diff --git a/exp/controllers/awsmachinepool_controller.go b/exp/controllers/awsmachinepool_controller.go
index e35f746a39..827c515fbe 100644
--- a/exp/controllers/awsmachinepool_controller.go
+++ b/exp/controllers/awsmachinepool_controller.go
@@ -227,13 +227,30 @@ func (r *AWSMachinePoolReconciler) reconcileNormal(ctx context.Context, machineP
 	ec2Svc := r.getEC2Service(ec2Scope)
 	asgsvc := r.getASGService(clusterScope)
 
+	// Find existing ASG
+	asg, err := r.findASG(machinePoolScope, asgsvc)
+	if err != nil {
+		conditions.MarkUnknown(machinePoolScope.AWSMachinePool, expinfrav1.ASGReadyCondition, expinfrav1.ASGNotFoundReason, err.Error())
+		return err
+	}
+
 	canUpdateLaunchTemplate := func() (bool, error) {
 		// If there is a change: before changing the template, check if there exist an ongoing instance refresh,
 		// because only 1 instance refresh can be "InProgress". If template is updated when refresh cannot be started,
 		// that change will not trigger a refresh. Do not start an instance refresh if only userdata changed.
+		if asg == nil {
+			// If the ASG hasn't been created yet, there is no need to check if we can start the instance refresh.
+			// But we want to update the LaunchTemplate because an error in the LaunchTemplate may be blocking the ASG creation.
+			return true, nil
+		}
 		return asgsvc.CanStartASGInstanceRefresh(machinePoolScope)
 	}
 	runPostLaunchTemplateUpdateOperation := func() error {
+		// skip instance refresh if ASG is not created yet
+		if asg == nil {
+			machinePoolScope.Debug("ASG does not exist yet, skipping instance refresh")
+			return nil
+		}
 		// skip instance refresh if explicitly disabled
 		if machinePoolScope.AWSMachinePool.Spec.RefreshPreferences != nil && machinePoolScope.AWSMachinePool.Spec.RefreshPreferences.Disable {
 			machinePoolScope.Debug("instance refresh disabled, skipping instance refresh")
@@ -260,13 +277,6 @@ func (r *AWSMachinePoolReconciler) reconcileNormal(ctx context.Context, machineP
 	// set the LaunchTemplateReady condition
 	conditions.MarkTrue(machinePoolScope.AWSMachinePool, expinfrav1.LaunchTemplateReadyCondition)
 
-	// Find existing ASG
-	asg, err := r.findASG(machinePoolScope, asgsvc)
-	if err != nil {
-		conditions.MarkUnknown(machinePoolScope.AWSMachinePool, expinfrav1.ASGReadyCondition, expinfrav1.ASGNotFoundReason, err.Error())
-		return err
-	}
-
 	if asg == nil {
 		// Create new ASG
 		if err := r.createPool(machinePoolScope, clusterScope); err != nil {
diff --git a/exp/controllers/awsmachinepool_controller_test.go b/exp/controllers/awsmachinepool_controller_test.go
index 4a459bf707..3489fa9237 100644
--- a/exp/controllers/awsmachinepool_controller_test.go
+++ b/exp/controllers/awsmachinepool_controller_test.go
@@ -208,8 +208,6 @@ func TestAWSMachinePoolReconciler(t *testing.T) {
 				defer teardown(t, g)
 				getASG(t, g)
 
-				ec2Svc.EXPECT().ReconcileLaunchTemplate(gomock.Any(), gomock.Any(), gomock.Any())
-
 				_ = reconciler.reconcileNormal(context.Background(), ms, cs, cs)
 
 				g.Expect(ms.AWSMachinePool.Finalizers).To(ContainElement(expinfrav1.MachinePoolFinalizer))
@@ -253,11 +251,18 @@ func TestAWSMachinePoolReconciler(t *testing.T) {
 				t.Helper()
 				ms.AWSMachinePool.Spec.ProviderID = id
 			}
+			getASG := func(t *testing.T, g *WithT) {
+				t.Helper()
+
+				ec2Svc.EXPECT().GetLaunchTemplate(gomock.Any()).Return(nil, "", nil).AnyTimes()
+				asgSvc.EXPECT().GetASGByName(gomock.Any()).Return(nil, nil).AnyTimes()
+			}
 			t.Run("should look up by provider ID when one exists", func(t *testing.T) {
 				g := NewWithT(t)
 				setup(t, g)
 				defer teardown(t, g)
 				setProviderID(t, g)
+				getASG(t, g)
 
 				expectedErr := errors.New("no connection available ")
 				ec2Svc.EXPECT().ReconcileLaunchTemplate(gomock.Any(), gomock.Any(), gomock.Any()).Return(expectedErr)
diff --git a/pkg/cloud/services/autoscaling/autoscalinggroup.go b/pkg/cloud/services/autoscaling/autoscalinggroup.go
index cea424063f..fb471c7d0f 100644
--- a/pkg/cloud/services/autoscaling/autoscalinggroup.go
+++ b/pkg/cloud/services/autoscaling/autoscalinggroup.go
@@ -323,9 +323,6 @@ func (s *Service) CanStartASGInstanceRefresh(scope *scope.MachinePoolScope) (boo
 	describeInput := &autoscaling.DescribeInstanceRefreshesInput{AutoScalingGroupName: aws.String(scope.Name())}
 	refreshes, err := s.ASGClient.DescribeInstanceRefreshesWithContext(context.TODO(), describeInput)
 	if err != nil {
-		if awserrors.IsNotFound(err) {
-			return false, nil
-		}
 		return false, err
 	}
 	hasUnfinishedRefresh := false
diff --git a/pkg/cloud/services/autoscaling/autoscalinggroup_test.go b/pkg/cloud/services/autoscaling/autoscalinggroup_test.go
index ed8b9f4ec6..8b9ca450a9 100644
--- a/pkg/cloud/services/autoscaling/autoscalinggroup_test.go
+++ b/pkg/cloud/services/autoscaling/autoscalinggroup_test.go
@@ -1094,17 +1094,6 @@ func TestServiceCanStartASGInstanceRefresh(t *testing.T) {
 					Return(nil, awserrors.NewConflict("some error"))
 			},
 		},
-		{
-			name:     "should NOT return error if describe instance failed due to 'not found'",
-			wantErr:  false,
-			canStart: false,
-			expect: func(m *mock_autoscalingiface.MockAutoScalingAPIMockRecorder) {
-				m.DescribeInstanceRefreshesWithContext(context.TODO(), gomock.Eq(&autoscaling.DescribeInstanceRefreshesInput{
-					AutoScalingGroupName: aws.String("machinePoolName"),
-				})).
-					Return(nil, awserrors.NewNotFound("not found"))
-			},
-		},
 		{
 			name:     "should return true if no instance available for refresh",
 			wantErr:  false,