diff --git a/src/connectedk8s/azext_connectedk8s/_constants.py b/src/connectedk8s/azext_connectedk8s/_constants.py
index e25157c1361..38758bc10d3 100644
--- a/src/connectedk8s/azext_connectedk8s/_constants.py
+++ b/src/connectedk8s/azext_connectedk8s/_constants.py
@@ -247,6 +247,16 @@
 No_Param_Error = "No parameters were specified with update command. Please run az connectedk8s update --help to check parameters available for update"
 Gateway_ArmId_Is_Invalid = "The provided Gateway ArmID in --gateway-resource-id  {} is invalid. Please provide a valid Gateway ArmID."
 EnableProxy_Conflict_Error = "Conflict detected: --disable-proxy can not be set with --https-proxy, --http-proxy, --proxy-skip-range and --proxy-cert at the same time. Please run az connectedk8s update --help for more information about the parameters"
+
+# --proxy-skip-range keyword that expands to the Azure Arc private-link endpoints.
+Proxy_Skip_Range_Arc_Keyword = "arc"
+# Arc private-link endpoint host suffixes the "arc" keyword expands to.
+Arc_Private_Link_Endpoints = [
+    ".his.arc.azure.{cloud_based_domain}",
+    ".dp.kubernetesconfiguration.azure.{cloud_based_domain}",
+    ".guestconfiguration.azure.{cloud_based_domain}",
+]
+
 Manual_Upgrade_Called_In_Auto_Update_Enabled = (
     "Manual Upgrade was called while in auto_Update enabled mode"
 )
diff --git a/src/connectedk8s/azext_connectedk8s/_help.py b/src/connectedk8s/azext_connectedk8s/_help.py
index ebdf83064cc..878116a5263 100644
--- a/src/connectedk8s/azext_connectedk8s/_help.py
+++ b/src/connectedk8s/azext_connectedk8s/_help.py
@@ -25,7 +25,7 @@
     - name: Onboard a connected kubernetes cluster by specifying the kubeconfig and kubecontext.
       text: az connectedk8s connect -g resourceGroupName -n connectedClusterName --kube-config /path/to/kubeconfig --kube-context kubeContextName
     - name: Onboard a connected kubernetes cluster by specifying the https proxy, http proxy, no proxy settings.
-      text: az connectedk8s connect -g resourceGroupName -n connectedClusterName --proxy-https https://proxy-url --proxy-http http://proxy-url --proxy-skip-range excludedIP,excludedCIDR,exampleCIDRfollowed,10.0.0.0/24
+      text: az connectedk8s connect -g resourceGroupName -n connectedClusterName --proxy-https https://proxy-url --proxy-http http://proxy-url --proxy-skip-range excludedIP,excludedCIDR,exampleCIDRfollowed,10.0.0.0/24,Arc
     - name: Onboard a connected kubernetes cluster by specifying the https proxy, http proxy, no proxy  with cert settings.
       text: az connectedk8s connect -g resourceGroupName -n connectedClusterName --proxy-cert /path/to/crt --proxy-https https://proxy-url --proxy-http http://proxy-url --proxy-skip-range excludedIP,excludedCIDR,exampleCIDRfollowed,10.0.0.0/24
     - name: Onboard a connected kubernetes cluster with private link feature enabled by specifying private link parameters.
@@ -46,7 +46,7 @@
     short-summary: Update properties of the arc onboarded kubernetes cluster.
     examples:
     - name: Update proxy values for the agents
-      text: az connectedk8s update -g resourceGroupName -n connectedClusterName  --proxy-cert /path/to/crt --proxy-https https://proxy-url --proxy-http http://proxy-url --proxy-skip-range excludedIP,excludedCIDR,exampleCIDRfollowed,10.0.0.0/24
+      text: az connectedk8s update -g resourceGroupName -n connectedClusterName  --proxy-cert /path/to/crt --proxy-https https://proxy-url --proxy-http http://proxy-url --proxy-skip-range excludedIP,excludedCIDR,exampleCIDRfollowed,10.0.0.0/24,Arc
     - name: Disable proxy settings for agents
       text: az connectedk8s update -g resourceGroupName -n connectedClusterName --disable-proxy
     - name: Disable auto-upgrade of agents
diff --git a/src/connectedk8s/azext_connectedk8s/_params.py b/src/connectedk8s/azext_connectedk8s/_params.py
index 480102cf4b7..50923518ccf 100644
--- a/src/connectedk8s/azext_connectedk8s/_params.py
+++ b/src/connectedk8s/azext_connectedk8s/_params.py
@@ -97,7 +97,8 @@ def load_arguments(self: Connectedk8sCommandsLoader, _: CLICommand) -> None:  #
             "no_proxy",
             options_list=["--proxy-skip-range"],
             arg_group="Proxy",
-            help="List of URLs/CIDRs for which proxy should not to be used.",
+            help="List of URLs/CIDRs for which proxy should not be used. Pass the "
+            "keyword 'Arc' to bypass the proxy for the linked Azure Arc private-link endpoints.",
         )
         c.argument(
             "proxy_cert",
@@ -260,7 +261,8 @@ def load_arguments(self: Connectedk8sCommandsLoader, _: CLICommand) -> None:  #
             "no_proxy",
             options_list=["--proxy-skip-range"],
             arg_group="Proxy",
-            help="List of URLs/CIDRs for which proxy should not to be used.",
+            help="List of URLs/CIDRs for which proxy should not be used. Pass the "
+            "keyword 'Arc' to bypass the proxy for the linked Azure Arc private-link endpoints.",
         )
         c.argument(
             "distribution",
diff --git a/src/connectedk8s/azext_connectedk8s/custom.py b/src/connectedk8s/azext_connectedk8s/custom.py
index 10060515361..2329fb0ce0b 100644
--- a/src/connectedk8s/azext_connectedk8s/custom.py
+++ b/src/connectedk8s/azext_connectedk8s/custom.py
@@ -230,6 +230,9 @@ def create_connectedk8s(
 
     print(f"Step: {utils.get_utctimestring()}: Escape Proxy Settings, if passed in")
 
+    # Expand --proxy-skip-range service keywords (e.g. "Arc") before escaping.
+    no_proxy = expand_proxy_skip_range_keywords(cmd, no_proxy)
+
     # Escaping comma, forward slash present in https proxy urls, needed for helm params.
     https_proxy = escape_proxy_settings(https_proxy)
 
@@ -1321,6 +1324,45 @@ def escape_proxy_settings(proxy_setting: str | None) -> str:
     return proxy_setting
 
 
+def get_arc_proxy_skip_range_endpoints(cmd: CLICommand) -> list[str]:
+    # Arc private-link data-plane hosts to bypass the proxy. Leading-dot form matches
+    # every region; suffix is derived so it works across public and sovereign clouds.
+    cloud_based_domain = get_cloud_based_domain(cmd)
+    return [
+        endpoint.format(cloud_based_domain=cloud_based_domain)
+        for endpoint in consts.Arc_Private_Link_Endpoints
+    ]
+
+
+def expand_proxy_skip_range_keywords(cmd: CLICommand, no_proxy: str) -> str:
+    # Replace the "Arc" keyword (case-insensitive) with the Arc private-link endpoints,
+    # keeping all other entries in order; returns the value unchanged if no keyword.
+    if not no_proxy:
+        return no_proxy
+
+    entries = no_proxy.split(",")
+    if not any(
+        entry.strip().lower() == consts.Proxy_Skip_Range_Arc_Keyword
+        for entry in entries
+    ):
+        return no_proxy
+
+    expanded: list[str] = []
+    seen: set[str] = set()
+    for entry in entries:
+        stripped = entry.strip()
+        if stripped.lower() == consts.Proxy_Skip_Range_Arc_Keyword:
+            for endpoint in get_arc_proxy_skip_range_endpoints(cmd):
+                if endpoint.lower() not in seen:
+                    seen.add(endpoint.lower())
+                    expanded.append(endpoint)
+        elif stripped and stripped.lower() not in seen:
+            seen.add(stripped.lower())
+            expanded.append(stripped)
+
+    return ",".join(expanded)
+
+
 def check_kube_connection() -> str:
     print(f"Step: {utils.get_utctimestring()}: Checking Connectivity to Cluster")
     api_instance = kube_client.VersionApi()
@@ -1627,7 +1669,7 @@ def connected_cluster_exists(
     return True
 
 
-def get_default_config_dp_endpoint(cmd: CLICommand, location: str) -> str:
+def get_cloud_based_domain(cmd: CLICommand) -> str:
     active_directory_array = cmd.cli_ctx.cloud.endpoints.active_directory.split(".")
     # default for public, mc, ff clouds
     cloud_based_domain = active_directory_array[2]
@@ -1642,7 +1684,11 @@ def get_default_config_dp_endpoint(cmd: CLICommand, location: str) -> str:
             + "."
             + active_directory_array[4]
         )
+    return cloud_based_domain
 
+
+def get_default_config_dp_endpoint(cmd: CLICommand, location: str) -> str:
+    cloud_based_domain = get_cloud_based_domain(cmd)
     config_dp_endpoint = (
         f"https://{location}.dp.kubernetesconfiguration.azure.{cloud_based_domain}"
     )
@@ -2439,6 +2485,9 @@ def update_connected_cluster(
     # Setting kubeconfig
     kube_config = set_kube_config(kube_config)
 
+    # Expand --proxy-skip-range service keywords (e.g. "Arc") before escaping.
+    no_proxy = expand_proxy_skip_range_keywords(cmd, no_proxy)
+
     # Escaping comma, forward slash present in https proxy urls, needed for helm params.
     https_proxy = escape_proxy_settings(https_proxy)
 
diff --git a/src/connectedk8s/azext_connectedk8s/tests/unittests/test_custom.py b/src/connectedk8s/azext_connectedk8s/tests/unittests/test_custom.py
index 1693db1fefc..050afa2a851 100644
--- a/src/connectedk8s/azext_connectedk8s/tests/unittests/test_custom.py
+++ b/src/connectedk8s/azext_connectedk8s/tests/unittests/test_custom.py
@@ -5,12 +5,17 @@
 import os
 import sys
 from typing import Dict, Optional
+from unittest.mock import MagicMock
 
 import pytest
 from kubernetes.client.models import V1Node, V1NodeList, V1NodeSpec, V1ObjectMeta
 
 sys.path.insert(0, os.path.abspath(os.path.join(os.path.dirname(__file__), "../../..")))
-from azext_connectedk8s.custom import get_kubernetes_distro, get_kubernetes_infra
+from azext_connectedk8s.custom import (
+    expand_proxy_skip_range_keywords,
+    get_kubernetes_distro,
+    get_kubernetes_infra,
+)
 
 
 def create_node(
@@ -86,3 +91,91 @@ def test_distro_invalid_metadata():
     node = create_node(provider_id="aws://node1", labels=None, annotations=None)
     api_response = V1NodeList(items=[node])
     assert get_kubernetes_distro(api_response) == "generic"
+
+
+# --------------------- Tests for expand_proxy_skip_range_keywords ---------------------
+def _proxy_cmd(active_directory="https://login.microsoftonline.com"):
+    cmd = MagicMock()
+    cmd.cli_ctx.cloud.endpoints.active_directory = active_directory
+    return cmd
+
+
+ARC_PUBLIC = (
+    ".his.arc.azure.com,"
+    ".dp.kubernetesconfiguration.azure.com,"
+    ".guestconfiguration.azure.com"
+)
+
+
+def test_expand_arc_keyword_public_cloud():
+    assert expand_proxy_skip_range_keywords(_proxy_cmd(), "Arc") == ARC_PUBLIC
+
+
+@pytest.mark.parametrize("keyword", ["Arc", "arc", "ARC", " aRc "])
+def test_expand_arc_keyword_is_case_and_space_insensitive(keyword):
+    assert expand_proxy_skip_range_keywords(_proxy_cmd(), keyword) == ARC_PUBLIC
+
+
+def test_expand_arc_keyword_preserves_other_entries():
+    out = expand_proxy_skip_range_keywords(_proxy_cmd(), "Arc,10.0.0.0/16,.svc")
+    assert out == ARC_PUBLIC + ",10.0.0.0/16,.svc"
+
+
+def test_expand_arc_keyword_china_cloud():
+    cmd = _proxy_cmd("https://login.chinacloudapi.cn")
+    out = expand_proxy_skip_range_keywords(cmd, "Arc")
+    assert out == (
+        ".his.arc.azure.cn,"
+        ".dp.kubernetesconfiguration.azure.cn,"
+        ".guestconfiguration.azure.cn"
+    )
+
+
+def test_expand_arc_keyword_usgov_cloud():
+    cmd = _proxy_cmd("https://login.microsoftonline.us")
+    out = expand_proxy_skip_range_keywords(cmd, "Arc")
+    assert out == (
+        ".his.arc.azure.us,"
+        ".dp.kubernetesconfiguration.azure.us,"
+        ".guestconfiguration.azure.us"
+    )
+
+
+def test_expand_arc_keyword_ussec_cloud():
+    cmd = _proxy_cmd("https://login.microsoftonline.microsoft.scloud")
+    out = expand_proxy_skip_range_keywords(cmd, "Arc")
+    assert out == (
+        ".his.arc.azure.microsoft.scloud,"
+        ".dp.kubernetesconfiguration.azure.microsoft.scloud,"
+        ".guestconfiguration.azure.microsoft.scloud"
+    )
+
+
+def test_expand_arc_keyword_usnat_cloud():
+    cmd = _proxy_cmd("https://login.microsoftonline.eaglex.ic.gov")
+    out = expand_proxy_skip_range_keywords(cmd, "Arc")
+    assert out == (
+        ".his.arc.azure.eaglex.ic.gov,"
+        ".dp.kubernetesconfiguration.azure.eaglex.ic.gov,"
+        ".guestconfiguration.azure.eaglex.ic.gov"
+    )
+
+
+def test_expand_no_keyword_returns_unchanged():
+    val = "10.0.0.0/16,.svc,localhost"
+    assert expand_proxy_skip_range_keywords(_proxy_cmd(), val) == val
+
+
+def test_expand_empty_returns_unchanged():
+    assert expand_proxy_skip_range_keywords(_proxy_cmd(), "") == ""
+
+
+def test_expand_arc_keyword_deduplicates():
+    out = expand_proxy_skip_range_keywords(_proxy_cmd(), "Arc,Arc")
+    assert out == ARC_PUBLIC
+
+
+def test_expand_arc_keyword_dedups_case_insensitive_endpoint():
+    # A user endpoint differing only in case is not duplicated in NO_PROXY.
+    out = expand_proxy_skip_range_keywords(_proxy_cmd(), "Arc, .his.ARC.azure.com")
+    assert out == ARC_PUBLIC
diff --git a/testing/test/configurations/Proxy.Tests.ps1 b/testing/test/configurations/Proxy.Tests.ps1
index bda7b06e4bc..0d268506e52 100644
--- a/testing/test/configurations/Proxy.Tests.ps1
+++ b/testing/test/configurations/Proxy.Tests.ps1
@@ -28,6 +28,36 @@ Describe 'Proxy Scenario' {
         $n | Should -BeLessOrEqual $MAX_RETRY_ATTEMPTS
     }
 
+    It 'Expands the Arc keyword in --proxy-skip-range to the Azure Arc private-link endpoints' {
+        az connectedk8s update -n $ENVCONFIG.arcClusterName -g $ENVCONFIG.resourceGroup --proxy-skip-range Arc
+        $? | Should -BeTrue
+        Start-Sleep -Seconds 10
+
+        # Loop and retry until the Arc keyword expands into the no-proxy list
+        $n = 0
+        do 
+        {
+            $output = az connectedk8s show -n $ENVCONFIG.arcClusterName -g $ENVCONFIG.resourceGroup
+            $provisioningState = ($output | ConvertFrom-Json).provisioningState
+            Write-Host "Provisioning State: $provisioningState"
+            if ($provisioningState -eq $SUCCEEDED) {
+                $noProxy = helm get values -n azure-arc-release azure-arc -o yaml | grep noProxy
+                Write-Host "$noProxy"
+                if ($noProxy -match "\.his\.arc\.azure") {
+                    break
+                }
+            }
+            Start-Sleep -Seconds 10
+            $n += 1
+        } while ($n -le $MAX_RETRY_ATTEMPTS)
+        $n | Should -BeLessOrEqual $MAX_RETRY_ATTEMPTS
+
+        $noProxy = helm get values -n azure-arc-release azure-arc -o yaml | grep noProxy
+        $noProxy | Should -Match "\.his\.arc\.azure"
+        $noProxy | Should -Match "\.dp\.kubernetesconfiguration\.azure"
+        $noProxy | Should -Match "\.guestconfiguration\.azure"
+    }
+
     It 'Disable proxy' {
         az connectedk8s update -n $ENVCONFIG.arcClusterName -g $ENVCONFIG.resourceGroup --disable-proxy
         $? | Should -BeTrue