diff --git a/pkg/readiness/etcd_health.go b/pkg/readiness/etcd_health.go
index 6ddc9547b..4d3da67fb 100644
--- a/pkg/readiness/etcd_health.go
+++ b/pkg/readiness/etcd_health.go
@@ -4,6 +4,7 @@ import (
 	"context"
 	"fmt"
 
+	kerrors "k8s.io/apimachinery/pkg/api/errors"
 	"k8s.io/client-go/dynamic"
 )
 
@@ -16,9 +17,17 @@ func (c *EtcdHealthCheck) Run(ctx context.Context, dc dynamic.Interface, current
 	result := map[string]any{}
 	var sectionErrors []map[string]any
 
-	// Check etcd ClusterOperator
+	// Check etcd ClusterOperator — on HyperShift hosted clusters etcd is
+	// managed externally and the CO does not exist on the guest cluster.
 	etcdCO, err := GetResource(ctx, dc, GVRClusterOperator, "etcd")
 	if err != nil {
+		if kerrors.IsNotFound(err) {
+			return map[string]any{
+				"externally_managed": true,
+				"total_members":     0,
+				"healthy_members":   0,
+			}, nil
+		}
 		return nil, fmt.Errorf("failed to get etcd ClusterOperator: %w", err)
 	}
 
diff --git a/test/cvo/readiness.go b/test/cvo/readiness.go
index 106dcb0c6..96652b54f 100644
--- a/test/cvo/readiness.go
+++ b/test/cvo/readiness.go
@@ -11,6 +11,7 @@ import (
 	metav1 "k8s.io/apimachinery/pkg/apis/meta/v1"
 	"k8s.io/client-go/dynamic"
 	"k8s.io/client-go/kubernetes"
+	"k8s.io/client-go/rest"
 
 	configv1client "github.com/openshift/client-go/config/clientset/versioned/typed/config/v1"
 
@@ -24,6 +25,7 @@ var _ = g.Describe(`[Jira:"Cluster Version Operator"] cluster-version-operator r
 		kubeClient     kubernetes.Interface
 		configClient   *configv1client.ConfigV1Client
 		ctx            context.Context
+		restCfg        *rest.Config
 		currentVersion string
 		targetVersion  string
 	)
@@ -33,7 +35,8 @@ var _ = g.Describe(`[Jira:"Cluster Version Operator"] cluster-version-operator r
 		ctx, cancel = context.WithTimeout(context.Background(), 2*time.Minute)
 		g.DeferCleanup(cancel)
 
-		restCfg, err := util.GetRestConfig()
+		var err error
+		restCfg, err = util.GetRestConfig()
 		o.Expect(err).NotTo(o.HaveOccurred())
 
 		dynamicClient, err = dynamic.NewForConfig(restCfg)
@@ -138,6 +141,8 @@ var _ = g.Describe(`[Jira:"Cluster Version Operator"] cluster-version-operator r
 	})
 
 	g.It("should report etcd member count matching actual etcd pods", func() {
+		o.Expect(util.SkipIfHypershift(ctx, restCfg)).To(o.BeNil())
+
 		// Ground truth: list etcd pods via typed client
 		podList, err := kubeClient.CoreV1().Pods("openshift-etcd").List(ctx, metav1.ListOptions{
 			LabelSelector: "app=etcd",