diff --git a/README.md b/README.md
index 54bfb3e..8935101 100644
--- a/README.md
+++ b/README.md
@@ -27,6 +27,10 @@
     version: "0.11.0"
 ```
 
+### Staying in sync with the `latest` version
+
+By setting the version to `latest`, this action will install the latest version of Dagger.
+
 ### All `with:` input parameter options
 
 | Key             | Description                                                   | Required   | Default               |
diff --git a/action.yml b/action.yml
index ff11bba..71386ef 100644
--- a/action.yml
+++ b/action.yml
@@ -44,10 +44,19 @@ runs:
             prefix_dir="$(mktemp -d)"
         fi
         printf '%s/bin' "$prefix_dir" >> $GITHUB_PATH
+
+        # If the dagger version is 'latest', set the version back to an empty
+        # string. This allows the install script to detect and install the latest
+        # version itself
+        VERSION=${{ inputs.version }}
+        if [[ "$VERSION" == "latest" ]]; then
+          VERSION=
+        fi
+
         # The install.sh script creates path ${prefix_dir}/bin
         cd "$prefix_dir" && { \
         curl -sL https://dl.dagger.io/dagger/install.sh 2>/dev/null | \
-        DAGGER_VERSION=${{ inputs.version }} sh; }
+        DAGGER_VERSION=$VERSION sh; }
       shell: bash
 
     - run: |