diff --git a/__tests__/docker/install.test.e2e.ts b/__tests__/docker/install.test.e2e.ts
index 9b55615..e75d60f 100644
--- a/__tests__/docker/install.test.e2e.ts
+++ b/__tests__/docker/install.test.e2e.ts
@@ -26,7 +26,7 @@ describe('install', () => {
       await expect((async () => {
         const install = new Install();
         const toolPath = await install.download(version);
-        await install.install(toolPath);
+        await install.install(toolPath, version);
         await Docker.printVersion();
         await Docker.printInfo();
       })()).resolves.not.toThrow();
diff --git a/package.json b/package.json
index 19386bb..f8aaf19 100644
--- a/package.json
+++ b/package.json
@@ -51,6 +51,7 @@
     "@actions/io": "^1.1.2",
     "@actions/tool-cache": "^2.0.1",
     "csv-parse": "^5.3.5",
+    "handlebars": "^4.7.7",
     "jwt-decode": "^3.1.2",
     "semver": "^7.3.8",
     "tmp": "^0.2.1"
diff --git a/scripts/colima.yaml b/scripts/colima.yaml
new file mode 100644
index 0000000..1c30642
--- /dev/null
+++ b/scripts/colima.yaml
@@ -0,0 +1,175 @@
+# Number of CPUs to be allocated to the virtual machine.
+# Default: 2
+cpu: 2
+
+# Size of the disk in GiB to be allocated to the virtual machine.
+# NOTE: changing this has no effect after the virtual machine has been created.
+# Default: 60
+disk: 60
+
+# Size of the memory in GiB to be allocated to the virtual machine.
+# Default: 2
+memory: 2
+
+# Architecture of the virtual machine (x86_64, aarch64, host).
+# Default: host
+arch: host
+
+# Container runtime to be used (docker, containerd).
+# Default: docker
+runtime: docker
+
+# Kubernetes configuration for the virtual machine.
+kubernetes:
+  enabled: false
+
+# Auto-activate on the Host for client access.
+# Setting to true does the following on startup
+#  - sets as active Docker context (for Docker runtime).
+#  - sets as active Kubernetes context (if Kubernetes is enabled).
+# Default: true
+autoActivate: false
+
+# Network configurations for the virtual machine.
+network:
+  # Assign reachable IP address to the virtual machine.
+  # NOTE: this is currently macOS only and ignored on Linux.
+  # Default: false
+  address: false
+
+  # Custom DNS resolvers for the virtual machine.
+  #
+  # EXAMPLE
+  # dns: [8.8.8.8, 1.1.1.1]
+  #
+  # Default: []
+  dns: []
+
+  # DNS hostnames to resolve to custom targets using the internal resolver.
+  # This setting has no effect if a custom DNS resolver list is supplied above.
+  # It does not configure the /etc/hosts files of any machine or container.
+  # The value can be an IP address or another host.
+  #
+  # EXAMPLE
+  # dnsHosts:
+  #   example.com: 1.2.3.4
+  dnsHosts:
+    host.docker.internal: host.lima.internal
+
+  # Network driver to use (slirp, gvproxy), (requires vmType `qemu`)
+  #   - slirp is the default user mode networking provided by Qemu
+  #   - gvproxy is an alternative to VPNKit based on gVisor https://github.com/containers/gvisor-tap-vsock
+  # Default: gvproxy
+  driver: gvproxy
+
+# Forward the host's SSH agent to the virtual machine.
+# Default: false
+forwardAgent: false
+
+# Docker daemon configuration that maps directly to daemon.json.
+# https://docs.docker.com/engine/reference/commandline/dockerd/#daemon-configuration-file.
+# NOTE: some settings may affect Colima's ability to start docker. e.g. `hosts`.
+#
+# EXAMPLE - disable buildkit
+# docker:
+#   features:
+#     buildkit: false
+#
+# EXAMPLE - add insecure registries
+# docker:
+#   insecure-registries:
+#     - myregistry.com:5000
+#     - host.docker.internal:5000
+#
+# Colima default behaviour: buildkit enabled
+# Default: {}
+docker: {}
+
+# Virtual Machine type (qemu, vz)
+# NOTE: this is macOS 13 only. For Linux and macOS <13.0, qemu is always used.
+#
+# vz is macOS virtualization framework and requires macOS 13
+#
+# Default: qemu
+vmType: qemu
+
+# Volume mount driver for the virtual machine (virtiofs, 9p, sshfs).
+#
+# virtiofs is limited to macOS and vmType `vz`. It is the fastest of the options.
+#
+# 9p is the recommended and the most stable option for vmType `qemu`.
+#
+# sshfs is faster than 9p but the least reliable of the options (when there are lots
+# of concurrent reads or writes).
+#
+# Default: virtiofs (for vz), sshfs (for qemu)
+mountType: 9p
+
+# The CPU type for the virtual machine (requires vmType `qemu`).
+# Options available for host emulation can be checked with: `qemu-system-$(arch) -cpu help`.
+# Instructions are also supported by appending to the cpu type e.g. "qemu64,+ssse3".
+# Default: host
+cpuType: host
+
+# For a more general purpose virtual machine, Ubuntu container is optionally provided
+# as a layer on the virtual machine.
+# The underlying virtual machine is still accessible via `colima ssh --layer=false` or running `colima` in
+# the Ubuntu session.
+#
+# Default: false
+layer: false
+
+# Custom provision scripts for the virtual machine.
+# Provisioning scripts are executed on startup and therefore needs to be idempotent.
+#
+# EXAMPLE - script exected as root
+# provision:
+#   - mode: system
+#     script: apk add htop vim
+#
+# EXAMPLE - script exected as user
+# provision:
+#   - mode: user
+#     script: |
+#       [ -f ~/.provision ] && exit 0;
+#       echo provisioning as $USER...
+#       touch ~/.provision
+#
+# Default: []
+provision:
+  - mode: system
+    script: |
+      mkdir -p /tmp/docker-bins
+      cd /tmp/docker-bins
+      wget -qO- "https://download.docker.com/linux/static/{{dockerChannel}}/{{hostArch}}/docker-{{dockerVersion}}.tgz" | tar xvz --strip 1
+      mv -f /tmp/docker-bins/* /usr/bin/
+
+# Modify ~/.ssh/config automatically to include a SSH config for the virtual machine.
+# SSH config will still be generated in ~/.colima/ssh_config regardless.
+# Default: true
+sshConfig: false
+
+# Configure volume mounts for the virtual machine.
+# Colima mounts user's home directory by default to provide a familiar
+# user experience.
+#
+# EXAMPLE
+# mounts:
+#   - location: ~/secrets
+#     writable: false
+#   - location: ~/projects
+#     writable: true
+#
+# Colima default behaviour: $HOME and /tmp/colima are mounted as writable.
+# Default: []
+mounts: []
+
+# Environment variables for the virtual machine.
+#
+# EXAMPLE
+# env:
+#   KEY: value
+#   ANOTHER_KEY: another value
+#
+# Default: {}
+env: {}
diff --git a/src/docker/install.ts b/src/docker/install.ts
index a3d6507..d722ae2 100644
--- a/src/docker/install.ts
+++ b/src/docker/install.ts
@@ -17,10 +17,11 @@
 import fs from 'fs';
 import os from 'os';
 import path from 'path';
+import * as handlebars from 'handlebars';
+import * as util from 'util';
 import * as core from '@actions/core';
 import * as io from '@actions/io';
 import * as tc from '@actions/tool-cache';
-import * as util from 'util';
 
 import * as scripts from '../scripts';
 import {Context} from '../context';
@@ -64,10 +65,11 @@ export class Install {
     return tooldir;
   }
 
-  public async install(toolDir: string): Promise<void> {
+  public async install(toolDir: string, version: string, channel?: string): Promise<void> {
+    channel = channel || 'stable';
     switch (os.platform()) {
       case 'darwin': {
-        await this.installDarwin(toolDir);
+        await this.installDarwin(toolDir, version, channel);
         break;
       }
       case 'linux': {
@@ -84,12 +86,33 @@ export class Install {
     }
   }
 
-  private async installDarwin(toolDir: string): Promise<void> {
+  private async installDarwin(toolDir: string, version: string, channel?: string): Promise<void> {
+    const colimaDir = path.join(os.homedir(), '.colima', 'default');
+    await io.mkdirP(colimaDir);
+    const dockerHost = `unix://${colimaDir}/docker.sock`;
+
     if (!(await Install.colimaInstalled())) {
       await core.group('Installing colima', async () => {
         await Exec.exec('brew', ['install', 'colima']);
       });
     }
+
+    await core.group('Creating colima config', async () => {
+      const colimaCfg = handlebars.compile(
+        fs.readFileSync(scripts.colimaConfig, {
+          encoding: 'utf8',
+          flag: 'r'
+        })
+      )({
+        hostArch: Install.platformArch(),
+        dockerVersion: version,
+        dockerChannel: channel
+      });
+      core.info(`Writing colima config to ${path.join(colimaDir, 'colima.yaml')}`);
+      fs.writeFileSync(path.join(colimaDir, 'colima.yaml'), colimaCfg);
+      core.info(colimaCfg);
+    });
+
     // colima is already started on the runner so env var added in download
     // method is not expanded to the running process.
     const envs = Object.assign({}, process.env, {
@@ -98,7 +121,12 @@ export class Install {
       [key: string]: string;
     };
     await core.group('Starting colima', async () => {
-      await Exec.exec('colima', ['start', '--runtime', 'docker', '--mount-type', '9p'], {env: envs});
+      await Exec.exec('colima', ['start', '--very-verbose'], {env: envs});
+    });
+
+    await core.group('Create Docker context', async () => {
+      await Exec.exec('docker', ['context', 'create', 'setup-docker-action', '--docker', `host=${dockerHost}`]);
+      await Exec.exec('docker', ['context', 'use', 'setup-docker-action']);
     });
   }
 
@@ -109,6 +137,7 @@ export class Install {
 
   private async installWindows(toolDir: string): Promise<void> {
     const dockerHost = 'npipe:////./pipe/setup_docker_action';
+
     const setupCmd = await Util.powershellCommand(scripts.setupDockerPowershell, {
       ToolDir: toolDir,
       TmpDir: Context.tmpDir(),
@@ -117,6 +146,7 @@ export class Install {
     await core.group('Install Docker daemon service', async () => {
       await Exec.exec(setupCmd.command, setupCmd.args);
     });
+
     await core.group('Create Docker context', async () => {
       await Exec.exec('docker', ['context', 'create', 'setup-docker-action', '--docker', `host=${dockerHost}`]);
       await Exec.exec('docker', ['context', 'use', 'setup-docker-action']);
@@ -124,60 +154,56 @@ export class Install {
   }
 
   private downloadURL(version: string, channel: string): string {
-    let platformOS, platformArch: string;
+    const platformOS = Install.platformOS();
+    const platformArch = Install.platformArch();
+    const ext = platformOS === 'win' ? '.zip' : '.tgz';
+    return util.format('https://download.docker.com/%s/static/%s/%s/docker-%s%s', platformOS, channel, platformArch, version, ext);
+  }
+
+  private static platformOS(): string {
     switch (os.platform()) {
       case 'darwin': {
-        platformOS = 'mac';
-        break;
+        return 'mac';
       }
       case 'linux': {
-        platformOS = 'linux';
-        break;
+        return 'linux';
       }
       case 'win32': {
-        platformOS = 'win';
-        break;
+        return 'win';
       }
       default: {
-        platformOS = os.platform();
-        break;
+        return os.platform();
       }
     }
+  }
+
+  private static platformArch(): string {
     switch (os.arch()) {
       case 'x64': {
-        platformArch = 'x86_64';
-        break;
+        return 'x86_64';
       }
       case 'ppc64': {
-        platformArch = 'ppc64le';
-        break;
+        return 'ppc64le';
       }
       case 'arm': {
         // eslint-disable-next-line @typescript-eslint/no-explicit-any
         const arm_version = (process.config.variables as any).arm_version;
         switch (arm_version) {
           case 6: {
-            platformArch = 'armel';
-            break;
+            return 'armel';
           }
           case 7: {
-            platformArch = 'armhf';
-            break;
+            return 'armhf';
           }
           default: {
-            platformArch = `v${arm_version}`;
-            break;
+            return `v${arm_version}`;
           }
         }
-        break;
       }
       default: {
-        platformArch = os.arch();
-        break;
+        return os.arch();
       }
     }
-    const ext = platformOS === 'win' ? '.zip' : '.tgz';
-    return util.format('https://download.docker.com/%s/static/%s/%s/docker-%s%s', platformOS, channel, platformArch, version, ext);
   }
 
   private static async colimaInstalled(): Promise<boolean> {
diff --git a/src/scripts.ts b/src/scripts.ts
index 0056f5a..ac33853 100644
--- a/src/scripts.ts
+++ b/src/scripts.ts
@@ -19,3 +19,4 @@ import path from 'path';
 const scriptsPath = path.join(__dirname, '..', 'scripts');
 
 export const setupDockerPowershell = path.join(scriptsPath, 'setup-docker.ps1');
+export const colimaConfig = path.join(scriptsPath, 'colima.yaml');
diff --git a/yarn.lock b/yarn.lock
index 2e18697..5a5562a 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -782,6 +782,7 @@ __metadata:
     eslint-plugin-import: ^2.27.5
     eslint-plugin-jest: ^26.9.0
     eslint-plugin-prettier: ^4.2.1
+    handlebars: ^4.7.7
     jest: ^27.5.1
     jwt-decode: ^3.1.2
     prettier: ^2.8.3
@@ -3667,6 +3668,24 @@ __metadata:
   languageName: node
   linkType: hard
 
+"handlebars@npm:^4.7.7":
+  version: 4.7.7
+  resolution: "handlebars@npm:4.7.7"
+  dependencies:
+    minimist: ^1.2.5
+    neo-async: ^2.6.0
+    source-map: ^0.6.1
+    uglify-js: ^3.1.4
+    wordwrap: ^1.0.0
+  dependenciesMeta:
+    uglify-js:
+      optional: true
+  bin:
+    handlebars: bin/handlebars
+  checksum: 1e79a43f5e18d15742977cb987923eab3e2a8f44f2d9d340982bcb69e1735ed049226e534d7c1074eaddaf37e4fb4f471a8adb71cddd5bc8cf3f894241df5cee
+  languageName: node
+  linkType: hard
+
 "hard-rejection@npm:^2.1.0":
   version: 2.1.0
   resolution: "hard-rejection@npm:2.1.0"
@@ -5144,6 +5163,13 @@ __metadata:
   languageName: node
   linkType: hard
 
+"minimist@npm:^1.2.5":
+  version: 1.2.8
+  resolution: "minimist@npm:1.2.8"
+  checksum: 75a6d645fb122dad29c06a7597bddea977258957ed88d7a6df59b5cd3fe4a527e253e9bbf2e783e4b73657f9098b96a5fe96ab8a113655d4109108577ecf85b0
+  languageName: node
+  linkType: hard
+
 "minipass-collect@npm:^1.0.2":
   version: 1.0.2
   resolution: "minipass-collect@npm:1.0.2"
@@ -5267,6 +5293,13 @@ __metadata:
   languageName: node
   linkType: hard
 
+"neo-async@npm:^2.6.0":
+  version: 2.6.2
+  resolution: "neo-async@npm:2.6.2"
+  checksum: deac9f8d00eda7b2e5cd1b2549e26e10a0faa70adaa6fdadca701cc55f49ee9018e427f424bac0c790b7c7e2d3068db97f3093f1093975f2acb8f8818b936ed9
+  languageName: node
+  linkType: hard
+
 "nested-error-stacks@npm:^2.0.0, nested-error-stacks@npm:^2.1.0":
   version: 2.1.1
   resolution: "nested-error-stacks@npm:2.1.1"
@@ -6694,6 +6727,15 @@ __metadata:
   languageName: node
   linkType: hard
 
+"uglify-js@npm:^3.1.4":
+  version: 3.17.4
+  resolution: "uglify-js@npm:3.17.4"
+  bin:
+    uglifyjs: bin/uglifyjs
+  checksum: 7b3897df38b6fc7d7d9f4dcd658599d81aa2b1fb0d074829dd4e5290f7318dbca1f4af2f45acb833b95b1fe0ed4698662ab61b87e94328eb4c0a0d3435baf924
+  languageName: node
+  linkType: hard
+
 "unbox-primitive@npm:^1.0.2":
   version: 1.0.2
   resolution: "unbox-primitive@npm:1.0.2"
@@ -6939,6 +6981,13 @@ __metadata:
   languageName: node
   linkType: hard
 
+"wordwrap@npm:^1.0.0":
+  version: 1.0.0
+  resolution: "wordwrap@npm:1.0.0"
+  checksum: 2a44b2788165d0a3de71fd517d4880a8e20ea3a82c080ce46e294f0b68b69a2e49cff5f99c600e275c698a90d12c5ea32aff06c311f0db2eb3f1201f3e7b2a04
+  languageName: node
+  linkType: hard
+
 "wrap-ansi@npm:^7.0.0":
   version: 7.0.0
   resolution: "wrap-ansi@npm:7.0.0"