diff --git a/.github/workflows/validate-script.yml b/.github/workflows/validate-script.yml
new file mode 100644
index 0000000..b5186b0
--- /dev/null
+++ b/.github/workflows/validate-script.yml
@@ -0,0 +1,11 @@
+on: [push]
+
+jobs:
+  validate-script:
+    runs-on: ubuntu-latest
+    container:
+      image: koalaman/shellcheck-alpine:latest
+    steps:  
+    - uses: actions/checkout@v2
+    - name: Validate script
+      run: shellcheck version.sh
diff --git a/Dockerfile b/Dockerfile
new file mode 100644
index 0000000..f83af92
--- /dev/null
+++ b/Dockerfile
@@ -0,0 +1,6 @@
+FROM alpine:latest
+
+RUN apk add --no-cache bash git sed
+COPY version.sh /version.sh
+
+ENTRYPOINT ["/version.sh"]
diff --git a/README.md b/README.md
new file mode 100644
index 0000000..6e397cc
--- /dev/null
+++ b/README.md
@@ -0,0 +1,92 @@
+# Set version action
+
+This action sets the version based on either the current commit hash or tag.
+The result can either be stored in the action's output or be written to a file directly.
+
+**Note:** Tags **MUST** be in one of the following formats or this action will fail: `vMAJOR.MINOR.PATCH` or `vMAJOR.MINOR.PATCH-identifier`.
+
+## Inputs
+
+### `target`
+
+**Required** Target for the version, either output or file. Default `"output"`.
+
+### `source`
+
+**Required** Source for the version, either commit or tag. Default `"commit"`.
+
+### `file_path`
+
+File path in case of file target, relative to the workspace.
+
+### `version_placeholder`
+
+Version placeholder to replace in case of file target. Default `"0.0.0+development"`.
+
+## Outputs
+
+### `version`
+
+The current version
+
+## Example usage
+
+### Build a Docker image using the current Git tag
+
+This example uses the version variable directly in the `docker build` command.
+
+```yaml
+jobs:
+  build:
+    - name: Checkout
+      uses: actions/checkout@v2
+    - name: Set version
+      uses: weareyipyip/set-version-action@v1
+      id: set-version
+      with:
+        target: output
+        source: tag
+    - name: Build Docker image
+      run: 'docker build -t some-image:${{ steps.set-version.outputs.version }}'
+```
+
+### Build a Node package using the current Git tag
+
+This example directly replaces the version placeholder in `package.json` with the parsed version.
+
+```yaml
+jobs:
+  build:
+    - name: Checkout
+      uses: actions/checkout@v2
+    - name: Set version
+      uses: weareyipyip/set-version-action@v1
+      id: set-version
+      with:
+        target: file
+        source: tag
+        file_path: package.json
+    - name: Build Node package
+      run: 'npm build'
+```
+
+### Build a Node package using the current Git commit
+
+This example directly replaces the version placeholder in `package.json` with the parsed version.
+The commit hash can be used for builds that aren't tagged, e.g. automated test builds.
+
+```yaml
+jobs:
+  build:
+    - name: Checkout
+      uses: actions/checkout@v2
+    - name: Set version
+      uses: weareyipyip/set-version-action@v1
+      id: set-version
+      with:
+        target: file
+        source: commit
+        file_path: package.json
+    - name: Build Node package
+      run: 'npm build'
+```
diff --git a/action.yml b/action.yml
new file mode 100644
index 0000000..423ca45
--- /dev/null
+++ b/action.yml
@@ -0,0 +1,29 @@
+name: 'Set version'
+description: 'Set the version from the current commit or tag'
+inputs:
+  target:
+    description: 'Target for the version, either output or file'
+    required: true
+    default: 'output'
+  source:
+    description: 'Source for the version, either commit or tag'
+    required: true
+    default: 'commit'
+  file_path:
+    description: 'File path in case of file target, relative to the workspace'
+    required: false
+  version_placeholder:
+    description: 'Version placeholder to replace in case of file target'
+    required: false
+    default: '0.0.0+development'
+outputs:
+  version:
+    description: 'The current version'
+runs:
+  using: 'docker'
+  image: 'Dockerfile'
+  args:
+    - ${{ inputs.target }}
+    - ${{ inputs.source }}
+    - ${{ inputs.file_path }}
+    - ${{ inputs.version_placeholder }}
diff --git a/version.sh b/version.sh
new file mode 100755
index 0000000..13dec4b
--- /dev/null
+++ b/version.sh
@@ -0,0 +1,45 @@
+#!/bin/bash
+
+exit_error() {
+  echo "$1" 1>&2
+  exit 1
+}
+
+parse_tag() {
+  if [[ "$1" =~ ^v[0-9]\.[0-9]\.[0-9](-[0-9A-Za-z\.]+)?$ ]]; then
+    echo -n "${1:1}"
+  else
+    exit_error "Tag must be in format 'vMAJOR.MINOR.PATCH' or 'vMAJOR.MINOR.PATCH-identifier'"
+  fi
+}
+
+get_version() {
+  case "$1" in
+    "commit")
+      SHORT_SHA="$(git rev-parse --short "$GITHUB_SHA")" || exit 1
+      echo -n "0.0.0+$SHORT_SHA"
+      ;;
+    "tag")
+      TAG="${GITHUB_REF#refs/*/}"
+      VERSION="$(parse_tag "$TAG")" || exit 1
+      echo -n "$VERSION"
+      ;;
+    *)
+      exit_error "Invalid second argument (must be 'commit' or 'tag')"
+      ;;
+  esac
+}
+
+case "$1" in
+  "output")
+    VERSION="$(get_version "$2")" || exit 1
+    echo "::set-output name=version::$VERSION"
+    ;;
+  "file")
+    VERSION="$(get_version "$2")" || exit 1
+    sed -i "s/$4/$VERSION/g" "$GITHUB_WORKSPACE/$3"
+    ;;
+  *)
+    exit_error "Invalid first argument (must be 'output' or 'file')"
+    ;;
+esac