diff --git a/action.yml b/action.yml
index 1fc6b8bf6..8be6f4631 100644
--- a/action.yml
+++ b/action.yml
@@ -29,6 +29,19 @@ inputs:
       Example: flake8,pylint==2.13.1
     required: false
     default: ''
+  working-directory:
+    description: >-
+      Directory to run Darker in, either absolute or relative to
+      $GITHUB_WORKSPACE. By default, Darker is run in $GITHUB_WORKSPACE.
+    required: false
+    default: '.'
+outputs:
+  exitcode:
+    description: "Exit code of Darker"
+    value: ${{ steps.darker.outputs.exitcode }}
+  stdout:
+    description: "Standard output of Darker"
+    value: ${{ steps.darker.outputs.stdout }}
 branding:
   color: "black"
   icon: "check-circle"
@@ -37,8 +50,13 @@ runs:
   steps:
     - name: Commit Range
       id: commit-range
-      uses: akaihola/darker/.github/actions/commit-range@1.7.1
+      uses: ./.github/actions/commit-range
+    - name: Install dependencies
+      run: |
+        pip install pip-requirements-parser
+      shell: bash
     - name: Run Darker
+      id: darker
       run: |
         # Exists since using github.action_path + path to main script doesn't
         # work because bash interprets the backslashes in github.action_path
@@ -56,7 +74,6 @@ runs:
         sys.exit(proc.returncode)
         "
 
-        pip install pip-requirements-parser
         if [ "$RUNNER_OS" == "Windows" ]; then
           echo $entrypoint | python
         else
@@ -71,5 +88,6 @@ runs:
         INPUT_REVISION: ${{ inputs.revision }}
         INPUT_LINT: ${{ inputs.lint }}
         INPUT_COMMIT_RANGE: ${{ steps.commit-range.outputs.commit-range }}
+        INPUT_WORKING_DIRECTORY: ${{ inputs.working-directory }}
         pythonioencoding: utf-8
       shell: bash
diff --git a/action/main.py b/action/main.py
index e196079c9..0d7aef9d2 100644
--- a/action/main.py
+++ b/action/main.py
@@ -17,10 +17,52 @@
 VERSION = os.getenv("INPUT_VERSION", default="")
 LINT = os.getenv("INPUT_LINT", default="")
 REVISION = os.getenv("INPUT_REVISION") or os.getenv("INPUT_COMMIT_RANGE") or "HEAD^"
+WORKING_DIRECTORY = os.getenv("INPUT_WORKING_DIRECTORY", ".")
+
+
+def set_github_output(key: str, val: str) -> None:
+    """Write a key-value pair to the output file."""
+    with Path(os.environ["GITHUB_OUTPUT"]).open("a", encoding="UTF-8") as f:
+        if "\n" in val:
+            print(f"{key}<<DARKER_ACTION_EOF", file=f)
+            print(val, file=f, end="" if val.endswith("\n") else "\n")
+            print("DARKER_ACTION_EOF", file=f)
+        else:
+            print(f"{key}={val}", file=f)
+
+
+def exit(exitcode: int) -> None:
+    """Write the exit code to the output file and exit with it."""
+    set_github_output("exitcode", str(exitcode))
+    sys.exit(exitcode)
+
+
+# Check if the working directory exists
+if not os.path.isdir(WORKING_DIRECTORY):
+    print(f"::error::Working directory does not exist: {WORKING_DIRECTORY}", flush=True)
+    exit(21)
+
+
+def pip_install(*packages):
+    """Install the specified Python packages using a pip subprocess."""
+    python = str(ENV_BIN / "python")
+    args = [python, "-m", "pip", "install", *packages]
+    pip_proc = run(  # nosec
+        args,
+        check=False,
+        stdout=PIPE,
+        stderr=STDOUT,
+        encoding="utf-8",
+    )
+    print(pip_proc.stdout, end="")
+    if pip_proc.returncode:
+        print(f"::error::Failed to install {' '.join(packages)}.", flush=True)
+        sys.exit(pip_proc.returncode)
+
 
 run([sys.executable, "-m", "venv", str(ENV_PATH)], check=True)  # nosec
 
-req = ["darker[color,isort]"]
+req = ["darker[color, isort]"]
 if VERSION:
     if VERSION.startswith("@"):
         req[0] = f"git+https://github.com/akaihola/darker{VERSION}#egg={req[0]}"
@@ -41,17 +83,7 @@
     req.append(str(linter_requirement))
     linter_options.extend(["--lint", linter])
 
-pip_proc = run(  # nosec
-    [str(ENV_BIN / "python"), "-m", "pip", "install"] + req,
-    check=False,
-    stdout=PIPE,
-    stderr=STDOUT,
-    encoding="utf-8",
-)
-print(pip_proc.stdout, end="")
-if pip_proc.returncode:
-    print(f"::error::Failed to install {' '.join(req)}.", flush=True)
-    sys.exit(pip_proc.returncode)
+pip_install(*req)
 
 
 base_cmd = [str(ENV_BIN / "darker")]
@@ -69,7 +101,9 @@
     stderr=STDOUT,
     env={**os.environ, "PATH": f"{ENV_BIN}:{os.environ['PATH']}"},
     encoding="utf-8",
+    cwd=WORKING_DIRECTORY,
 )
 print(proc.stdout, end="")
 
-sys.exit(proc.returncode)
+set_github_output("stdout", proc.stdout)
+exit(proc.returncode)