repoRoot`. No installed-package fallback: the
+ * template's `CodeUri` is relative to the monorepo, so it only works inside a checkout.
  */
 export function locateSamTemplate(repoRoot: string): string {
   const candidate = join(repoRoot, "examples", "aws-lambda", "template.yaml");
   if (!existsSync(candidate)) {
     throw new Error(
       `[lambda] SAM template not found at ${candidate}. ` +
-        `If you're running from an installed package, point --sam-template at your local copy of examples/aws-lambda/template.yaml.`,
+        "`hyperframes lambda deploy` needs a HyperFrames repo checkout: run it from one, " +
+        "or set HYPERFRAMES_REPO_ROOT to point at one.",
     );
   }
   return candidate;