diff --git a/scripts/zmk_local_install.sh b/scripts/zmk_local_install.sh
index cd34fcd3b..f48cab20b 100755
--- a/scripts/zmk_local_install.sh
+++ b/scripts/zmk_local_install.sh
@@ -15,17 +15,17 @@ sudo apt-get install --yes --no-install-recommends git cmake ninja-build gperf \
 # Find latest release version
 # ZSDK_URL="https://github.com/zephyrproject-rtos/sdk-ng/releases/latest"
 # ZSDK_VERSION="$(curl -fsSLI -o /dev/null -w %{url_effective} ${ZSDK_URL} | sed 's/^.*v//')"
-ZSDK_VERSION="0.15.2"
+ZSDK_VERSION="0.16.3"
 
 # Download and verify latest Zephyr SDK bundle
 cd ~/.local
-wget https://github.com/zephyrproject-rtos/sdk-ng/releases/download/v${ZSDK_VERSION}/zephyr-sdk-${ZSDK_VERSION}_linux-x86_64.tar.gz
+wget https://github.com/zephyrproject-rtos/sdk-ng/releases/download/v${ZSDK_VERSION}/zephyr-sdk-${ZSDK_VERSION}_linux-x86_64.tar.xz
 wget -O - https://github.com/zephyrproject-rtos/sdk-ng/releases/download/v${ZSDK_VERSION}/sha256.sum | shasum --check --ignore-missing
 ## TODO: abort if exit code is error
 
 # Extract the Zephyr SDK bundle archive
-tar xvf zephyr-sdk-${ZSDK_VERSION}_linux-x86_64.tar.gz
-rm zephyr-sdk-${ZSDK_VERSION}_linux-x86_64.tar.gz
+tar xvf zephyr-sdk-${ZSDK_VERSION}_linux-x86_64.tar.xz
+rm zephyr-sdk-${ZSDK_VERSION}_linux-x86_64.tar.xz
 
 # Run the Zephyr SDK bundle setup script
 cd zephyr-sdk-${ZSDK_VERSION}