diff --git a/src/actions/InstallationHandler.ts b/src/actions/InstallationHandler.ts
index 439638c4..5d2bbfaf 100644
--- a/src/actions/InstallationHandler.ts
+++ b/src/actions/InstallationHandler.ts
@@ -19,16 +19,7 @@ import * as fs from 'fs';
 import { ConfigurationStore } from '../storage/ConfigurationStore';
 import { InstallationArgs } from '../types/stateInterfaces';
 import { FALLBACK_SCHEMA, deepMerge } from '../renderer/components/common/Utils';
-
-
-//AJV did not like the regex in our current schema
-const zoweDatasetMemberRegexFixed = {
-  "description": "PARMLIB member used by ZIS",
-  "type": "string",
-  "pattern": "^([A-Z$#@]){1}([A-Z0-9$#@]){0,7}$",
-  "minLength": 1,
-  "maxLength": 8
-}
+import { updateSchemaReferences } from '../services/ResolveRef';
 
 class Installation {
 
@@ -152,19 +143,11 @@ class Installation {
         }
 
         //No reason not to always set schema to latest if user is re-running installation
-        if(readPaxYamlAndSchema.details.yamlSchema && readPaxYamlAndSchema.details.serverCommon){
+        if(readPaxYamlAndSchema.details.schemas.yamlSchema){
           try {
-            let yamlSchema = JSON.parse(readPaxYamlAndSchema.details.yamlSchema);
-            const serverCommon = JSON.parse(readPaxYamlAndSchema.details.serverCommon);
-            if(yamlSchema && serverCommon){
-              yamlSchema.additionalProperties = true;
-              yamlSchema.properties.zowe.properties.setup.properties.dataset.properties.parmlibMembers.properties.zis = zoweDatasetMemberRegexFixed;
-              yamlSchema.properties.zowe.properties.setup.properties.certificate.properties.pkcs12.properties.directory = serverCommon.$defs.path;
-              if(yamlSchema.$defs?.networkSettings?.properties?.server?.properties?.listenAddresses?.items){
-                delete yamlSchema.$defs?.networkSettings?.properties?.server?.properties?.listenAddresses?.items?.ref;
-                yamlSchema.$defs.networkSettings.properties.server.properties.listenAddresses.items = serverCommon.$defs.ipv4
-              }
-              // console.log('Setting schema from runtime dir:', JSON.stringify(yamlSchema));
+            let yamlSchema = JSON.parse(readPaxYamlAndSchema.details.schemas.yamlSchema);
+            updateSchemaReferences(readPaxYamlAndSchema.details.schemas, yamlSchema);
+            if(yamlSchema){
               ConfigurationStore.setSchema(yamlSchema);
               parsedSchema = true;
               ProgressStore.set('downloadUnpax.getSchemas', true);
@@ -630,10 +613,10 @@ export class FTPInstallation extends Installation {
       const yamlSchema = await new FileTransfer().download(connectionArgs, yamlSchemaPath, DataType.ASCII);
       const serverCommonPath = `${installDir}/schemas/server-common.json`;
       const serverCommon = await new FileTransfer().download(connectionArgs, serverCommonPath, DataType.ASCII);
-      return {status: true, details: {yaml, yamlSchema, serverCommon}};
+      return {status: true, details: {yaml, schemas: {yamlSchema, serverCommon}}};
     } catch (e) {
       console.log("Error downloading example-zowe.yaml and schemas:", e.message);
-      return {status: false, details: {yaml: '', yamlSchema: '', serverCommon: ''}}  
+      return {status: false, details: {yaml: '', schemas: {yamlSchema: '', serverCommon: ''}}};
     }
   }
 
diff --git a/src/services/ResolveRef.ts b/src/services/ResolveRef.ts
new file mode 100644
index 00000000..18df0e91
--- /dev/null
+++ b/src/services/ResolveRef.ts
@@ -0,0 +1,92 @@
+let mainSchema: any;
+let schemaMap: { [key: string]: any } = {};
+
+export const updateSchemaReferences = (schemas: { [key: string]: string }, schemaObject: any): void => {
+  schemaMap = parseSchemas(schemas);
+
+  // Traverse and resolve references in schemas other than zowe-yaml schema
+  Object.values(schemaMap).forEach((schema: any) => {
+    if(schema?.$id !== schemaObject?.$id) {
+      mainSchema = schema;
+      traverseAndResolveReferences(schema);
+    }
+  })
+
+  // Traverse and resolve references for the zowe-yaml schema
+  mainSchema = schemaObject;
+  traverseAndResolveReferences(schemaObject);
+}
+
+// Parses all schemas and populates the schemaMap
+const parseSchemas = (schemas: { [key: string]: string }): { [key: string]: any } => {
+  const schemaMap: { [key: string]: any } = {};
+  Object.entries(schemas).forEach(([key, value]) => {
+    try {
+      const schemaObject = JSON.parse(value);
+      const id = schemaObject?.$id;
+      if (id) {
+        schemaMap[id] = schemaObject;
+      }
+    } catch (error: any) {
+      console.error(`Error parsing schema for key ${key}:`, error.message);
+    }
+  });
+  return schemaMap;
+};
+
+// Recursively traverse and resolve $ref references in the schema object
+const traverseAndResolveReferences = (schemaObj: any) => {
+  if (schemaObj && typeof schemaObj === "object") {
+    Object.keys(schemaObj).forEach((key) => {
+      if (key === "$ref" && typeof schemaObj[key] === "string") {
+        try {
+          const refValue = resolveRef(schemaObj[key]);
+          Object.assign(schemaObj, refValue);
+          delete schemaObj['$ref'];
+        } catch(error){
+          console.error("Error resolving reference:", error.message);
+        }
+      } else {
+        traverseAndResolveReferences(schemaObj[key]);
+      }
+    })
+  }
+}
+
+// Resolve a $ref string to its referenced schema object
+const resolveRef = (ref: string) => {
+  let [refPath, anchorPart] = ref.split('#');
+  const isRefPathEmpty = !refPath;
+
+  let refSchema = isRefPathEmpty
+    ? mainSchema
+    : schemaMap[Object.keys(schemaMap).find((id) => id.endsWith(refPath))];
+
+  if (!refSchema) {
+    throw new Error(`Schema for reference path ${refPath} not found`);
+  }
+
+  if (!refSchema.$defs) {
+    throw new Error(`No $defs found in schema ${refSchema.$id}`);
+  }
+
+  const anchor = anchorPart?.split("/").pop();
+  const refObject = isRefPathEmpty
+    ? refSchema.$defs[anchor]
+    : Object.values(refSchema.$defs).find((obj:any) => obj.$anchor === anchor);
+
+  if (!refObject) {
+    throw new Error(`Reference ${ref} not found in schemaObject ${refSchema.$id}`);
+  }
+
+  // Ensure pattern is a string and remove backslashes for ajv compatibility
+  if (refObject.pattern) {
+    const pattern = typeof refObject.pattern === 'string' ? refObject.pattern : String(refObject.pattern);
+
+    if (pattern.includes("\\")) {
+      refObject.pattern = pattern.replace(/\\/g, '');
+    }
+  }
+
+  return refObject;
+}
\ No newline at end of file