diff --git a/orbit/changes/37340-tar.gz-update-bug-fix b/orbit/changes/37340-tar.gz-update-bug-fix
new file mode 100644
index 0000000000..4c12d85a01
--- /dev/null
+++ b/orbit/changes/37340-tar.gz-update-bug-fix
@@ -0,0 +1 @@
+* Fixed bugs in auto-update of `.tar.gz` components ("Fleet Desktop" and osqueryd) in orbit.
diff --git a/orbit/pkg/update/hash.go b/orbit/pkg/update/hash.go
index 0865ac96e6..d612cc8a54 100644
--- a/orbit/pkg/update/hash.go
+++ b/orbit/pkg/update/hash.go
@@ -33,16 +33,21 @@ func fileHashes(meta *data.TargetFileMeta, localPath string) (metaHash []byte, l
 		return nil, nil, err
 	}
 
-	f, err := os.Open(localPath)
-	if err != nil {
-		// If tar.gz doesn't exist but a hash file does, use the cached hash file
-		if os.IsNotExist(err) && strings.HasSuffix(localPath, ".tar.gz") {
-			cachedHash, err := readCachedHash(localPath, meta)
-			if err == nil {
-				return metaHash, cachedHash, nil
-			}
+	// For .tar.gz components, try cached hash file first.
+	if strings.HasSuffix(localPath, ".tar.gz") {
+		cachedHash, err := readCachedHash(localPath, meta)
+		switch {
+		case err == nil:
+			return metaHash, cachedHash, nil
+		case os.IsNotExist(err):
+			// OK
+		default:
 			log.Info().Err(err).Msg("failed to read cached hash file")
 		}
+	}
+
+	f, err := os.Open(localPath)
+	if err != nil {
 		return nil, nil, fmt.Errorf("open file for hash: %w", err)
 	}
 	defer f.Close()
diff --git a/orbit/pkg/update/update.go b/orbit/pkg/update/update.go
index 0e89200fec..14c2373882 100644
--- a/orbit/pkg/update/update.go
+++ b/orbit/pkg/update/update.go
@@ -494,6 +494,9 @@ func (u *Updater) get(target string) (*LocalTarget, error) {
 						return nil, fmt.Errorf("download %q: %w", repoPath, err)
 					}
 					removeCachedHashes(localTarget.Path)
+					if err := os.RemoveAll(localTarget.DirPath); err != nil {
+						return nil, fmt.Errorf("failed to remove old extracted dir: %q: %w", localTarget.DirPath, err)
+					}
 				} else {
 					// Hash matches! We can proceed without the tar.gz
 					log.Debug().Str("path", localTarget.Path).Msg("using cached hash, tar.gz not needed")