diff --git a/README.md b/README.md
index 36c82df..f56d8ba 100644
--- a/README.md
+++ b/README.md
@@ -189,6 +189,7 @@ jobs:
 | `trigger_phrase`          | The trigger phrase to look for in comments, issue/PR bodies, and issue titles                                        | No       | `@claude` |
 | `branch_prefix`           | The prefix to use for Claude branches (defaults to 'claude/', use 'claude-' for dash format)                         | No       | `claude/` |
 | `claude_env`              | Custom environment variables to pass to Claude Code execution (YAML format)                                          | No       | ""        |
+| `settings`                | Claude Code settings as JSON string or path to settings JSON file                                                    | No       | ""        |
 | `additional_permissions`  | Additional permissions to enable. Currently supports 'actions: read' for viewing workflow results                    | No       | ""        |
 
 \*Required when using direct Anthropic API (default and when not using Bedrock or Vertex)
@@ -571,6 +572,65 @@ Use a specific Claude model:
     # ... other inputs
 ```
 
+### Claude Code Settings
+
+You can provide Claude Code settings to customize behavior such as model selection, environment variables, permissions, and hooks. Settings can be provided either as a JSON string or a path to a settings file.
+
+#### Option 1: Settings File
+
+```yaml
+- uses: anthropics/claude-code-action@beta
+  with:
+    settings: "path/to/settings.json"
+    # ... other inputs
+```
+
+#### Option 2: Inline Settings
+
+```yaml
+- uses: anthropics/claude-code-action@beta
+  with:
+    settings: |
+      {
+        "model": "claude-opus-4-20250514",
+        "env": {
+          "DEBUG": "true",
+          "API_URL": "https://api.example.com"
+        },
+        "permissions": {
+          "allow": ["Bash", "Read"],
+          "deny": ["WebFetch"]
+        },
+        "hooks": {
+          "PreToolUse": [{
+            "matcher": "Bash",
+            "hooks": [{
+              "type": "command",
+              "command": "echo Running bash command..."
+            }]
+          }]
+        }
+      }
+    # ... other inputs
+```
+
+The settings support all Claude Code settings options including:
+
+- `model`: Override the default model
+- `env`: Environment variables for the session
+- `permissions`: Tool usage permissions
+- `hooks`: Pre/post tool execution hooks
+- And more...
+
+For a complete list of available settings and their descriptions, see the [Claude Code settings documentation](https://docs.anthropic.com/en/docs/claude-code/settings).
+
+**Notes**:
+
+- The `enableAllProjectMcpServers` setting is always set to `true` by this action to ensure MCP servers work correctly.
+- If both the `model` input parameter and a `model` in settings are provided, the `model` input parameter takes precedence.
+- The `allowed_tools` and `disallowed_tools` input parameters take precedence over `permissions` in settings.
+- In a future version, we may deprecate individual input parameters in favor of using the settings file for all configuration.
+
 ## Cloud Providers
 
 You can authenticate with Claude using any of these three methods:
diff --git a/action.yml b/action.yml
index ee0506b..c9e8616 100644
--- a/action.yml
+++ b/action.yml
@@ -60,6 +60,10 @@ inputs:
     description: "Custom environment variables to pass to Claude Code execution (YAML format)"
     required: false
     default: ""
+  settings:
+    description: "Claude Code settings as JSON string or path to settings JSON file"
+    required: false
+    default: ""
 
   # Auth configuration
   anthropic_api_key:
@@ -160,6 +164,7 @@ runs:
         anthropic_api_key: ${{ inputs.anthropic_api_key }}
         claude_code_oauth_token: ${{ inputs.claude_code_oauth_token }}
         claude_env: ${{ inputs.claude_env }}
+        settings: ${{ inputs.settings }}
       env:
         # Model configuration
         ANTHROPIC_MODEL: ${{ inputs.model || inputs.anthropic_model }}