diff --git a/.github/workflows/test.yml b/.github/workflows/test.yml
index e2a8029..7d8cd59 100644
--- a/.github/workflows/test.yml
+++ b/.github/workflows/test.yml
@@ -386,6 +386,60 @@ jobs:
         env:
           UV_VENV: ${{ steps.setup-uv.outputs.venv }}
 
+  test-activate-environment-custom-path:
+    runs-on: ${{ matrix.os }}
+    strategy:
+      matrix:
+        os: [ubuntu-latest, macos-latest, windows-latest]
+    steps:
+      - uses: actions/checkout@8e8c483db84b4bee98b60c0593521ed34d9990e8 # v6.0.1
+        with:
+          persist-credentials: false
+      - name: Install latest version
+        id: setup-uv
+        uses: ./
+        with:
+          python-version: 3.13.1t
+          activate-environment: true
+          venv-path: ${{ runner.temp }}/custom-venv
+      - name: Verify VIRTUAL_ENV matches output
+        run: |
+          if [ "$VIRTUAL_ENV" != "$UV_VENV" ]; then
+            echo "VIRTUAL_ENV does not match venv output: $VIRTUAL_ENV vs $UV_VENV"
+            exit 1
+          fi
+        shell: bash
+        env:
+          UV_VENV: ${{ steps.setup-uv.outputs.venv }}
+      - name: Verify venv location is runner.temp/custom-venv
+        run: |
+          python - <<'PY'
+          import os
+          from pathlib import Path
+
+          venv = Path(os.environ["VIRTUAL_ENV"]).resolve()
+          temp = Path(os.environ["RUNNER_TEMP"]).resolve()
+
+          if venv.name != "custom-venv":
+              raise SystemExit(f"Expected venv name 'custom-venv', got: {venv}")
+          if venv.parent != temp:
+              raise SystemExit(f"Expected venv under {temp}, got: {venv}")
+          if not venv.is_dir():
+              raise SystemExit(f"Venv directory does not exist: {venv}")
+          PY
+        shell: bash
+      - name: Verify packages can be installed
+        run: uv pip install pip
+        shell: bash
+      - name: Verify python runs from custom venv
+        run: |
+          python - <<'PY'
+          import sys
+          if "custom-venv" not in sys.executable:
+              raise SystemExit(f"Python is not running from custom venv: {sys.executable}")
+          PY
+        shell: bash
+
   test-musl:
     runs-on: ubuntu-latest
     container: alpine
@@ -1069,6 +1123,7 @@ jobs:
       - test-tilde-expansion-tool-dirs
       - test-python-version
       - test-activate-environment
+      - test-activate-environment-custom-path
       - test-musl
       - test-cache-key-os-version
       - test-cache-local
diff --git a/README.md b/README.md
index d944b2e..380f9ff 100644
--- a/README.md
+++ b/README.md
@@ -59,6 +59,9 @@ Have a look under [Advanced Configuration](#advanced-configuration) for detailed
     # Use uv venv to activate a venv ready to be used by later steps
     activate-environment: "false"
 
+    # Custom path for the virtual environment when using activate-environment (default: .venv in the working directory)
+    venv-path: ""
+
     # The directory to execute all commands in and look for files such as pyproject.toml
     working-directory: ""
 
@@ -167,7 +170,7 @@ You can set the working directory with the `working-directory` input.
 This controls where we look for `pyproject.toml`, `uv.toml` and `.python-version` files
 which are used to determine the version of uv and python to install.
 
-It also controls where [the venv gets created](#activate-environment).
+It also controls where [the venv gets created](#activate-environment), unless `venv-path` is set.
 
 ```yaml
 - name: Install uv based on the config files in the working-directory
diff --git a/__tests__/utils/inputs.test.ts b/__tests__/utils/inputs.test.ts
index d43aa8c..bbfc4c8 100644
--- a/__tests__/utils/inputs.test.ts
+++ b/__tests__/utils/inputs.test.ts
@@ -84,3 +84,42 @@ describe("cacheDependencyGlob", () => {
     );
   });
 });
+
+describe("venvPath", () => {
+  beforeEach(() => {
+    jest.resetModules();
+    mockInputs = {};
+    process.env.HOME = "/home/testuser";
+  });
+
+  afterEach(() => {
+    process.env.HOME = ORIGINAL_HOME;
+  });
+
+  it("defaults to .venv in the working directory", async () => {
+    mockInputs["working-directory"] = "/workspace";
+    const { venvPath } = await import("../../src/utils/inputs");
+    expect(venvPath).toBe("/workspace/.venv");
+  });
+
+  it("resolves a relative venv-path", async () => {
+    mockInputs["working-directory"] = "/workspace";
+    mockInputs["venv-path"] = "custom-venv";
+    const { venvPath } = await import("../../src/utils/inputs");
+    expect(venvPath).toBe("/workspace/custom-venv");
+  });
+
+  it("keeps an absolute venv-path unchanged", async () => {
+    mockInputs["working-directory"] = "/workspace";
+    mockInputs["venv-path"] = "/tmp/custom-venv";
+    const { venvPath } = await import("../../src/utils/inputs");
+    expect(venvPath).toBe("/tmp/custom-venv");
+  });
+
+  it("expands tilde in venv-path", async () => {
+    mockInputs["working-directory"] = "/workspace";
+    mockInputs["venv-path"] = "~/.venv";
+    const { venvPath } = await import("../../src/utils/inputs");
+    expect(venvPath).toBe("/home/testuser/.venv");
+  });
+});
diff --git a/action.yml b/action.yml
index ebeba73..f222155 100644
--- a/action.yml
+++ b/action.yml
@@ -15,6 +15,9 @@ inputs:
   activate-environment:
     description: "Use uv venv to activate a venv ready to be used by later steps. "
     default: "false"
+  venv-path:
+    description: "Custom path for the virtual environment when using activate-environment. Defaults to '.venv' in the working directory."
+    default: ""
   working-directory:
     description: "The directory to execute all commands in and look for files such as pyproject.toml"
     default: ${{ github.workspace }}
diff --git a/dist/save-cache/index.js b/dist/save-cache/index.js
index 7c28736..f5b369c 100644
--- a/dist/save-cache/index.js
+++ b/dist/save-cache/index.js
@@ -91032,7 +91032,7 @@ var __importDefault = (this && this.__importDefault) || function (mod) {
     return (mod && mod.__esModule) ? mod : { "default": mod };
 };
 Object.defineProperty(exports, "__esModule", ({ value: true }));
-exports.resolutionStrategy = exports.addProblemMatchers = exports.manifestFile = exports.githubToken = exports.pythonDir = exports.toolDir = exports.toolBinDir = exports.ignoreEmptyWorkdir = exports.ignoreNothingToCache = exports.cachePython = exports.pruneCache = exports.cacheDependencyGlob = exports.cacheLocalPath = exports.cacheSuffix = exports.saveCache = exports.restoreCache = exports.enableCache = exports.checkSum = exports.activateEnvironment = exports.pythonVersion = exports.versionFile = exports.version = exports.workingDirectory = exports.CacheLocalSource = void 0;
+exports.resolutionStrategy = exports.addProblemMatchers = exports.manifestFile = exports.githubToken = exports.pythonDir = exports.toolDir = exports.toolBinDir = exports.ignoreEmptyWorkdir = exports.ignoreNothingToCache = exports.cachePython = exports.pruneCache = exports.cacheDependencyGlob = exports.cacheLocalPath = exports.cacheSuffix = exports.saveCache = exports.restoreCache = exports.enableCache = exports.checkSum = exports.venvPath = exports.activateEnvironment = exports.pythonVersion = exports.versionFile = exports.version = exports.workingDirectory = exports.CacheLocalSource = void 0;
 exports.getUvPythonDir = getUvPythonDir;
 const node_path_1 = __importDefault(__nccwpck_require__(6760));
 const core = __importStar(__nccwpck_require__(7484));
@@ -91049,6 +91049,7 @@ exports.version = core.getInput("version");
 exports.versionFile = getVersionFile();
 exports.pythonVersion = core.getInput("python-version");
 exports.activateEnvironment = core.getBooleanInput("activate-environment");
+exports.venvPath = getVenvPath();
 exports.checkSum = core.getInput("checksum");
 exports.enableCache = getEnableCache();
 exports.restoreCache = core.getInput("restore-cache") === "true";
@@ -91075,6 +91076,14 @@ function getVersionFile() {
     }
     return versionFileInput;
 }
+function getVenvPath() {
+    const venvPathInput = core.getInput("venv-path");
+    if (venvPathInput !== "") {
+        const tildeExpanded = expandTilde(venvPathInput);
+        return resolveRelativePath(tildeExpanded);
+    }
+    return resolveRelativePath(".venv");
+}
 function getEnableCache() {
     const enableCacheInput = core.getInput("enable-cache");
     if (enableCacheInput === "auto") {
diff --git a/dist/setup/index.js b/dist/setup/index.js
index 57c1047..04706f3 100644
--- a/dist/setup/index.js
+++ b/dist/setup/index.js
@@ -96532,17 +96532,15 @@ async function activateEnvironment() {
         if (process.env.UV_NO_MODIFY_PATH !== undefined) {
             throw new Error("UV_NO_MODIFY_PATH and activate-environment cannot be used together.");
         }
-        const execArgs = ["venv", ".venv", "--directory", inputs_1.workingDirectory];
-        core.info("Activating python venv...");
-        await exec.exec("uv", execArgs);
-        const venvPath = path.resolve(`${inputs_1.workingDirectory}${path.sep}.venv`);
-        let venvBinPath = `${venvPath}${path.sep}bin`;
+        core.info(`Activating python venv at ${inputs_1.venvPath}...`);
+        await exec.exec("uv", ["venv", inputs_1.venvPath, "--directory", inputs_1.workingDirectory]);
+        let venvBinPath = `${inputs_1.venvPath}${path.sep}bin`;
         if (process.platform === "win32") {
-            venvBinPath = `${venvPath}${path.sep}Scripts`;
+            venvBinPath = `${inputs_1.venvPath}${path.sep}Scripts`;
         }
         core.addPath(path.resolve(venvBinPath));
-        core.exportVariable("VIRTUAL_ENV", venvPath);
-        core.setOutput("venv", venvPath);
+        core.exportVariable("VIRTUAL_ENV", inputs_1.venvPath);
+        core.setOutput("venv", inputs_1.venvPath);
     }
 }
 function setCacheDir() {
@@ -96714,7 +96712,7 @@ var __importDefault = (this && this.__importDefault) || function (mod) {
     return (mod && mod.__esModule) ? mod : { "default": mod };
 };
 Object.defineProperty(exports, "__esModule", ({ value: true }));
-exports.resolutionStrategy = exports.addProblemMatchers = exports.manifestFile = exports.githubToken = exports.pythonDir = exports.toolDir = exports.toolBinDir = exports.ignoreEmptyWorkdir = exports.ignoreNothingToCache = exports.cachePython = exports.pruneCache = exports.cacheDependencyGlob = exports.cacheLocalPath = exports.cacheSuffix = exports.saveCache = exports.restoreCache = exports.enableCache = exports.checkSum = exports.activateEnvironment = exports.pythonVersion = exports.versionFile = exports.version = exports.workingDirectory = exports.CacheLocalSource = void 0;
+exports.resolutionStrategy = exports.addProblemMatchers = exports.manifestFile = exports.githubToken = exports.pythonDir = exports.toolDir = exports.toolBinDir = exports.ignoreEmptyWorkdir = exports.ignoreNothingToCache = exports.cachePython = exports.pruneCache = exports.cacheDependencyGlob = exports.cacheLocalPath = exports.cacheSuffix = exports.saveCache = exports.restoreCache = exports.enableCache = exports.checkSum = exports.venvPath = exports.activateEnvironment = exports.pythonVersion = exports.versionFile = exports.version = exports.workingDirectory = exports.CacheLocalSource = void 0;
 exports.getUvPythonDir = getUvPythonDir;
 const node_path_1 = __importDefault(__nccwpck_require__(6760));
 const core = __importStar(__nccwpck_require__(7484));
@@ -96731,6 +96729,7 @@ exports.version = core.getInput("version");
 exports.versionFile = getVersionFile();
 exports.pythonVersion = core.getInput("python-version");
 exports.activateEnvironment = core.getBooleanInput("activate-environment");
+exports.venvPath = getVenvPath();
 exports.checkSum = core.getInput("checksum");
 exports.enableCache = getEnableCache();
 exports.restoreCache = core.getInput("restore-cache") === "true";
@@ -96757,6 +96756,14 @@ function getVersionFile() {
     }
     return versionFileInput;
 }
+function getVenvPath() {
+    const venvPathInput = core.getInput("venv-path");
+    if (venvPathInput !== "") {
+        const tildeExpanded = expandTilde(venvPathInput);
+        return resolveRelativePath(tildeExpanded);
+    }
+    return resolveRelativePath(".venv");
+}
 function getEnableCache() {
     const enableCacheInput = core.getInput("enable-cache");
     if (enableCacheInput === "auto") {
diff --git a/docs/environment-and-tools.md b/docs/environment-and-tools.md
index 00eee69..e3097eb 100644
--- a/docs/environment-and-tools.md
+++ b/docs/environment-and-tools.md
@@ -15,6 +15,17 @@ This allows directly using it in later steps:
 - run: uv pip install pip
 ```
 
+By default, the venv is created at `.venv` inside the `working-directory`.
+
+You can customize the venv location with `venv-path`, for example to place it in the runner temp directory:
+
+```yaml
+- uses: astral-sh/setup-uv@v7
+  with:
+    activate-environment: true
+    venv-path: ${{ runner.temp }}/custom-venv
+```
+
 > [!WARNING]
 >
 > Activating the environment adds your dependencies to the `PATH`, which could break some workflows.
diff --git a/src/setup-uv.ts b/src/setup-uv.ts
index 22d8ca8..1a23d1d 100644
--- a/src/setup-uv.ts
+++ b/src/setup-uv.ts
@@ -24,6 +24,7 @@ import {
   resolutionStrategy,
   toolBinDir,
   toolDir,
+  venvPath,
   versionFile as versionFileInput,
   version as versionInput,
   workingDirectory,
@@ -269,12 +270,10 @@ async function activateEnvironment(): Promise<void> {
         "UV_NO_MODIFY_PATH and activate-environment cannot be used together.",
       );
     }
-    const execArgs = ["venv", ".venv", "--directory", workingDirectory];
 
-    core.info("Activating python venv...");
-    await exec.exec("uv", execArgs);
+    core.info(`Activating python venv at ${venvPath}...`);
+    await exec.exec("uv", ["venv", venvPath, "--directory", workingDirectory]);
 
-    const venvPath = path.resolve(`${workingDirectory}${path.sep}.venv`);
     let venvBinPath = `${venvPath}${path.sep}bin`;
     if (process.platform === "win32") {
       venvBinPath = `${venvPath}${path.sep}Scripts`;
diff --git a/src/utils/inputs.ts b/src/utils/inputs.ts
index 5490104..59e2fa9 100644
--- a/src/utils/inputs.ts
+++ b/src/utils/inputs.ts
@@ -14,6 +14,7 @@ export const version = core.getInput("version");
 export const versionFile = getVersionFile();
 export const pythonVersion = core.getInput("python-version");
 export const activateEnvironment = core.getBooleanInput("activate-environment");
+export const venvPath = getVenvPath();
 export const checkSum = core.getInput("checksum");
 export const enableCache = getEnableCache();
 export const restoreCache = core.getInput("restore-cache") === "true";
@@ -45,6 +46,15 @@ function getVersionFile(): string {
   return versionFileInput;
 }
 
+function getVenvPath(): string {
+  const venvPathInput = core.getInput("venv-path");
+  if (venvPathInput !== "") {
+    const tildeExpanded = expandTilde(venvPathInput);
+    return resolveRelativePath(tildeExpanded);
+  }
+  return resolveRelativePath(".venv");
+}
+
 function getEnableCache(): boolean {
   const enableCacheInput = core.getInput("enable-cache");
   if (enableCacheInput === "auto") {