diff --git a/documentation/content/en/book/01-getting-started/_index.md b/documentation/content/en/book/01-getting-started/_index.md
index f86aee96c4..b74030fb2b 100644
--- a/documentation/content/en/book/01-getting-started/_index.md
+++ b/documentation/content/en/book/01-getting-started/_index.md
@@ -75,7 +75,7 @@ Next, use the following command to view the content of the package:
 
 ```shell
 kpt pkg tree
-Package "nginx"
+Package "nginx" (independent)
 ├── [Kptfile]  Kptfile nginx
 ├── [deployment.yaml]  Deployment my-nginx
 └── [svc.yaml]  Service my-nginx-svc
diff --git a/documentation/content/en/book/02-concepts/_index.md b/documentation/content/en/book/02-concepts/_index.md
index e58cf33e97..61546aabd3 100644
--- a/documentation/content/en/book/02-concepts/_index.md
+++ b/documentation/content/en/book/02-concepts/_index.md
@@ -144,17 +144,17 @@ View the package hierarchy using the `tree` command:
 
 ```shell
 kpt pkg tree wordpress/
-Package "wordpress"
+Package "wordpress" (independent)
 ├── [Kptfile]  Kptfile wordpress
 ├── [service.yaml]  Service wordpress
 ├── deployment
 │   ├── [deployment.yaml]  Deployment wordpress
 │   └── [volume.yaml]  PersistentVolumeClaim wp-pv-claim
-└── Package "mysql"
+└── Package "mysql" (dependent)
     ├── [Kptfile]  Kptfile mysql
     ├── [deployment.yaml]  PersistentVolumeClaim mysql-pv-claim
     ├── [deployment.yaml]  Deployment wordpress-mysql
-    └── [deployment.yaml]  Service wordpress-mysql
+    └── [service.yaml]  Service wordpress-mysql
 ```
 
 This _package hierarchy_ contains two packages:
diff --git a/documentation/content/en/book/03-packages/_index.md b/documentation/content/en/book/03-packages/_index.md
index 72c1639cde..4cd78b8a23 100644
--- a/documentation/content/en/book/03-packages/_index.md
+++ b/documentation/content/en/book/03-packages/_index.md
@@ -138,17 +138,17 @@ kpt also provides the `tree` command which is handy for quickly viewing the pack
 
 ```shell
 kpt pkg tree wordpress/
-Package "wordpress"
+Package "wordpress" (independent)
 ├── [Kptfile]  Kptfile wordpress
 ├── [service.yaml]  Service wordpress
 ├── deployment
 │   ├── [deployment.yaml]  Deployment wordpress
 │   └── [volume.yaml]  PersistentVolumeClaim wp-pv-claim
-└── Package "mysql"
+└── Package "mysql" (dependent)
     ├── [Kptfile]  Kptfile mysql
     ├── [deployment.yaml]  PersistentVolumeClaim mysql-pv-claim
     ├── [deployment.yaml]  Deployment wordpress-mysql
-    └── [deployment.yaml]  Service wordpress-mysql
+    └── [service.yaml]  Service wordpress-mysql
 ```
 
 See the [tree command reference](../../reference/cli/pkg/tree/) for usage.
@@ -336,17 +336,17 @@ Let us revisit the `wordpress` package and see how it was composed in the first
 
 ```shell
 kpt pkg tree wordpress/
-Package "wordpress"
+Package "wordpress" (independent)
 ├── [Kptfile]  Kptfile wordpress
 ├── [service.yaml]  Service wordpress
 ├── deployment
 │   ├── [deployment.yaml]  Deployment wordpress
 │   └── [volume.yaml]  PersistentVolumeClaim wp-pv-claim
-└── Package "mysql"
+└── Package "mysql" (dependent)
     ├── [Kptfile]  Kptfile mysql
     ├── [deployment.yaml]  PersistentVolumeClaim mysql-pv-claim
     ├── [deployment.yaml]  Deployment wordpress-mysql
-    └── [deployment.yaml]  Service wordpress-mysql
+    └── [service.yaml]  Service wordpress-mysql
 ```
 
 First, delete the `mysql` subpackage. Deleting a subpackage is done by deleting the subdirectory, as follows:
diff --git a/documentation/content/en/guides/namespace-provisioning-cli.md b/documentation/content/en/guides/namespace-provisioning-cli.md
index e89793133d..37919bcb96 100644
--- a/documentation/content/en/guides/namespace-provisioning-cli.md
+++ b/documentation/content/en/guides/namespace-provisioning-cli.md
@@ -393,7 +393,7 @@ Successfully executed 2 function(s) in 1 package(s).
 
 # examine the output of backend package
 $ kpt pkg tree backend
-Package "backend"
+Package "backend" (independent)
 ├── [Kptfile]  Kptfile backend
 ├── [namespace.yaml]  Namespace backend
 ├── [package-context.yaml]  ConfigMap kptfile.kpt.dev
diff --git a/documentation/content/en/reference/cli/pkg/tree/_index.md b/documentation/content/en/reference/cli/pkg/tree/_index.md
index d9a974ada0..82a083225d 100644
--- a/documentation/content/en/reference/cli/pkg/tree/_index.md
+++ b/documentation/content/en/reference/cli/pkg/tree/_index.md
@@ -13,6 +13,16 @@ description: |
 
 `tree` displays resources, files and packages in a tree structure.
 
+Each package (directory containing a `Kptfile`) is annotated with its type:
+
+- **(independent)**: The package has an `upstream` section in its `Kptfile`,
+  meaning it tracks its own upstream source and can be updated independently.
+- **(dependent)**: A subpackage that does not have an `upstream` section in its
+  `Kptfile`. Its upstream is implicitly inherited from its parent package.
+
+A root package created locally (e.g. via `kpt pkg init`) has no annotation since
+it is neither independent nor dependent — it simply has no upstream source.
+
 ### Synopsis
 
 <!--mdtogo:Long-->
@@ -41,4 +51,19 @@ DIR:
 $ kpt pkg tree
 ```
 
+```shell
+# Example output showing independent and dependent packages:
+$ kpt pkg tree wordpress/
+Package "wordpress" (independent)
+├── [Kptfile]  Kptfile wordpress
+├── [service.yaml]  Service wordpress
+├── deployment
+│   ├── [deployment.yaml]  Deployment wordpress
+│   └── [volume.yaml]  PersistentVolumeClaim wp-pv-claim
+└── Package "mysql" (dependent)
+    ├── [Kptfile]  Kptfile mysql
+    ├── [deployment.yaml]  Deployment wordpress-mysql
+    └── [service.yaml]  Service wordpress-mysql
+```
+
 <!--mdtogo-->
diff --git a/internal/docs/generated/pkgdocs/docs.go b/internal/docs/generated/pkgdocs/docs.go
index 0921f9cc82..c6978fcfc8 100644
--- a/internal/docs/generated/pkgdocs/docs.go
+++ b/internal/docs/generated/pkgdocs/docs.go
@@ -245,6 +245,19 @@ Args:
 var TreeExamples = `
   # Show resources in the current directory.
   $ kpt pkg tree
+
+  # Example output showing independent and dependent packages:
+  $ kpt pkg tree wordpress/
+  Package "wordpress" (independent)
+  ├── [Kptfile]  Kptfile wordpress
+  ├── [service.yaml]  Service wordpress
+  ├── deployment
+  │   ├── [deployment.yaml]  Deployment wordpress
+  │   └── [volume.yaml]  PersistentVolumeClaim wp-pv-claim
+  └── Package "mysql" (dependent)
+      ├── [Kptfile]  Kptfile mysql
+      ├── [deployment.yaml]  Deployment wordpress-mysql
+      └── [service.yaml]  Service wordpress-mysql
 `
 
 var UpdateShort = `Apply upstream package updates.`
diff --git a/thirdparty/cmdconfig/commands/cmdtree/cmdtree_test.go b/thirdparty/cmdconfig/commands/cmdtree/cmdtree_test.go
index ea6079ac71..869ef10e26 100644
--- a/thirdparty/cmdconfig/commands/cmdtree/cmdtree_test.go
+++ b/thirdparty/cmdconfig/commands/cmdtree/cmdtree_test.go
@@ -325,7 +325,7 @@ openAPI:
 ├── [f1.yaml]  Abstraction foo
 ├── [f1.yaml]  Deployment foo
 ├── [f1.yaml]  Service foo
-└── Package "subpkg"
+└── Package "subpkg" (dependent)
     ├── [Kptfile]  Kptfile subpkg
     └── [f2.yaml]  Deployment bar
 `, filepath.Base(d)), b.String()) {
@@ -405,7 +405,7 @@ metadata:
 	if !assert.Equal(t, `Package "Mainpkg"
 ├── [Kptfile]  Kptfile Mainpkg
 ├── [f1.yaml]  Deployment foo
-└── Package "Subpkg"
+└── Package "Subpkg" (dependent)
     ├── [Kptfile]  Kptfile Subpkg
     └── [f2.yaml]  Deployment bar
 `, b.String()) {
@@ -413,6 +413,187 @@ metadata:
 	}
 }
 
+func TestTreeCommand_independentAndDependent(t *testing.T) {
+	d, err := os.MkdirTemp("", "tree-test")
+	defer os.RemoveAll(d)
+	if !assert.NoError(t, err) {
+		t.FailNow()
+	}
+
+	err = os.MkdirAll(filepath.Join(d, "subpkg"), 0700)
+	if !assert.NoError(t, err) {
+		t.FailNow()
+	}
+
+	err = os.WriteFile(filepath.Join(d, "f1.yaml"), []byte(`kind: Deployment
+metadata:
+  name: foo
+spec:
+  replicas: 1
+`), 0600)
+	if !assert.NoError(t, err) {
+		return
+	}
+	err = os.WriteFile(filepath.Join(d, "subpkg", "f2.yaml"), []byte(`kind: Deployment
+metadata:
+  name: bar
+spec:
+  replicas: 3
+`), 0600)
+	if !assert.NoError(t, err) {
+		return
+	}
+
+	// Root package is independent (has upstream)
+	err = os.WriteFile(filepath.Join(d, "Kptfile"), []byte(`apiVersion: kpt.dev/v1
+kind: Kptfile
+metadata:
+  name: mainpkg
+upstream:
+  type: git
+  git:
+    repo: https://github.com/example/repo
+    directory: /
+    ref: main
+  updateStrategy: resource-merge
+`), 0600)
+	if !assert.NoError(t, err) {
+		return
+	}
+	// Subpackage is dependent (no upstream)
+	err = os.WriteFile(filepath.Join(d, "subpkg", "Kptfile"), []byte(`apiVersion: kpt.dev/v1
+kind: Kptfile
+metadata:
+  name: subpkg
+`), 0600)
+	if !assert.NoError(t, err) {
+		return
+	}
+
+	b := &bytes.Buffer{}
+	r := GetTreeRunner(fake.CtxWithPrinter(b, nil), "")
+	r.Command.SetArgs([]string{d})
+	r.Command.SetOut(b)
+	if !assert.NoError(t, r.Command.Execute()) {
+		return
+	}
+
+	if !assert.Equal(t, fmt.Sprintf(`Package %q (independent)
+├── [Kptfile]  Kptfile mainpkg
+├── [f1.yaml]  Deployment foo
+└── Package "subpkg" (dependent)
+    ├── [Kptfile]  Kptfile subpkg
+    └── [f2.yaml]  Deployment bar
+`, filepath.Base(d)), b.String()) {
+		return
+	}
+}
+
+func TestTreeCommand_nestedSubpackages(t *testing.T) {
+	d, err := os.MkdirTemp("", "tree-test")
+	defer os.RemoveAll(d)
+	if !assert.NoError(t, err) {
+		t.FailNow()
+	}
+
+	err = os.MkdirAll(filepath.Join(d, "subpkg-a", "subpkg-b"), 0700)
+	if !assert.NoError(t, err) {
+		t.FailNow()
+	}
+
+	err = os.WriteFile(filepath.Join(d, "f1.yaml"), []byte(`kind: Deployment
+metadata:
+  name: root-deploy
+spec:
+  replicas: 1
+`), 0600)
+	if !assert.NoError(t, err) {
+		return
+	}
+	err = os.WriteFile(filepath.Join(d, "subpkg-a", "f2.yaml"), []byte(`kind: Service
+metadata:
+  name: my-service
+spec:
+  selector:
+    app: test
+`), 0600)
+	if !assert.NoError(t, err) {
+		return
+	}
+	err = os.WriteFile(filepath.Join(d, "subpkg-a", "subpkg-b", "f3.yaml"), []byte(`kind: ConfigMap
+metadata:
+  name: config
+data:
+  key: value
+`), 0600)
+	if !assert.NoError(t, err) {
+		return
+	}
+
+	// Root package is independent
+	err = os.WriteFile(filepath.Join(d, "Kptfile"), []byte(`apiVersion: kpt.dev/v1
+kind: Kptfile
+metadata:
+  name: root
+upstream:
+  type: git
+  git:
+    repo: https://github.com/example/repo
+    directory: /
+    ref: main
+  updateStrategy: resource-merge
+`), 0600)
+	if !assert.NoError(t, err) {
+		return
+	}
+	// subpkg-a is also independent (different upstream)
+	err = os.WriteFile(filepath.Join(d, "subpkg-a", "Kptfile"), []byte(`apiVersion: kpt.dev/v1
+kind: Kptfile
+metadata:
+  name: subpkg-a
+upstream:
+  type: git
+  git:
+    repo: https://github.com/example/other-repo
+    directory: /networking
+    ref: v2.0
+  updateStrategy: resource-merge
+`), 0600)
+	if !assert.NoError(t, err) {
+		return
+	}
+	// subpkg-b is dependent (no upstream)
+	err = os.WriteFile(filepath.Join(d, "subpkg-a", "subpkg-b", "Kptfile"), []byte(`apiVersion: kpt.dev/v1
+kind: Kptfile
+metadata:
+  name: subpkg-b
+`), 0600)
+	if !assert.NoError(t, err) {
+		return
+	}
+
+	b := &bytes.Buffer{}
+	r := GetTreeRunner(fake.CtxWithPrinter(b, nil), "")
+	r.Command.SetArgs([]string{d})
+	r.Command.SetOut(b)
+	if !assert.NoError(t, r.Command.Execute()) {
+		return
+	}
+
+	if !assert.Equal(t, fmt.Sprintf(`Package %q (independent)
+├── [Kptfile]  Kptfile root
+├── [f1.yaml]  Deployment root-deploy
+└── Package "subpkg-a" (independent)
+    ├── [Kptfile]  Kptfile subpkg-a
+    ├── [f2.yaml]  Service my-service
+    └── Package "subpkg-b" (dependent)
+        ├── [Kptfile]  Kptfile subpkg-b
+        └── [f3.yaml]  ConfigMap config
+`, filepath.Base(d)), b.String()) {
+		return
+	}
+}
+
 func TestTreeCommand_symlink(t *testing.T) {
 	d, err := os.MkdirTemp("", "tree-test")
 	if !assert.NoError(t, err) {
diff --git a/thirdparty/cmdconfig/commands/cmdtree/tree.go b/thirdparty/cmdconfig/commands/cmdtree/tree.go
index a165c21100..3ba7f7001f 100644
--- a/thirdparty/cmdconfig/commands/cmdtree/tree.go
+++ b/thirdparty/cmdconfig/commands/cmdtree/tree.go
@@ -16,6 +16,7 @@
 package cmdtree
 
 import (
+	"bytes"
 	"fmt"
 	"io"
 	"os"
@@ -37,6 +38,11 @@ const (
 	TreeStructurePackage TreeStructure = "directory"
 	// %q holds the package name
 	PkgNameFormat = "Package %q"
+
+	// PkgTypeIndependent indicates a package with its own upstream source.
+	PkgTypeIndependent = "independent"
+	// PkgTypeDependent indicates a package without upstream (inherits from parent).
+	PkgTypeDependent = "dependent"
 )
 
 var GraphStructures = []string{string(TreeStructurePackage)}
@@ -171,11 +177,19 @@ func (p TreeWriter) packageStructure(nodes []*yaml.RNode) error {
 		}
 		p.Root = d
 	}
-	_, err := os.Stat(filepath.Join(p.Root, kptfilev1.KptFileName))
+	kptfilePath := filepath.Join(p.Root, kptfilev1.KptFileName)
+	_, err := os.Stat(kptfilePath)
 	if !os.IsNotExist(err) {
-		// if Kptfile exists in the root directory, it is a kpt package
-		// print only package name and not entire path
-		tree.SetValue(fmt.Sprintf(PkgNameFormat, filepath.Base(p.Root)))
+		// if Kptfile exists in the root directory, it is a kpt package.
+		// Only annotate with type if it is independent (has upstream).
+		// A root package without upstream is not "dependent" — it simply
+		// has no upstream source (e.g. created with kpt pkg init).
+		pkgType := packageType(p.Root)
+		if pkgType == PkgTypeIndependent {
+			tree.SetValue(fmt.Sprintf(PkgNameFormat+" (%s)", filepath.Base(p.Root), pkgType))
+		} else {
+			tree.SetValue(fmt.Sprintf(PkgNameFormat, filepath.Base(p.Root)))
+		}
 	} else {
 		// else it is just a directory, so print only directory name
 		tree.SetValue(filepath.Base(p.Root))
@@ -187,16 +201,42 @@ func (p TreeWriter) packageStructure(nodes []*yaml.RNode) error {
 }
 
 // branchName takes the root directory and relative path to the directory
-// and returns the branch name
+// and returns the branch name. For packages (directories with a Kptfile),
+// it also indicates whether the package is independent or dependent.
+// An independent package has an upstream section in its Kptfile; a dependent
+// package does not.
 func branchName(root, dirRelPath string) string {
 	name := filepath.Base(dirRelPath)
-	_, err := os.Stat(filepath.Join(root, dirRelPath, kptfilev1.KptFileName))
-	if !os.IsNotExist(err) {
-		// add Package prefix indicating that it is a separate package as it has
-		// Kptfile
-		return fmt.Sprintf(PkgNameFormat, name)
+	pkgDir := filepath.Join(root, dirRelPath)
+	_, err := os.Stat(filepath.Join(pkgDir, kptfilev1.KptFileName))
+	if os.IsNotExist(err) {
+		return name
+	}
+	// It is a package (has Kptfile). Determine if independent or dependent.
+	pkgType := packageType(pkgDir)
+	if pkgType != "" {
+		return fmt.Sprintf(PkgNameFormat+" (%s)", name, pkgType)
+	}
+	return fmt.Sprintf(PkgNameFormat, name)
+}
+
+// packageType reads the Kptfile in the given directory and returns "independent"
+// if it has an upstream section, "dependent" otherwise. If the file cannot
+// be read or parsed, it returns an empty string.
+func packageType(dir string) string {
+	data, err := os.ReadFile(filepath.Join(dir, kptfilev1.KptFileName))
+	if err != nil {
+		return ""
+	}
+	var kf kptfilev1.KptFile
+	d := yaml.NewDecoder(bytes.NewReader(data))
+	if err := d.Decode(&kf); err != nil {
+		return ""
+	}
+	if kf.Upstream != nil {
+		return PkgTypeIndependent
 	}
-	return name
+	return PkgTypeDependent
 }
 
 // Write writes the ascii tree to p.Writer