diff --git a/api/v1alpha1/conditions_const.go b/api/v1alpha1/conditions_const.go
index 82b599064..24ba77602 100644
--- a/api/v1alpha1/conditions_const.go
+++ b/api/v1alpha1/conditions_const.go
@@ -39,7 +39,7 @@ const (
 
 const (
 	// HelmChartFoundCondition reports when mentioned helm chart is present in the cluster addon tar archive.
-	HelmChartFoundCondition = "HelmChartFound"
+	HelmChartFoundCondition clusterv1.ConditionType = "HelmChartFound"
 
 	// HelmChartMissingReason is used when mentioned helm chart is missing in the cluster addon tar archive.
 	HelmChartMissingReason = "HelmChartMissing"
@@ -62,6 +62,14 @@ const (
 	TemplateNewClusterStackFailedReason = "TemplateNewClusterStackFailed"
 )
 
+const (
+	// ClusterAddonConfigValidatedCondition reports when there is a error parsing clusteraddon.yaml.
+	ClusterAddonConfigValidatedCondition clusterv1.ConditionType = "ClusterAddonConfigValidated"
+
+	// ParsingClusterAddonConfigFailedReason is used when there's some error happen while parsing clusteraddon.yaml.
+	ParsingClusterAddonConfigFailedReason = "ParsingClusterAddonConfigFailed"
+)
+
 const (
 	// HelmChartAppliedCondition reports on whether the relevant helm chart has been applied.
 	HelmChartAppliedCondition clusterv1.ConditionType = "HelmChartApplied"
@@ -91,7 +99,7 @@ const (
 
 const (
 	// ProviderClusterStackReleasesSyncedCondition reports on whether the ProviderClusterStackReleases are ready.
-	ProviderClusterStackReleasesSyncedCondition = "ProviderClusterStackReleasesSynced"
+	ProviderClusterStackReleasesSyncedCondition clusterv1.ConditionType = "ProviderClusterStackReleasesSynced"
 
 	// ProviderTemplateNotFoundReason is used when providerTemplate is not found.
 	ProviderTemplateNotFoundReason = "ProviderTemplateNotFound"
@@ -102,7 +110,7 @@ const (
 
 const (
 	// ClusterStackReleasesSyncedCondition reports on whether the ClusterStackReleases are ready.
-	ClusterStackReleasesSyncedCondition = "ClusterStackReleasesSynced" //#nosec
+	ClusterStackReleasesSyncedCondition clusterv1.ConditionType = "ClusterStackReleasesSynced" //#nosec
 )
 
 const (
diff --git a/internal/controller/clusteraddon_controller.go b/internal/controller/clusteraddon_controller.go
index 307e231b1..23aaf7d41 100644
--- a/internal/controller/clusteraddon_controller.go
+++ b/internal/controller/clusteraddon_controller.go
@@ -298,8 +298,23 @@ func (r *ClusterAddonReconciler) Reconcile(ctx context.Context, req reconcile.Re
 	// multi-stage cluster addon flow
 	in.addonStagesInput, err = r.getAddonStagesInput(in.restConfig, in.clusterAddonChartPath)
 	if err != nil {
-		return reconcile.Result{}, fmt.Errorf("failed to get addon stages input: %w", err)
+		conditions.MarkFalse(
+			clusterAddon,
+			csov1alpha1.ClusterAddonConfigValidatedCondition,
+			csov1alpha1.ParsingClusterAddonConfigFailedReason,
+			clusterv1.ConditionSeverityError,
+			"cluster addon config (clusteraddon.yaml) is wrong: %s", err.Error(),
+		)
+
+		record.Warnf(
+			clusterAddon,
+			csov1alpha1.ParsingClusterAddonConfigFailedReason,
+			"cluster addon config (clusteraddon.yaml) is wrong: %s", err.Error(),
+		)
+
+		return reconcile.Result{}, nil
 	}
+	conditions.MarkTrue(clusterAddon, csov1alpha1.ClusterAddonConfigValidatedCondition)
 
 	// clusteraddon.yaml in the release.
 	clusterAddonConfig, err := clusteraddon.ParseConfig(in.clusterAddonConfigPath)