diff --git a/README.md b/README.md
index a9da3c0..705b2ab 100644
--- a/README.md
+++ b/README.md
@@ -85,4 +85,15 @@ the necessary modules for a West based [Zephyr workspace application][1].
     west-project-filter: -nrf_hw_models
 ```
 
+## Skip installing OS level dependencies and Zephyr SDK
+
+```yaml
+- name: Setup Zephyr project
+  uses: zephyrproject-rtos/action-zephyr-setup@v1
+  with:
+    app-path: example-application
+    toolchains: arm-zephyr-eabi
+    skip-dependencies: true
+```
+
 [1]: https://docs.zephyrproject.org/latest/develop/application/index.html#zephyr-workspace-app
diff --git a/action.yml b/action.yml
index 8146798..27d6a39 100644
--- a/action.yml
+++ b/action.yml
@@ -34,6 +34,13 @@ inputs:
     required: false
     default: https://github.com/zephyrproject-rtos/sdk-ng/releases/download
 
+  skip-dependencies:
+    description: |
+      Set to 'true' to skip installation of SDK and OS dependencies. Useful
+      when running action within a container
+    required: false
+    default: 'false'
+
   toolchains:
     description: List of toolchains to install, colon separated
     required: false
@@ -53,6 +60,7 @@ runs:
   using: "composite"
   steps:
     - name: Install dependencies
+      if: ${{ inputs.skip-dependencies != 'true' }}
       shell: bash
       run: |
         if [ "${{ runner.os }}" = "Windows" ]; then
@@ -163,13 +171,14 @@ runs:
         west packages pip --install --ignore-venv-check || pip3 install -r zephyr/scripts/requirements.txt
 
     - name: Cache Zephyr SDK
+      if: ${{ inputs.skip-dependencies != 'true' }}
       id: cache-toolchain
       uses: actions/cache@v4
       with:
         path: ${{ inputs.base-path }}/zephyr-sdk
         key: ${{ env.SDK_FILE }}-${{ inputs.toolchains }}
 
-    - if: ${{ steps.cache-toolchain.outputs.cache-hit != 'true' }}
+    - if: ${{ steps.cache-toolchain.outputs.cache-hit != 'true' && inputs.skip-dependencies != 'true' }}
       working-directory: ${{ inputs.base-path }}
       name: Download Zephyr SDK
       shell: bash
@@ -184,6 +193,7 @@ runs:
         fi
 
     - name: Setup Zephyr SDK
+      if: ${{ inputs.skip-dependencies != 'true' }}
       working-directory: ${{ inputs.base-path }}/zephyr-sdk
       shell: bash
       run: |