diff --git a/cmd/oras/internal/option/spec.go b/cmd/oras/internal/option/spec.go
index 6f2d7a2b3..7160098f3 100644
--- a/cmd/oras/internal/option/spec.go
+++ b/cmd/oras/internal/option/spec.go
@@ -45,7 +45,7 @@ func (is *ImageSpec) Set(value string) error {
 	is.flag = value
 	switch value {
 	case ImageSpecV1_1:
-		is.PackVersion = oras.PackManifestVersion1_1_RC4
+		is.PackVersion = oras.PackManifestVersion1_1
 	case ImageSpecV1_0:
 		is.PackVersion = oras.PackManifestVersion1_0
 	default:
@@ -78,7 +78,7 @@ func (is *ImageSpec) String() string {
 // ApplyFlags applies flags to a command flag set.
 func (is *ImageSpec) ApplyFlags(fs *pflag.FlagSet) {
 	// default to v1.1-rc.4
-	is.PackVersion = oras.PackManifestVersion1_1_RC4
+	is.PackVersion = oras.PackManifestVersion1_1
 	defaultFlag := ImageSpecV1_1
 	fs.Var(is, "image-spec", fmt.Sprintf(`[Experimental] specify manifest type for building artifact. Options: %s (default %q)`, is.Options(), defaultFlag))
 }
diff --git a/cmd/oras/internal/option/target.go b/cmd/oras/internal/option/target.go
index 56da7587d..db5ac8357 100644
--- a/cmd/oras/internal/option/target.go
+++ b/cmd/oras/internal/option/target.go
@@ -102,14 +102,12 @@ func (opts *Target) Parse() error {
 		if len(opts.headerFlags) != 0 {
 			return errors.New("custom header flags cannot be used on an OCI image layout target")
 		}
-		return nil
+		return opts.parseOCILayoutReference()
 	default:
 		opts.Type = TargetTypeRemote
-		if ref, err := registry.ParseReference(opts.RawReference); err != nil {
-			return err
-		} else if ref.Registry == "" || ref.Repository == "" {
+		if _, err := registry.ParseReference(opts.RawReference); err != nil {
 			return &oerrors.Error{
-				Err:            fmt.Errorf("%q is an invalid reference", opts.RawReference),
+				Err:            fmt.Errorf("%q: %w", opts.RawReference, err),
 				Recommendation: "Please make sure the provided reference is in the form of <registry>/<repo>[:tag|@digest]",
 			}
 		}
@@ -118,24 +116,28 @@ func (opts *Target) Parse() error {
 }
 
 // parseOCILayoutReference parses the raw in format of <path>[:<tag>|@<digest>]
-func parseOCILayoutReference(raw string) (path string, ref string, err error) {
+func (opts *Target) parseOCILayoutReference() error {
+	raw := opts.RawReference
+	var path string
+	var ref string
 	if idx := strings.LastIndex(raw, "@"); idx != -1 {
 		// `digest` found
 		path = raw[:idx]
 		ref = raw[idx+1:]
 	} else {
 		// find `tag`
+		var err error
 		path, ref, err = fileref.Parse(raw, "")
+		if err != nil {
+			return errors.Join(err, errdef.ErrInvalidReference)
+		}
 	}
-	return
+	opts.Path = path
+	opts.Reference = ref
+	return nil
 }
 
 func (opts *Target) newOCIStore() (*oci.Store, error) {
-	var err error
-	opts.Path, opts.Reference, err = parseOCILayoutReference(opts.RawReference)
-	if err != nil {
-		return nil, err
-	}
 	return oci.New(opts.Path)
 }
 
@@ -208,11 +210,6 @@ type ReadOnlyGraphTagFinderTarget interface {
 func (opts *Target) NewReadonlyTarget(ctx context.Context, common Common, logger logrus.FieldLogger) (ReadOnlyGraphTagFinderTarget, error) {
 	switch opts.Type {
 	case TargetTypeOCILayout:
-		var err error
-		opts.Path, opts.Reference, err = parseOCILayoutReference(opts.RawReference)
-		if err != nil {
-			return nil, err
-		}
 		info, err := os.Stat(opts.Path)
 		if err != nil {
 			if errors.Is(err, fs.ErrNotExist) {
diff --git a/cmd/oras/internal/option/target_test.go b/cmd/oras/internal/option/target_test.go
index d3cdf217f..5dc94249d 100644
--- a/cmd/oras/internal/option/target_test.go
+++ b/cmd/oras/internal/option/target_test.go
@@ -23,15 +23,16 @@ import (
 	"testing"
 
 	"github.com/spf13/cobra"
+	"oras.land/oras-go/v2/errdef"
 	"oras.land/oras-go/v2/registry/remote/errcode"
 	oerrors "oras.land/oras/cmd/oras/internal/errors"
 )
 
 func TestTarget_Parse_oci(t *testing.T) {
 	opts := Target{IsOCILayout: true}
-
-	if err := opts.Parse(); err != nil {
-		t.Errorf("Target.Parse() error = %v", err)
+	err := opts.Parse()
+	if !errors.Is(err, errdef.ErrInvalidReference) {
+		t.Errorf("Target.Parse() error = %v, expect %v", err, errdef.ErrInvalidReference)
 	}
 	if opts.Type != TargetTypeOCILayout {
 		t.Errorf("Target.Parse() failed, got %q, want %q", opts.Type, TargetTypeOCILayout)
@@ -62,36 +63,38 @@ func TestTarget_Parse_remote_err(t *testing.T) {
 }
 
 func Test_parseOCILayoutReference(t *testing.T) {
-	type args struct {
-		raw string
+	opts := Target{
+		RawReference: "/test",
+		IsOCILayout:  false,
 	}
 	tests := []struct {
 		name    string
-		args    args
+		raw     string
 		want    string
 		want1   string
 		wantErr bool
 	}{
-		{"Empty input", args{raw: ""}, "", "", true},
-		{"Empty path and tag", args{raw: ":"}, "", "", true},
-		{"Empty path and digest", args{raw: "@"}, "", "", false},
-		{"Empty digest", args{raw: "path@"}, "path", "", false},
-		{"Empty tag", args{raw: "path:"}, "path", "", false},
-		{"path and digest", args{raw: "path@digest"}, "path", "digest", false},
-		{"path and tag", args{raw: "path:tag"}, "path", "tag", false},
+		{"Empty input", "", "", "", true},
+		{"Empty path and tag", ":", "", "", true},
+		{"Empty path and digest", "@", "", "", false},
+		{"Empty digest", "path@", "path", "", false},
+		{"Empty tag", "path:", "path", "", false},
+		{"path and digest", "path@digest", "path", "digest", false},
+		{"path and tag", "path:tag", "path", "tag", false},
 	}
 	for _, tt := range tests {
 		t.Run(tt.name, func(t *testing.T) {
-			got, got1, err := parseOCILayoutReference(tt.args.raw)
+			opts.RawReference = tt.raw
+			err := opts.parseOCILayoutReference()
 			if (err != nil) != tt.wantErr {
 				t.Errorf("parseOCILayoutReference() error = %v, wantErr %v", err, tt.wantErr)
 				return
 			}
-			if got != tt.want {
-				t.Errorf("parseOCILayoutReference() got = %v, want %v", got, tt.want)
+			if opts.Path != tt.want {
+				t.Errorf("parseOCILayoutReference() got = %v, want %v", opts.Path, tt.want)
 			}
-			if got1 != tt.want1 {
-				t.Errorf("parseOCILayoutReference() got1 = %v, want %v", got1, tt.want1)
+			if opts.Reference != tt.want1 {
+				t.Errorf("parseOCILayoutReference() got1 = %v, want %v", opts.Reference, tt.want1)
 			}
 		})
 	}
diff --git a/cmd/oras/root/attach.go b/cmd/oras/root/attach.go
index 944810b2f..0e6bbbe75 100644
--- a/cmd/oras/root/attach.go
+++ b/cmd/oras/root/attach.go
@@ -156,7 +156,7 @@ func runAttach(cmd *cobra.Command, opts *attachOptions) error {
 		Layers:              descs,
 	}
 	pack := func() (ocispec.Descriptor, error) {
-		return oras.PackManifest(ctx, store, oras.PackManifestVersion1_1_RC4, opts.artifactType, packOpts)
+		return oras.PackManifest(ctx, store, oras.PackManifestVersion1_1, opts.artifactType, packOpts)
 	}
 
 	copy := func(root ocispec.Descriptor) error {
diff --git a/cmd/oras/root/push.go b/cmd/oras/root/push.go
index fb357e71e..a6541286e 100644
--- a/cmd/oras/root/push.go
+++ b/cmd/oras/root/push.go
@@ -113,7 +113,7 @@ Example - Push file "hi.txt" into an OCI image layout folder 'layout-dir' with t
 				if opts.manifestConfigRef != "" && opts.artifactType != "" {
 					return errors.New("--artifact-type and --config cannot both be provided for 1.0 OCI image")
 				}
-			case oras.PackManifestVersion1_1_RC4:
+			case oras.PackManifestVersion1_1:
 				if opts.manifestConfigRef == "" && opts.artifactType == "" {
 					opts.artifactType = oras.MediaTypeUnknownArtifact
 				}
diff --git a/cmd/oras/root/tag.go b/cmd/oras/root/tag.go
index 42576f7ba..7dc923be8 100644
--- a/cmd/oras/root/tag.go
+++ b/cmd/oras/root/tag.go
@@ -21,7 +21,7 @@ import (
 
 	"github.com/spf13/cobra"
 	"oras.land/oras-go/v2"
-	"oras.land/oras-go/v2/registry"
+	"oras.land/oras-go/v2/errdef"
 	"oras.land/oras/cmd/oras/internal/argument"
 	"oras.land/oras/cmd/oras/internal/display/status"
 	oerrors "oras.land/oras/cmd/oras/internal/errors"
@@ -74,11 +74,16 @@ Example - Tag the manifest 'v1.0.1' to 'v1.0.2' in an OCI image layout folder 'l
 		},
 		PreRunE: func(cmd *cobra.Command, args []string) error {
 			opts.RawReference = args[0]
-			if _, err := registry.ParseReference(opts.RawReference); err != nil {
-				return fmt.Errorf("unable to add tag for '%s': %w", opts.RawReference, err)
-			}
 			opts.targetRefs = args[1:]
-			return option.Parse(&opts)
+			if err := option.Parse(&opts); err != nil {
+				if inner, ok := err.(*oerrors.Error); ok {
+					if errors.Is(inner, errdef.ErrInvalidReference) {
+						inner.Err = fmt.Errorf("unable to add tag for '%s': %w", opts.RawReference, inner.Err)
+					}
+				}
+				return err
+			}
+			return nil
 		},
 		RunE: func(cmd *cobra.Command, args []string) error {
 			return tagManifest(cmd, &opts)
diff --git a/go.mod b/go.mod
index 2a91fd58f..1ca0f0c8c 100644
--- a/go.mod
+++ b/go.mod
@@ -14,7 +14,7 @@ require (
 	golang.org/x/sync v0.6.0
 	golang.org/x/term v0.18.0
 	gopkg.in/yaml.v3 v3.0.1
-	oras.land/oras-go/v2 v2.4.0
+	oras.land/oras-go/v2 v2.5.0
 )
 
 require (
diff --git a/go.sum b/go.sum
index b4139fdeb..f55f57036 100644
--- a/go.sum
+++ b/go.sum
@@ -109,5 +109,5 @@ gopkg.in/yaml.v2 v2.3.0/go.mod h1:hI93XBmqTisBFMUTm0b8Fm+jr3Dg1NNxqwp+5A1VGuI=
 gopkg.in/yaml.v3 v3.0.0-20200313102051-9f266ea9e77c/go.mod h1:K4uyk7z7BCEPqu6E+C64Yfv1cQ7kz7rIZviUmN+EgEM=
 gopkg.in/yaml.v3 v3.0.1 h1:fxVm/GzAzEWqLHuvctI91KS9hhNmmWOoWu0XTYJS7CA=
 gopkg.in/yaml.v3 v3.0.1/go.mod h1:K4uyk7z7BCEPqu6E+C64Yfv1cQ7kz7rIZviUmN+EgEM=
-oras.land/oras-go/v2 v2.4.0 h1:i+Wt5oCaMHu99guBD0yuBjdLvX7Lz8ukPbwXdR7uBMs=
-oras.land/oras-go/v2 v2.4.0/go.mod h1:osvtg0/ClRq1KkydMAEu/IxFieyjItcsQ4ut4PPF+f8=
+oras.land/oras-go/v2 v2.5.0 h1:o8Me9kLY74Vp5uw07QXPiitjsw7qNXi8Twd+19Zf02c=
+oras.land/oras-go/v2 v2.5.0/go.mod h1:z4eisnLP530vwIOUOJeBIj0aGI0L1C3d53atvCBqZHg=
diff --git a/test/e2e/go.mod b/test/e2e/go.mod
index fa5083e6e..8119550d7 100644
--- a/test/e2e/go.mod
+++ b/test/e2e/go.mod
@@ -8,7 +8,7 @@ require (
 	github.com/opencontainers/go-digest v1.0.0
 	github.com/opencontainers/image-spec v1.1.0
 	gopkg.in/yaml.v2 v2.4.0
-	oras.land/oras-go/v2 v2.4.0
+	oras.land/oras-go/v2 v2.5.0
 )
 
 require (
diff --git a/test/e2e/go.sum b/test/e2e/go.sum
index ce312454a..50510c9ab 100644
--- a/test/e2e/go.sum
+++ b/test/e2e/go.sum
@@ -47,5 +47,5 @@ gopkg.in/yaml.v2 v2.4.0/go.mod h1:RDklbk79AGWmwhnvt/jBztapEOGDOx6ZbXqjP6csGnQ=
 gopkg.in/yaml.v3 v3.0.0-20200313102051-9f266ea9e77c/go.mod h1:K4uyk7z7BCEPqu6E+C64Yfv1cQ7kz7rIZviUmN+EgEM=
 gopkg.in/yaml.v3 v3.0.1 h1:fxVm/GzAzEWqLHuvctI91KS9hhNmmWOoWu0XTYJS7CA=
 gopkg.in/yaml.v3 v3.0.1/go.mod h1:K4uyk7z7BCEPqu6E+C64Yfv1cQ7kz7rIZviUmN+EgEM=
-oras.land/oras-go/v2 v2.4.0 h1:i+Wt5oCaMHu99guBD0yuBjdLvX7Lz8ukPbwXdR7uBMs=
-oras.land/oras-go/v2 v2.4.0/go.mod h1:osvtg0/ClRq1KkydMAEu/IxFieyjItcsQ4ut4PPF+f8=
+oras.land/oras-go/v2 v2.5.0 h1:o8Me9kLY74Vp5uw07QXPiitjsw7qNXi8Twd+19Zf02c=
+oras.land/oras-go/v2 v2.5.0/go.mod h1:z4eisnLP530vwIOUOJeBIj0aGI0L1C3d53atvCBqZHg=
diff --git a/test/e2e/suite/command/push.go b/test/e2e/suite/command/push.go
index 19a89ad39..741c70e20 100644
--- a/test/e2e/suite/command/push.go
+++ b/test/e2e/suite/command/push.go
@@ -51,7 +51,7 @@ var _ = Describe("ORAS beginners:", func() {
 
 		It("should fail if the provided reference is not valid", func() {
 			err := ORAS("push", "/oras").ExpectFailure().Exec().Err
-			gomega.Expect(err).Should(gbytes.Say(`Error: "/oras" is an invalid reference`))
+			gomega.Expect(err).Should(gbytes.Say(`Error: "/oras": invalid reference: invalid registry ""`))
 			gomega.Expect(err).Should(gbytes.Say(regexp.QuoteMeta("Please make sure the provided reference is in the form of <registry>/<repo>[:tag|@digest]")))
 		})
 
diff --git a/test/e2e/suite/command/resolve.go b/test/e2e/suite/command/resolve.go
index adbef52ba..449271830 100644
--- a/test/e2e/suite/command/resolve.go
+++ b/test/e2e/suite/command/resolve.go
@@ -41,7 +41,7 @@ var _ = Describe("ORAS beginners:", func() {
 			ORAS("resolve").ExpectFailure().MatchErrKeyWords("Error:").Exec()
 		})
 		It("should fail when repo is invalid", func() {
-			ORAS("resolve", fmt.Sprintf("%s/%s", ZOTHost, InvalidRepo)).ExpectFailure().MatchErrKeyWords("Error:", fmt.Sprintf("invalid reference: invalid repository %q", InvalidRepo)).Exec()
+			ORAS("resolve", fmt.Sprintf("%s/%s", ZOTHost, InvalidRepo)).ExpectFailure().MatchErrKeyWords("Error:", "localhost:7000/INVALID", "invalid reference", "<registry>/<repo>[:tag|@digest]").Exec()
 		})
 		It("should fail when no tag or digest provided", func() {
 			ORAS("resolve", RegistryRef(ZOTHost, ImageRepo, "")).ExpectFailure().MatchErrKeyWords("Error:", `no tag or digest specified`, "oras resolve [flags] <name>{:<tag>|@<digest>}", "Please specify a reference").Exec()
diff --git a/test/e2e/suite/command/tag.go b/test/e2e/suite/command/tag.go
index 4532d7655..d1536d1ab 100644
--- a/test/e2e/suite/command/tag.go
+++ b/test/e2e/suite/command/tag.go
@@ -17,6 +17,7 @@ package command
 
 import (
 	"fmt"
+	"path/filepath"
 	"regexp"
 
 	. "github.com/onsi/ginkgo/v2"
@@ -36,6 +37,10 @@ var _ = Describe("ORAS beginners:", func() {
 			ORAS("tag", RegistryRef(ZOTHost, ImageRepo, InvalidTag), "tagged").ExpectFailure().MatchErrKeyWords(RegistryErrorPrefix).Exec()
 		})
 
+		It("should fail when the given reference is invalid", func() {
+			ORAS("tag", fmt.Sprintf("%s/%s:%s", ZOTHost, InvalidRepo, "test"), "latest").ExpectFailure().MatchErrKeyWords("Error:", "unable to add tag", "invalid reference").Exec()
+		})
+
 		It("should fail and show detailed error description if no argument provided", func() {
 			err := ORAS("tag").ExpectFailure().Exec().Err
 			gomega.Expect(err).Should(gbytes.Say("Error"))
@@ -108,5 +113,13 @@ var _ = Describe("OCI image layout users:", func() {
 		It("should add multiple tags to an existent manifest when providing tag reference", func() {
 			tagAndValidate(PrepareTempOCI(ImageRepo), multi_arch.Tag, multi_arch.Digest, "tag1-via-tag", "tag1-via-tag", "tag1-via-tag")
 		})
+		It("should be able to retag a manifest at the current directory", func() {
+			root := PrepareTempOCI(ImageRepo)
+			dir := filepath.Dir(root)
+			ref := filepath.Base(root)
+			ORAS("tag", LayoutRef(ref, multi_arch.Tag), Flags.Layout, "latest").WithWorkDir(dir).MatchKeyWords("Tagging [oci-layout]", "Tagged latest").Exec()
+			ORAS("tag", LayoutRef(ref, multi_arch.Tag), Flags.Layout, "tag2").WithWorkDir(dir).MatchKeyWords("Tagging [oci-layout]", "Tagged tag2").Exec()
+			ORAS("repo", "tags", Flags.Layout, LayoutRef(ref, multi_arch.Tag)).WithWorkDir(dir).MatchKeyWords(multi_arch.Tag, "latest", "tag2").Exec()
+		})
 	})
 })