diff --git a/README.md b/README.md
index d663623..a8d6fa9 100644
--- a/README.md
+++ b/README.md
@@ -129,7 +129,8 @@ Define the ENV variables in docker-compose.yml file
 | AUTO_UPDATE_MOODLE          | true                 | Set to false to disable performing update of Moodle (e.g. plugins) at docker start                                                                              |
 | UPDATE_MOODLE_CODE          | true                 | Set to false to disable auto download latest patch of Moodle core code, only effective if AUTO_UPDATE_MOODLE is true or built with ARG_ENABLE_GIT_CLONE as true |
 | DISABLE_WEB_INSTALL_PLUGIN  | false                | Set to true to disable plugin installation via site admin UI, could be useful to avoid image outsync with HA setting                                            |
-| MAINT_STATUS_KEYWORD        | Status: enabled      | Keyword for detecting Moodle maintainence status when running admin/cli/maintenance.php, language following the Moodle site default language                    |
+| MAINT_STATUS_KEYWORD        | Status: enabled      | Keyword for detecting Moodle maintenance status when running admin/cli/maintenance.php, language following the Moodle site default language                     |
+| LOCAL_CACHE_DIRECTORY       |                      | Set the path to a local fast filesystem for Moodle local caching that no need to be shared with other instances                                                 |
 
 ### Important Note about using `AUTO_UPDATE_MOODLE` and `UPDATE_MOODLE_CODE`
 
diff --git a/rootfs/docker-entrypoint-init.d/02-configure-moodle.sh b/rootfs/docker-entrypoint-init.d/02-configure-moodle.sh
index 78c4384..31fe6d5 100755
--- a/rootfs/docker-entrypoint-init.d/02-configure-moodle.sh
+++ b/rootfs/docker-entrypoint-init.d/02-configure-moodle.sh
@@ -97,7 +97,29 @@ if [ ! -f "${WEB_PATH}"/config.php ]; then
     # shellcheck disable=SC2016
     sed -i '/require_once/i $CFG->xsendfile = '\''X-Accel-Redirect'\'';' "${WEB_PATH}"/config.php
     # shellcheck disable=SC2016
-    sed -i '/require_once/i $CFG->xsendfilealiases = array('\''\/dataroot\/'\'' => $CFG->dataroot);' "${WEB_PATH}"/config.php
+    sed -i '/require_once/i $CFG->xsendfilealiases = array(' "${WEB_PATH}"/config.php
+    # shellcheck disable=SC2016
+    sed -i "/\$CFG->xsendfilealiases/a );" "${WEB_PATH}"/config.php
+    # shellcheck disable=SC2016
+    sed -i "/\$CFG->xsendfilealiases/a \ \ "\''/dataroot/'\'" => \$CFG->dataroot," "${WEB_PATH}"/config.php
+    
+    if [ -n "$LOCAL_CACHE_DIRECTORY" ]; then
+      if [ ! -d "$LOCAL_CACHE_DIRECTORY" ]; then
+        echo "Creating $LOCAL_CACHE_DIRECTORY for localcachedir..."
+        mkdir -p "$LOCAL_CACHE_DIRECTORY"
+      fi
+      # shellcheck disable=SC2016
+      sed -i "/require_once/i \$CFG->localcachedir = \'$LOCAL_CACHE_DIRECTORY\';" "${WEB_PATH}"/config.php
+      # shellcheck disable=SC2016
+      sed -i "/\$CFG->xsendfilealiases/a \ \ "\''/localcachedir/'\'" => \'$LOCAL_CACHE_DIRECTORY\'," "${WEB_PATH}"/config.php
+      cat << EOL >> /etc/nginx/conf.d/default/server/moodle.conf
+    location ~ ^/localcachedir/(.*)$ {
+        internal;
+        alias $LOCAL_CACHE_DIRECTORY/\$1;
+    }
+EOL
+      echo "Set $LOCAL_CACHE_DIRECTORY as localcachedir"
+    fi
 
     if [ "$SSLPROXY" = 'true' ]; then
         # shellcheck disable=SC2016