diff --git a/action.yml b/action.yml
index 0077ecd7..0edea86a 100644
--- a/action.yml
+++ b/action.yml
@@ -11,7 +11,9 @@ inputs:
     required: false
   terraform_version:
     description: 'The version of Terraform CLI to install. Instead of full version string you can also specify constraint string starting with "<" (for example `<1.13.0`) to install the latest version satisfying the constraint. A value of `latest` will install the latest version of Terraform CLI. Defaults to `latest`.'
-    default: 'latest'
+    required: false
+  terraform_version_file:
+    description: 'The version of Terraform CLI to install, specify the path of your terraform version file.'
     required: false
   terraform_wrapper:
     description: 'Whether or not to install a wrapper to wrap subsequent calls of the `terraform` binary and expose its STDOUT, STDERR, and exit code as outputs named `stdout`, `stderr`, and `exitcode` respectively. Defaults to `true`.'
diff --git a/dist/index.js b/dist/index.js
index ff3d27a9..a1471c43 100644
--- a/dist/index.js
+++ b/dist/index.js
@@ -125,11 +125,48 @@ credentials "${credentialsHostname}" {
   core.debug(`Adding credentials to ${credsFile}`);
   await fs.writeFile(credsFile, creds);
 }
+async function isVersionFileExist(versionFilePath) {
+  try {
+    await fs.access(versionFilePath);
+    return true;
+  } catch (err) {
+    return false;
+  }
+}
+async function resolveVersionInput() {
+  let version = core.getInput("terraform_version");
+  const versionFileInput = core.getInput("terraform_version_file");
+  if (version && versionFileInput) {
+    core.warning(
+      "Both terraform_version and terraform_version_file inputs are specified, only terraform_version will be used"
+    );
+  }
+  if (version) {
+    return version;
+  }
+  if (versionFileInput) {
+    const versionFilePath = path.join(
+      process.env.GITHUB_WORKSPACE,
+      versionFileInput
+    );
+    const fileExists = await isVersionFileExist(versionFilePath);
+    if (!fileExists) {
+      throw new Error(
+        `The specified terraform version file at: ${versionFilePath} does not exist`
+      );
+    }
+
+    version = await fs.readFile(versionFilePath, "utf-8");
+
+    core.info(`Resolved ${versionFileInput} as ${version}`);
+  }
+  return version || "latest";
+}
 
 async function run () {
   try {
     // Gather GitHub Actions inputs
-    const version = core.getInput('terraform_version');
+    const version = await resolveVersionInput();
     const credentialsHostname = core.getInput('cli_config_credentials_hostname');
     const credentialsToken = core.getInput('cli_config_credentials_token');
     const wrapper = core.getInput('terraform_wrapper') === 'true';
diff --git a/lib/setup-terraform.js b/lib/setup-terraform.js
index 3e726cfa..f8d66f35 100644
--- a/lib/setup-terraform.js
+++ b/lib/setup-terraform.js
@@ -119,11 +119,48 @@ credentials "${credentialsHostname}" {
   core.debug(`Adding credentials to ${credsFile}`);
   await fs.writeFile(credsFile, creds);
 }
+async function isVersionFileExist(versionFilePath) {
+  try {
+    await fs.access(versionFilePath);
+    return true;
+  } catch (err) {
+    return false;
+  }
+}
+async function resolveVersionInput() {
+  let version = core.getInput("terraform_version");
+  const versionFileInput = core.getInput("terraform_version_file");
+  if (version && versionFileInput) {
+    core.warning(
+      "Both terraform_version and terraform_version_file inputs are specified, only terraform_version will be used"
+    );
+  }
+  if (version) {
+    return version;
+  }
+  if (versionFileInput) {
+    const versionFilePath = path.join(
+      process.env.GITHUB_WORKSPACE,
+      versionFileInput
+    );
+    const fileExists = await isVersionFileExist(versionFilePath);
+    if (!fileExists) {
+      throw new Error(
+        `The specified terraform version file at: ${versionFilePath} does not exist`
+      );
+    }
+
+    version = await fs.readFile(versionFilePath, "utf-8");
+
+    core.info(`Resolved ${versionFileInput} as ${version}`);
+  }
+  return version || "latest";
+}
 
 async function run () {
   try {
     // Gather GitHub Actions inputs
-    const version = core.getInput('terraform_version');
+    const version = await resolveVersionInput();
     const credentialsHostname = core.getInput('cli_config_credentials_hostname');
     const credentialsToken = core.getInput('cli_config_credentials_token');
     const wrapper = core.getInput('terraform_wrapper') === 'true';