diff --git a/src/dstack/_internal/cli/utils/updates.py b/src/dstack/_internal/cli/utils/updates.py
index 88542cc4b..418cefb3b 100644
--- a/src/dstack/_internal/cli/utils/updates.py
+++ b/src/dstack/_internal/cli/utils/updates.py
@@ -57,10 +57,22 @@ def _is_last_check_time_outdated() -> bool:
     )
 
 
+def is_update_available(current_version: str, latest_version: str) -> bool:
+    """
+    Return True if latest_version is newer than current_version.
+    Pre-releases are only considered if the current version is also a pre-release.
+    """
+    _current_version = pkg_version.parse(str(current_version))
+    _latest_version = pkg_version.parse(str(latest_version))
+    return _current_version < _latest_version and (
+        not _latest_version.is_prerelease or _current_version.is_prerelease
+    )
+
+
 def _check_version():
     latest_version = get_latest_version()
     if latest_version is not None:
-        if pkg_version.parse(str(version.__version__)) < pkg_version.parse(latest_version):
+        if is_update_available(version.__version__, latest_version):
             console.print(f"A new version of dstack is available: [code]{latest_version}[/]\n")
 
 
diff --git a/src/tests/_internal/cli/utils/test_updates.py b/src/tests/_internal/cli/utils/test_updates.py
new file mode 100644
index 000000000..6e18c9e9b
--- /dev/null
+++ b/src/tests/_internal/cli/utils/test_updates.py
@@ -0,0 +1,24 @@
+import pytest
+
+from dstack._internal.cli.utils import updates
+
+
+@pytest.mark.parametrize(
+    "current_version,latest_version,expected",
+    [
+        ("1.0.0", "1.0.1", True),  # patch update, both releases
+        ("1.0.0", "2.0.0", True),  # major update, both releases
+        ("1.0.0", "1.0.0", False),  # same version
+        ("1.1.0", "1.0.9", False),  # downgrade
+        ("1.0.0a1", "1.0.0", True),  # pre-release to release (should show update)
+        ("1.0.0", "1.0.0a1", False),  # release to pre-release (should NOT show update)
+        ("1.0.0b1", "1.0.0b2", True),  # beta to beta (should show update)
+        ("1.0.0rc1", "1.0.0", True),  # rc to release (should show update)
+        ("1.0.0", "1.0.0rc1", False),  # release to rc (should NOT show update)
+        ("1.0.0a1", "1.0.0b1", True),  # alpha to beta (should show update)
+        ("1.0.0b1", "1.0.0rc1", True),  # beta to rc (should show update)
+        ("1.0.0rc1", "1.0.1a1", True),  # rc to next alpha (should show update)
+    ],
+)
+def test_is_update_available(current_version, latest_version, expected):
+    assert updates.is_update_available(current_version, latest_version) == expected