diff --git a/pkg/runner/step_context.go b/pkg/runner/step_context.go
index d31f2d7e..939ebdd1 100644
--- a/pkg/runner/step_context.go
+++ b/pkg/runner/step_context.go
@@ -479,6 +479,11 @@ func (sc *StepContext) runAction(actionDir string, actionPath string, localActio
 
 		sc.Env = mergeMaps(sc.Env, action.Runs.Env)
 
+		ee := sc.NewExpressionEvaluator()
+		for k, v := range sc.Env {
+			sc.Env[k] = ee.Interpolate(v)
+		}
+
 		log.Debugf("type=%v actionDir=%s actionPath=%s workdir=%s actionCacheDir=%s actionName=%s containerActionDir=%s", step.Type(), actionDir, actionPath, rc.Config.Workdir, rc.ActionCacheDir(), actionName, containerActionDir)
 
 		maybeCopyToActionDir := func() error {
diff --git a/pkg/runner/testdata/actions/docker-local/action.yml b/pkg/runner/testdata/actions/docker-local/action.yml
index 9b136f8f..5d3ce624 100644
--- a/pkg/runner/testdata/actions/docker-local/action.yml
+++ b/pkg/runner/testdata/actions/docker-local/action.yml
@@ -11,5 +11,7 @@ outputs:
 runs:
   using: 'docker'
   image: 'Dockerfile'
+  env:
+    WHOAMI: ${{ inputs.who-to-greet }}
   args:
     - ${{ inputs.who-to-greet }}
diff --git a/pkg/runner/testdata/actions/docker-local/entrypoint.sh b/pkg/runner/testdata/actions/docker-local/entrypoint.sh
index bff7aa7b..43ca2dd8 100755
--- a/pkg/runner/testdata/actions/docker-local/entrypoint.sh
+++ b/pkg/runner/testdata/actions/docker-local/entrypoint.sh
@@ -3,5 +3,6 @@
 echo "Hello $1"
 time=$(date)
 echo ::set-output name=time::$time
+echo ::set-output name=whoami::$WHOAMI
 
 echo "SOMEVAR=$1" >>$GITHUB_ENV
diff --git a/pkg/runner/testdata/local-action-dockerfile/push.yml b/pkg/runner/testdata/local-action-dockerfile/push.yml
index bc4b6fda..4940b98c 100644
--- a/pkg/runner/testdata/local-action-dockerfile/push.yml
+++ b/pkg/runner/testdata/local-action-dockerfile/push.yml
@@ -7,10 +7,12 @@ jobs:
     steps:
     - uses: actions/checkout@v2
     - uses: ./actions/docker-local
+      id: dockerlocal
       with:
         who-to-greet: 'Mona the Octocat'
     - run: '[[ "${{ env.SOMEVAR }}" == "Mona the Octocat" ]]'
     - run: '[ "${SOMEVAR}" = "Not Mona" ] || exit 1'
       env:
         SOMEVAR: 'Not Mona'
+    - run: '[[ "${{ steps.dockerlocal.outputs.whoami }}" == "Mona the Octocat" ]]'
     - uses: ./localdockerimagetest_