diff --git a/.changeset/smooth-garlics-deny.md b/.changeset/smooth-garlics-deny.md
new file mode 100644
index 0000000..a02da01
--- /dev/null
+++ b/.changeset/smooth-garlics-deny.md
@@ -0,0 +1,5 @@
+---
+'openapi-ts-json-schema': patch
+---
+
+Fix external local `$ref`s resolution
diff --git a/src/openapiToTsJsonSchema.ts b/src/openapiToTsJsonSchema.ts
index f1e691f..a7314e0 100644
--- a/src/openapiToTsJsonSchema.ts
+++ b/src/openapiToTsJsonSchema.ts
@@ -1,8 +1,6 @@
-import fs from 'fs/promises';
 import { existsSync } from 'fs';
 import path from 'node:path';
 import $RefParser from '@apidevtools/json-schema-ref-parser';
-import YAML from 'yaml';
 import get from 'lodash.get';
 import {
   clearFolder,
@@ -68,10 +66,7 @@ export async function openapiToTsJsonSchema({
 
   await clearFolder(outputPath);
 
-  const openApiSchema = await fs.readFile(openApiSchemaPath, 'utf-8');
-  const jsonOpenApiSchema: Record<string, any> = YAML.parse(openApiSchema);
-  // Resolve/inline remote and URL $ref's (keeping local ones "#/...")
-  const bundledOpenApiSchema = await $RefParser.bundle(jsonOpenApiSchema);
+  const bundledOpenApiSchema = await $RefParser.bundle(openApiSchemaPath);
   const initialJsonSchema = convertOpenApiToJsonSchema(bundledOpenApiSchema);
 
   const inlinedRefs: Map<string, JSONSchema> = new Map();
diff --git a/test/externalRefs.test.ts b/test/externalRefs.test.ts
index 3f2bbe3..ab8ea80 100644
--- a/test/externalRefs.test.ts
+++ b/test/externalRefs.test.ts
@@ -17,7 +17,7 @@ describe('External $ref', () => {
     );
 
     expect(externalDefinitionSchema.default).toEqual({
-      description: 'External Foo description',
+      description: 'External Foo 1 description',
       type: ['string', 'null'],
       enum: ['yes', 'no', null],
     });
@@ -33,7 +33,7 @@ describe('External $ref', () => {
       type: 'object',
       properties: {
         remoteDefinition: {
-          description: 'External Foo description',
+          description: 'External Foo 1 description',
           type: ['string', 'null'],
           enum: ['yes', 'no', null],
         },
diff --git a/test/fixtures/external-ref/external-definition.yaml b/test/fixtures/external-ref/external-definition-1.yaml
similarity index 69%
rename from test/fixtures/external-ref/external-definition.yaml
rename to test/fixtures/external-ref/external-definition-1.yaml
index a71a1b7..7b95f44 100644
--- a/test/fixtures/external-ref/external-definition.yaml
+++ b/test/fixtures/external-ref/external-definition-1.yaml
@@ -5,15 +5,15 @@ info:
   version: 1.0.0
 components:
   schemas:
-    Foo:
-      description: External Foo description
+    Foo1:
+      description: External Foo 1 description
       type: string
       nullable: true
       enum:
         - yes
         - no
-    Bar:
-      description: External Bar description
+    Bar1:
+      description: External Bar 1 description
       type: string
       nullable: true
       enum:
diff --git a/test/fixtures/external-ref/specs.yaml b/test/fixtures/external-ref/specs.yaml
index c32e63c..5f60181 100644
--- a/test/fixtures/external-ref/specs.yaml
+++ b/test/fixtures/external-ref/specs.yaml
@@ -11,4 +11,4 @@ components:
         remoteDefinition:
           $ref: '#/components/schemas/ExternalDefinition'
     ExternalDefinition:
-      $ref: 'test/fixtures/external-ref/external-definition.yaml#/components/schemas/Foo'
+      $ref: './external-definition-1.yaml#/components/schemas/Foo1'