Fix: create_external_models misclassifies cross-repo models as external

sqlmesh/core/context.py

@@ -2488,6 +2488,7 @@ def create_external_models(self, strict: bool = False) -> None:
                 gateway=external_models_gateway,
                 max_workers=self.concurrent_tasks,
                 strict=strict,
+                all_models=self._models,
             )
 
     @python_api_analytics

sqlmesh/core/schema_loader.py

@@ -24,26 +24,33 @@ def create_external_models_file(
     gateway: t.Optional[str] = None,
     max_workers: int = 1,
     strict: bool = False,
+    all_models: t.Optional[t.Dict[str, Model]] = None,
 ) -> None:
     """Create or replace a YAML file with column and types of all columns in all external models.
 
     Args:
         path: The path to store the YAML file.
-        models: FQN to model
+        models: FQN to model for the current repo/config being processed.
         adapter: The engine adapter.
         state_reader: The state reader.
         dialect: The dialect to serialize the schema as.
         gateway: If the model should be associated with a specific gateway; the gateway key
         max_workers: The max concurrent workers to fetch columns.
         strict: If True, raise an error if the external model is missing in the database.
+        all_models: FQN to model across all loaded repos. When provided, a dependency is only
+            classified as external if it is absent from this full set. This prevents cross-repo
+            internal models from being misclassified as external in multi-repo setups.
     """
+    known_models: t.Union[UniqueKeyDict[str, Model], t.Dict[str, Model]] = (
+        all_models if all_models is not None else models
+    )
     external_model_fqns = set()
 
     for fqn, model in models.items():
         if model.kind.is_external:
             external_model_fqns.add(fqn)
         for dep in model.depends_on:
-            if dep not in models:
+            if dep not in known_models:
                 external_model_fqns.add(dep)
 
     # Make sure we don't convert internal models into external ones.

tests/core/integration/test_multi_repo.py

@@ -21,6 +21,7 @@
 )
 from sqlmesh.core.console import get_console
 from sqlmesh.core.context import Context
+from sqlmesh.utils import yaml
 from sqlmesh.utils.date import now
 from tests.conftest import DuckDBMetadata
 from tests.utils.test_helpers import use_terminal_console
@@ -559,3 +560,58 @@ def test_engine_adapters_multi_repo_all_gateways_gathered(copy_to_temp_path):
     gathered_gateways = context.engine_adapters.keys()
     expected_gateways = {"local", "memory", "extra"}
     assert gathered_gateways == expected_gateways
+
+
+@use_terminal_console
+def test_multi_repo_create_external_models(copy_to_temp_path):
+    """create_external_models should not classify cross-repo models as external (sqlmesh#5326).
+
+    silver.c and silver.e (repo_2) depend on bronze.a (repo_1). When running
+    create_external_models with both repos loaded, bronze.a must NOT be treated
+    as an external model because it is an internal model defined in repo_1.
+
+    The observable symptom of the bug is a warning: "Unable to get schema for
+    'bronze.a'" — because SQLMesh tries to query the schema of what it wrongly
+    thinks is an external table.  A correct implementation never attempts this
+    lookup and therefore emits no such warning.
+    """
+    paths = copy_to_temp_path("examples/multi")
+    repo_1_path = f"{paths[0]}/repo_1"
+    repo_2_path = f"{paths[0]}/repo_2"
+
+    context = Context(paths=[repo_1_path, repo_2_path], gateway="memory")
+    context._new_state_sync().reset(default_catalog=context.default_catalog)
+
+    with patch.object(context.console, "log_warning") as mock_warning:
+        context.create_external_models()
+
+    warning_messages = [str(call) for call in mock_warning.call_args_list]
+    schema_lookup_warnings = [
+        msg for msg in warning_messages if "bronze" in msg and "a" in msg and "schema" in msg.lower()
+    ]
+    assert not schema_lookup_warnings, (
+        "bronze.a should not be looked up as an external model, but got warnings: "
+        + str(schema_lookup_warnings)
+    )
+
+    # repo_2's external_models.yaml must not contain bronze.a
+    repo_2_external = Path(repo_2_path) / c.EXTERNAL_MODELS_YAML
+    if repo_2_external.exists():
+        contents = yaml.load(repo_2_external)
+        external_names = [e["name"] for e in contents]
+        assert not any("bronze" in name and "a" in name for name in external_names), (
+            f"bronze.a should not be in repo_2's external models, but found: {external_names}"
+        )
+
+    # repo_1 has no external dependencies at all
+    repo_1_external = Path(repo_1_path) / c.EXTERNAL_MODELS_YAML
+    if repo_1_external.exists():
+        contents = yaml.load(repo_1_external)
+        assert len(contents) == 0, (
+            f"repo_1 should have no external models, got: {contents}"
+        )
+
+    # Plan should still resolve all 5 models as internal after create_external_models
+    context.load()
+    plan = context.plan_builder().build()
+    assert len(plan.new_snapshots) == 5