diff --git a/__tests__/setup-go.test.ts b/__tests__/setup-go.test.ts
index 415c958..ee2df59 100644
--- a/__tests__/setup-go.test.ts
+++ b/__tests__/setup-go.test.ts
@@ -965,6 +965,56 @@ use .
     );
   });
 
+  describe('go-version-file-toolchain', () => {
+    const goModContents = `module example.com/mymodule
+
+go 1.14
+
+toolchain go1.21.0
+
+require (
+	example.com/othermodule v1.2.3
+	example.com/thismodule v1.2.3
+	example.com/thatmodule v1.2.3
+)
+
+replace example.com/thatmodule => ../thatmodule
+exclude example.com/thismodule v1.3.0
+`;
+
+    const goWorkContents = `go 1.19
+
+toolchain go1.21.0
+
+use .
+
+`;
+
+    it('reads version from toolchain directive in go.mod', async () => {
+      inputs['go-version-file'] = 'go.mod';
+      existsSpy.mockImplementation(() => true);
+      readFileSpy.mockImplementation(() => Buffer.from(goModContents));
+
+      await main.run();
+
+      expect(logSpy).toHaveBeenCalledWith('Setup go version spec 1.21.0');
+      expect(logSpy).toHaveBeenCalledWith('Attempting to download 1.21.0...');
+      expect(logSpy).toHaveBeenCalledWith('matching 1.21.0...');
+    });
+
+    it('reads version from toolchain directive in go.work', async () => {
+      inputs['go-version-file'] = 'go.work';
+      existsSpy.mockImplementation(() => true);
+      readFileSpy.mockImplementation(() => Buffer.from(goWorkContents));
+
+      await main.run();
+
+      expect(logSpy).toHaveBeenCalledWith('Setup go version spec 1.21.0');
+      expect(logSpy).toHaveBeenCalledWith('Attempting to download 1.21.0...');
+      expect(logSpy).toHaveBeenCalledWith('matching 1.21.0...');
+    });
+  });
+
   it('exports GOTOOLCHAIN and sets it in current process env', async () => {
     inputs['go-version'] = '1.21.0';
     inSpy.mockImplementation(name => inputs[name]);
diff --git a/dist/setup/index.js b/dist/setup/index.js
index 4cbdc47..bde7044 100644
--- a/dist/setup/index.js
+++ b/dist/setup/index.js
@@ -88318,8 +88318,14 @@ function parseGoVersionFile(versionFilePath) {
     const contents = fs_1.default.readFileSync(versionFilePath).toString();
     if (path.basename(versionFilePath) === 'go.mod' ||
         path.basename(versionFilePath) === 'go.work') {
-        const match = contents.match(/^go (\d+(\.\d+)*)/m);
-        return match ? match[1] : '';
+        // toolchain directive: https://go.dev/ref/mod#go-mod-file-toolchain
+        const matchToolchain = contents.match(/^toolchain go(\d+(\.\d+)*)/m);
+        if (matchToolchain) {
+            return matchToolchain[1];
+        }
+        // go directive: https://go.dev/ref/mod#go-mod-file-go
+        const matchGo = contents.match(/^go (\d+(\.\d+)*)/m);
+        return matchGo ? matchGo[1] : '';
     }
     return contents.trim();
 }
diff --git a/src/installer.ts b/src/installer.ts
index 817c334..96be79b 100644
--- a/src/installer.ts
+++ b/src/installer.ts
@@ -424,8 +424,15 @@ export function parseGoVersionFile(versionFilePath: string): string {
     path.basename(versionFilePath) === 'go.mod' ||
     path.basename(versionFilePath) === 'go.work'
   ) {
-    const match = contents.match(/^go (\d+(\.\d+)*)/m);
-    return match ? match[1] : '';
+    // toolchain directive: https://go.dev/ref/mod#go-mod-file-toolchain
+    const matchToolchain = contents.match(/^toolchain go(\d+(\.\d+)*)/m);
+    if (matchToolchain) {
+      return matchToolchain[1];
+    }
+
+    // go directive: https://go.dev/ref/mod#go-mod-file-go
+    const matchGo = contents.match(/^go (\d+(\.\d+)*)/m);
+    return matchGo ? matchGo[1] : '';
   }
 
   return contents.trim();