diff --git a/.github/workflows/test-python.yml b/.github/workflows/test-python.yml
index cd5a77fe..d37c715d 100644
--- a/.github/workflows/test-python.yml
+++ b/.github/workflows/test-python.yml
@@ -1,5 +1,5 @@
 name: Validate Python e2e
-on: 
+on:
   push:
     branches:
       - main
@@ -120,3 +120,30 @@ jobs:
     - name: Run simple code
       run: python -c 'import math; print(math.factorial(5))'
 
+  setup-dev-version:
+    name: Setup 3.9-dev ${{ matrix.os }}
+    runs-on: ${{ matrix.os }}
+    strategy:
+      fail-fast: false
+      matrix:
+        os: [macos-latest, windows-latest, ubuntu-latest]
+    steps:
+    - name: Checkout
+      uses: actions/checkout@v3
+
+    - name: setup-python 3.9-dev
+      id: setup-python
+      uses: ./
+      with:
+        python-version: '3.9-dev'
+
+    - name: Check python-path
+      run: ./__tests__/check-python-path.sh '${{ steps.setup-python.outputs.python-path }}'
+      shell: bash
+
+    - name: Validate version
+      run: ${{ startsWith(steps.setup-python.outputs.python-version, '3.9.') }}
+      shell: bash
+
+    - name: Run simple code
+      run: python -c 'import math; print(math.factorial(5))'
diff --git a/README.md b/README.md
index 7508d353..1e556d75 100644
--- a/README.md
+++ b/README.md
@@ -1,4 +1,4 @@
-# setup-python V3
+# setup-python V4
 
 <p align="left">
   <a href="https://github.com/actions/setup-python"><img alt="GitHub Actions status" src="https://github.com/actions/setup-python/workflows/Main%20workflow/badge.svg"></a>
@@ -20,6 +20,7 @@ This action sets up a Python environment for use in actions by:
 - Support for pre-release versions of Python.
 - Support for installing any version of PyPy on-flight
 - Support for built-in caching of pip, pipenv and poetry dependencies
+- Support for `.python-version` file
 
 # Usage
 
@@ -29,13 +30,23 @@ Basic:
 ```yaml
 steps:
 - uses: actions/checkout@v3
-- uses: actions/setup-python@v3
+- uses: actions/setup-python@v4
   with:
     python-version: '3.x' # Version range or exact version of a Python version to use, using SemVer's version range syntax
     architecture: 'x64' # optional x64 or x86. Defaults to x64 if not specified
 - run: python my_script.py
 ```
 
+Read Python version from file:
+```yaml
+steps:
+- uses: actions/checkout@v3
+- uses: actions/setup-python@v4
+  with:
+    python-version-file: '.python-version' # Read python version from a file
+- run: python my_script.py
+```
+
 Matrix Testing:
 ```yaml
 jobs:
@@ -48,7 +59,7 @@ jobs:
     steps:
       - uses: actions/checkout@v3
       - name: Set up Python
-        uses: actions/setup-python@v3
+        uses: actions/setup-python@v4
         with:
           python-version: ${{ matrix.python-version }}
           architecture: x64
@@ -72,7 +83,7 @@ jobs:
     steps:
       - uses: actions/checkout@v3
       - name: Set up Python
-        uses: actions/setup-python@v3
+        uses: actions/setup-python@v4
         with:
           python-version: ${{ matrix.python-version }}
       - name: Display Python version
@@ -90,7 +101,7 @@ jobs:
         python-version: ['3.7.4', '3.8', '3.9', '3.10']
     steps:
     - uses: actions/checkout@v3
-    - uses: actions/setup-python@v3
+    - uses: actions/setup-python@v4
       with:
         python-version: ${{ matrix.python-version }}
     - run: python my_script.py
@@ -100,7 +111,7 @@ Download and set up an accurate pre-release version of Python:
 ```yaml
 steps:
 - uses: actions/checkout@v3
-- uses: actions/setup-python@v3
+- uses: actions/setup-python@v4
   with:
     python-version: '3.11.0-alpha.1'
 - run: python my_script.py
@@ -110,7 +121,7 @@ Download and set up the latest available version of Python (includes both pre-re
 ```yaml
 steps:
 - uses: actions/checkout@v3
-- uses: actions/setup-python@v3
+- uses: actions/setup-python@v4
   with:
     python-version: '3.11.0-alpha - 3.11.0' # SemVer's version range syntax
 - run: python my_script.py
@@ -130,7 +141,7 @@ jobs:
         - 'pypy3.8' # the latest available version of PyPy that supports Python 3.8
     steps:
     - uses: actions/checkout@v3
-    - uses: actions/setup-python@v3
+    - uses: actions/setup-python@v4
       with:
         python-version: ${{ matrix.python-version }}
     - run: python my_script.py
@@ -144,13 +155,15 @@ jobs:
     runs-on: ubuntu-latest
     steps:
     - uses: actions/checkout@v3
-    - uses: actions/setup-python@v3
+    - uses: actions/setup-python@v4
       id: cp310
       with:
         python-version: "3.10"
     - run: pipx run --python '${{ steps.cp310.outputs.python-path }}' nox --version
 ```
 
+>The environment variable `pythonLocation` also becomes available after Python or PyPy installation. It contains the absolute path to the folder where the desired version of Python or PyPy is installed.
+
 # Getting started with Python + Actions
 
 Check out our detailed guide on using [Python with GitHub Actions](https://help.github.com/en/actions/automating-your-workflow-with-github-actions/using-python-with-github-actions).
@@ -164,7 +177,7 @@ Check out our detailed guide on using [Python with GitHub Actions](https://help.
     - For every minor version of Python, expect only the latest patch to be preinstalled.
     - If `3.8.1` is installed for example, and `3.8.2` is released, expect `3.8.1` to be removed and replaced by `3.8.2` in the tools cache.
     - If the exact patch version doesn't matter to you, specifying just the major and minor version will get you the latest preinstalled patch version. In the previous example, the version spec `3.8` will use the `3.8.2` Python version found in the cache.
-    - Use `-dev` instead of a patch number (e.g., `3.11-dev`) to install the latest release of a minor version, *alpha and beta releases included*.
+    - Use `-dev` instead of a patch number (e.g., `3.11-dev`) to install the latest patch version release for a given minor version, *alpha and beta releases included*.
 - Downloadable Python versions from GitHub Releases ([actions/python-versions](https://github.com/actions/python-versions/releases)).
     - All available versions are listed in the [version-manifest.json](https://github.com/actions/python-versions/blob/main/versions-manifest.json) file.
     - If there is a specific version of Python that is not available, you can open an issue here
@@ -243,7 +256,7 @@ The requirements file format allows to specify dependency versions using logical
 ```yaml
 steps:
 - uses: actions/checkout@v3
-- uses: actions/setup-python@v3
+- uses: actions/setup-python@v4
   with:
     python-version: '3.9'
     cache: 'pip'
@@ -256,7 +269,7 @@ steps:
 - uses: actions/checkout@v3
 - name: Install pipenv
   run: pipx install pipenv
-- uses: actions/setup-python@v3
+- uses: actions/setup-python@v4
   with:
     python-version: '3.9'
     cache: 'pipenv'
@@ -269,7 +282,7 @@ steps:
 - uses: actions/checkout@v3
 - name: Install poetry
   run: pipx install poetry
-- uses: actions/setup-python@v3
+- uses: actions/setup-python@v4
   with:
     python-version: '3.9'
     cache: 'poetry'
@@ -281,7 +294,7 @@ steps:
 ```yaml
 steps:
 - uses: actions/checkout@v3
-- uses: actions/setup-python@v3
+- uses: actions/setup-python@v4
   with:
     python-version: '3.9'
     cache: 'pip'
@@ -295,7 +308,7 @@ steps:
 - uses: actions/checkout@v3
 - name: Install pipenv
   run: pipx install pipenv
-- uses: actions/setup-python@v3
+- uses: actions/setup-python@v4
   with:
     python-version: '3.9'
     cache: 'pipenv'
diff --git a/dist/setup/index.js b/dist/setup/index.js
index 9ab89d40..0d98b66f 100644
--- a/dist/setup/index.js
+++ b/dist/setup/index.js
@@ -63993,7 +63993,7 @@ function findPyPyVersion(versionSpec, architecture) {
         const binaryExtension = utils_1.IS_WINDOWS ? '.exe' : '';
         const pythonPath = path.join(utils_1.IS_WINDOWS ? installDir : _binDir, `python${binaryExtension}`);
         const pythonLocation = pypyInstall.getPyPyBinaryPath(installDir);
-        core.exportVariable('pythonLocation', pythonLocation);
+        core.exportVariable('pythonLocation', installDir);
         core.exportVariable('PKG_CONFIG_PATH', pythonLocation + '/lib/pkgconfig');
         core.addPath(pythonLocation);
         core.addPath(_binDir);
@@ -64183,15 +64183,10 @@ function useCpythonVersion(version, architecture) {
     });
 }
 exports.useCpythonVersion = useCpythonVersion;
-/** Convert versions like `3.8-dev` to a version like `>= 3.8.0-a0`. */
+/** Convert versions like `3.8-dev` to a version like `~3.8.0-0`. */
 function desugarDevVersion(versionSpec) {
-    if (versionSpec.endsWith('-dev')) {
-        const versionRoot = versionSpec.slice(0, -'-dev'.length);
-        return `>= ${versionRoot}.0-a0`;
-    }
-    else {
-        return versionSpec;
-    }
+    const devVersion = /^(\d+)\.(\d+)-dev$/;
+    return versionSpec.replace(devVersion, '~$1.$2.0-0');
 }
 /** Extracts python version from install path from hosted tool cache as described in README.md */
 function versionFromPath(installDir) {
diff --git a/docs/adrs/0000-caching-dependencies.md b/docs/adrs/0000-caching-dependencies.md
index 721ea8ed..8a172a07 100644
--- a/docs/adrs/0000-caching-dependencies.md
+++ b/docs/adrs/0000-caching-dependencies.md
@@ -45,8 +45,8 @@ We won't pursue the goal to provide wide customization of caching in the scope o
 
 ```
 steps:
-- uses: actions/checkout@v2
-- uses: actions/setup-python@v2
+- uses: actions/checkout@v3
+- uses: actions/setup-python@v4
   with:
     python-version: 3.9
     cache: pip
@@ -56,8 +56,8 @@ steps:
 
 ```
 steps:
-- uses: actions/checkout@v2
-- uses: actions/setup-python@v2
+- uses: actions/checkout@v3
+- uses: actions/setup-python@v4
   with:
     python-version: 3.9
     cache: pipenv
@@ -66,8 +66,8 @@ steps:
 
 ```
 steps:
-- uses: actions/checkout@v2
-- uses: actions/setup-python@v2
+- uses: actions/checkout@v3
+- uses: actions/setup-python@v4
   with:
     python-version: 3.9
     cache: pip
@@ -80,8 +80,8 @@ steps:
 
 ```
 steps:
-- uses: actions/checkout@v2
-- uses: actions/setup-python@v2
+- uses: actions/checkout@v3
+- uses: actions/setup-python@v4
   with:
     python-version: 3.9
     cache: pip
diff --git a/src/find-pypy.ts b/src/find-pypy.ts
index 1008ed6e..630d685c 100644
--- a/src/find-pypy.ts
+++ b/src/find-pypy.ts
@@ -54,7 +54,7 @@ export async function findPyPyVersion(
     `python${binaryExtension}`
   );
   const pythonLocation = pypyInstall.getPyPyBinaryPath(installDir);
-  core.exportVariable('pythonLocation', pythonLocation);
+  core.exportVariable('pythonLocation', installDir);
   core.exportVariable('PKG_CONFIG_PATH', pythonLocation + '/lib/pkgconfig');
   core.addPath(pythonLocation);
   core.addPath(_binDir);
diff --git a/src/find-python.ts b/src/find-python.ts
index 0a3dde13..f1dad3a9 100644
--- a/src/find-python.ts
+++ b/src/find-python.ts
@@ -117,14 +117,10 @@ export async function useCpythonVersion(
   return {impl: 'CPython', version: installed};
 }
 
-/** Convert versions like `3.8-dev` to a version like `>= 3.8.0-a0`. */
+/** Convert versions like `3.8-dev` to a version like `~3.8.0-0`. */
 function desugarDevVersion(versionSpec: string) {
-  if (versionSpec.endsWith('-dev')) {
-    const versionRoot = versionSpec.slice(0, -'-dev'.length);
-    return `>= ${versionRoot}.0-a0`;
-  } else {
-    return versionSpec;
-  }
+  const devVersion = /^(\d+)\.(\d+)-dev$/;
+  return versionSpec.replace(devVersion, '~$1.$2.0-0');
 }
 
 /** Extracts python version from install path from hosted tool cache as described in README.md */