diff --git a/src/error.rs b/src/error.rs
index 590114f..60a41c4 100644
--- a/src/error.rs
+++ b/src/error.rs
@@ -210,4 +210,7 @@ pub enum OverlayError {
     /// A model error occurred during overlay application.
     #[error("model error: {0}")]
     Model(#[from] ModelError),
+    /// A buffer or slice contains malformed data.
+    #[error("malformed overlay data: {0}")]
+    MalformedData(String),
 }
diff --git a/src/model/overlay.rs b/src/model/overlay.rs
index 2add64b..a073ce1 100644
--- a/src/model/overlay.rs
+++ b/src/model/overlay.rs
@@ -12,9 +12,10 @@ use alloc::collections::BTreeMap;
 use alloc::format;
 use alloc::string::String;
 
-use crate::Node;
+use crate::error::OverlayError;
 use crate::model::DeviceTreeNode;
-use crate::overlay::get_phandle;
+use crate::overlay::{PHANDLE_PROPS, get_phandle};
+use crate::{Node, Property};
 
 #[allow(unused)]
 fn merge_node(
@@ -67,6 +68,27 @@ fn update_phandles_recursive(
     }
 }
 
+/// Relocates all local phandles defined in `overlay` and updates internal
+/// references specified by `/__local_fixups__` by adding `phandle_offset`.
+#[allow(unused)]
+fn offset_node_phandles(node: &mut DeviceTreeNode, offset: u32) -> Result<(), OverlayError> {
+    for prop_name in PHANDLE_PROPS {
+        if let Some(prop) = node.property_mut(prop_name)
+            && let Ok(val) = (&*prop).as_u32()
+        {
+            let new_val = val
+                .checked_add(offset)
+                .filter(|x| *x != 0 && *x != u32::MAX)
+                .ok_or(OverlayError::PhandleOverflow)?;
+            prop.set_value(new_val.to_be_bytes().to_vec());
+        }
+    }
+    for child in node.children_mut() {
+        offset_node_phandles(child, offset)?;
+    }
+    Ok(())
+}
+
 #[cfg(test)]
 mod tests {
     use alloc::vec;
@@ -173,4 +195,53 @@ mod tests {
         assert_eq!(phandles.get(&43).unwrap(), "/root/child");
         assert_eq!(phandles.get(&100).unwrap(), "/root/child/grandchild");
     }
+
+    #[test]
+    fn offset_node_phandles_works() {
+        let mut node = DeviceTreeNode::builder("root")
+            .unwrap()
+            .property(DeviceTreeProperty::new("phandle", 42u32.to_be_bytes().to_vec()).unwrap())
+            .child(
+                DeviceTreeNode::builder("child")
+                    .unwrap()
+                    .property(
+                        DeviceTreeProperty::new("linux,phandle", 43u32.to_be_bytes().to_vec())
+                            .unwrap(),
+                    )
+                    .build(),
+            )
+            .build();
+
+        offset_node_phandles(&mut node, 100).unwrap();
+
+        let expected = DeviceTreeNode::builder("root")
+            .unwrap()
+            .property(DeviceTreeProperty::new("phandle", 142u32.to_be_bytes().to_vec()).unwrap())
+            .child(
+                DeviceTreeNode::builder("child")
+                    .unwrap()
+                    .property(
+                        DeviceTreeProperty::new("linux,phandle", 143u32.to_be_bytes().to_vec())
+                            .unwrap(),
+                    )
+                    .build(),
+            )
+            .build();
+
+        assert_eq!(node, expected);
+    }
+
+    #[test]
+    fn offset_node_phandles_overflow() {
+        let mut node = DeviceTreeNode::builder("root")
+            .unwrap()
+            .property(DeviceTreeProperty::new("phandle", 42u32.to_be_bytes().to_vec()).unwrap())
+            .build();
+
+        offset_node_phandles(&mut node, 100).unwrap();
+
+        // Test overflow
+        let result = offset_node_phandles(&mut node, u32::MAX - 100);
+        assert!(matches!(result, Err(OverlayError::PhandleOverflow)));
+    }
 }