diff --git a/libmamba/include/mamba/core/package_fetcher.hpp b/libmamba/include/mamba/core/package_fetcher.hpp
index bf326b59b2..3d1578ada3 100644
--- a/libmamba/include/mamba/core/package_fetcher.hpp
+++ b/libmamba/include/mamba/core/package_fetcher.hpp
@@ -116,6 +116,7 @@ namespace mamba
         void update_monitor(progress_callback_t* cb, PackageExtractEvent event) const;
 
         specs::PackageInfo m_package_info;
+        MultiPackageCache* m_caches = nullptr;
 
         fs::u8path m_tarball_path;
         fs::u8path m_cache_path;
diff --git a/libmamba/src/api/update.cpp b/libmamba/src/api/update.cpp
index c8cdce8a73..936ae45c1e 100644
--- a/libmamba/src/api/update.cpp
+++ b/libmamba/src/api/update.cpp
@@ -70,10 +70,20 @@ namespace mamba
                     request.jobs.emplace_back(Request::UpdateAll{ /* .clean_dependencies= */ false });
                 }
 
-                // Install everything else
+                // Specs passed with `update --all`:
+                // - Update jobs constrain already-installed packages without globally pinning them
+                // - Install jobs add packages that are not yet in the prefix
                 for (auto& ms : parsed_specs)
                 {
-                    request.jobs.emplace_back(Request::Install{ std::move(ms) });
+                    const auto& match_spec_name = ms.name().to_string();
+                    if (prefix_data.records().contains(match_spec_name))
+                    {
+                        request.jobs.emplace_back(Request::Update{ std::move(ms) });
+                    }
+                    else
+                    {
+                        request.jobs.emplace_back(Request::Install{ std::move(ms) });
+                    }
                 }
             }
             else
diff --git a/libmamba/src/core/package_cache.cpp b/libmamba/src/core/package_cache.cpp
index fc8d023104..abf428e926 100644
--- a/libmamba/src/core/package_cache.cpp
+++ b/libmamba/src/core/package_cache.cpp
@@ -656,6 +656,9 @@ namespace mamba
 
     void MultiPackageCache::clear_query_cache(const specs::PackageInfo& s)
     {
+        const std::string pkg = s.long_str();
+        m_cached_tarballs.erase(pkg);
+        m_cached_extracted_dirs.erase(pkg);
         for (auto& c : m_caches)
         {
             c.clear_query_cache(s);
diff --git a/libmamba/src/core/package_fetcher.cpp b/libmamba/src/core/package_fetcher.cpp
index 353914aac0..7f9d4fcfe5 100644
--- a/libmamba/src/core/package_fetcher.cpp
+++ b/libmamba/src/core/package_fetcher.cpp
@@ -140,6 +140,7 @@ namespace mamba
 
     PackageFetcher::PackageFetcher(const specs::PackageInfo& pkg_info, MultiPackageCache& caches)
         : m_package_info(pkg_info)
+        , m_caches(&caches)
     {
         const fs::u8path extracted_cache = caches.get_extracted_dir_path(m_package_info);
         if (extracted_cache.empty())
@@ -360,6 +361,7 @@ namespace mamba
                 LOG_DEBUG << "Extracted to '" << extract_path.string() << "'";
                 write_repodata_record(extract_path);
                 update_urls_txt();
+                m_caches->clear_query_cache(m_package_info);
                 update_monitor(cb, PackageExtractEvent::extract_success);
             }
             catch (const std::logic_error&)
diff --git a/libmamba/src/core/transaction.cpp b/libmamba/src/core/transaction.cpp
index 3a4d58dc94..e6c64dc800 100644
--- a/libmamba/src/core/transaction.cpp
+++ b/libmamba/src/core/transaction.cpp
@@ -26,6 +26,7 @@
 #include "mamba/core/execution.hpp"
 #include "mamba/core/output.hpp"
 #include "mamba/core/package_fetcher.hpp"
+#include "mamba/core/package_handling.hpp"
 #include "mamba/core/repo_checker_store.hpp"
 #include "mamba/core/thread_utils.hpp"
 #include "mamba/core/transaction.hpp"
@@ -57,6 +58,58 @@ namespace mamba
                    && caches.get_tarball_path(pkg_info).empty();
         }
 
+        /**
+         * Resolve the extracted package cache directory for linking.
+         *
+         * Clears stale negative cache entries (e.g. from before fetch/extract in the same
+         * transaction) and, if needed, re-extracts from a cached tarball at link time.
+         */
+        fs::u8path resolve_extracted_cache_path(
+            const specs::PackageInfo& pkg,
+            MultiPackageCache& caches,
+            const Context& ctx
+        )
+        {
+            auto lookup = [&]() { return caches.get_extracted_dir_path(pkg); };
+
+            if (auto path = lookup(); !path.empty())
+            {
+                return path;
+            }
+
+            caches.clear_query_cache(pkg);
+            if (auto path = lookup(); !path.empty())
+            {
+                return path;
+            }
+
+            PackageFetcher fetcher(pkg, caches);
+            if (fetcher.needs_download())
+            {
+                LOG_ERROR << "Cannot find a valid extracted directory cache for '" << pkg.filename
+                          << "'";
+                throw std::runtime_error("Package cache error.");
+            }
+
+            if (fetcher.needs_extract())
+            {
+                const auto extract_options = ExtractOptions::from_context(ctx);
+                if (!fetcher.extract(extract_options))
+                {
+                    LOG_ERROR << "Failed to extract package '" << pkg.filename << "' for linking";
+                    throw std::runtime_error("Package cache error.");
+                }
+                caches.clear_query_cache(pkg);
+                if (auto path = lookup(); !path.empty())
+                {
+                    return path;
+                }
+            }
+
+            LOG_ERROR << "Cannot find a valid extracted directory cache for '" << pkg.filename << "'";
+            throw std::runtime_error("Package cache error.");
+        }
+
         auto explicit_spec(const specs::PackageInfo& pkg) -> specs::MatchSpec
         {
             auto out = specs::MatchSpec();
@@ -241,7 +294,7 @@ namespace mamba
                 request,
                 [&](const auto& item) { m_history_entry.update.push_back(item.spec.to_string()); }
             );
-            solver::for_each_of<Request::Remove, Request::Update>(
+            solver::for_each_of<Request::Remove>(
                 request,
                 [&](const auto& item) { m_history_entry.remove.push_back(item.spec.to_string()); }
             );
@@ -764,7 +817,7 @@ namespace mamba
             }
 
             Console::stream() << "Linking " << pkg.str();
-            const fs::u8path cache_path(m_multi_cache.get_extracted_dir_path(pkg, false));
+            const fs::u8path cache_path(resolve_extracted_cache_path(pkg, m_multi_cache, ctx));
             LinkPackage lp(pkg, cache_path, &transaction_context);
             try
             {
diff --git a/libmamba/tests/src/core/test_package_cache.cpp b/libmamba/tests/src/core/test_package_cache.cpp
index a2bbe76094..025e64670c 100644
--- a/libmamba/tests/src/core/test_package_cache.cpp
+++ b/libmamba/tests/src/core/test_package_cache.cpp
@@ -177,5 +177,21 @@ namespace mamba
             MultiPackageCache cache({ long_pkgs_dir }, params);
             REQUIRE(cache.get_extracted_dir_path(pkg_info) == long_pkgs_dir / rel_path);
         }
+
+        SECTION("Stale negative cache is cleared and package is found")
+        {
+            MultiPackageCache cache({ pkgs_dir }, params);
+
+            // Negative lookup is cached before the extracted directory exists
+            REQUIRE(cache.get_extracted_dir_path(pkg_info).empty());
+
+            write_repodata_record(hierarchical_dir / "info" / "repodata_record.json", pkg_info);
+
+            // Without clearing the query cache, the negative result is reused
+            REQUIRE(cache.get_extracted_dir_path(pkg_info).empty());
+
+            cache.clear_query_cache(pkg_info);
+            REQUIRE(cache.get_extracted_dir_path(pkg_info) == pkgs_dir / rel_path);
+        }
     }
 }  // namespace mamba
diff --git a/micromamba/src/update.cpp b/micromamba/src/update.cpp
index 2cb871b5c5..4ac5faa2c7 100644
--- a/micromamba/src/update.cpp
+++ b/micromamba/src/update.cpp
@@ -38,7 +38,11 @@ set_update_command(CLI::App* subcom, Configuration& config)
     subcom->add_flag("--prune-deps,!--no-prune-deps", prune_deps, "Prune dependencies (default)");
 
     subcom->get_option("specs")->description("Specs to update in the environment");
-    subcom->add_flag("-a,--all", update_all, "Update all packages in the environment");
+    subcom->add_flag(
+        "-a,--all",
+        update_all,
+        "Update all packages in the environment (optionally constrained by specs)"
+    );
 
     subcom->callback(
         [&]
diff --git a/micromamba/tests/test_update.py b/micromamba/tests/test_update.py
index 01662ce7c5..d4c34fa12b 100644
--- a/micromamba/tests/test_update.py
+++ b/micromamba/tests/test_update.py
@@ -221,6 +221,19 @@ def test_update_all(self, env_created):
         pkgs = helpers.umamba_list("-n", TestUpdate.env_name, "--json")
         assert any(pkg["name"] == "numpy" for pkg in pkgs)
 
+    def test_update_all_with_constraint(self, env_created):
+        update_res = helpers.update("--all", "xtensor<=" + self.medium_old_version, "--json")
+        xtensor_link = [
+            to_link for to_link in update_res["actions"]["LINK"] if to_link["name"] == "xtensor"
+        ][0]
+        assert xtensor_link["version"].startswith(self.medium_old_version)
+
+        if helpers.dry_run_tests == helpers.DryRun.OFF:
+            with open(Path(self.prefix) / "conda-meta" / "history") as h:
+                history = h.read()
+            assert "update specs" in history
+            assert "xtensor<=" + self.medium_old_version in history
+
     @pytest.mark.parametrize(
         "alias",
         [