diff --git a/packages/artifact/RELEASES.md b/packages/artifact/RELEASES.md
index afc7f6a7..366b89f5 100644
--- a/packages/artifact/RELEASES.md
+++ b/packages/artifact/RELEASES.md
@@ -1,5 +1,9 @@
 # @actions/artifact Releases
 
+### 2.1.8
+
+- Allows `*.localhost` domains for hostname checks for local development.
+
 ### 2.1.7
 
 - Update unzip-stream dependency and reverted to using `unzip.Extract()`
diff --git a/packages/artifact/__tests__/config.test.ts b/packages/artifact/__tests__/config.test.ts
index 5afed94d..b9ef643c 100644
--- a/packages/artifact/__tests__/config.test.ts
+++ b/packages/artifact/__tests__/config.test.ts
@@ -20,6 +20,11 @@ describe('isGhes', () => {
     expect(config.isGhes()).toBe(false)
   })
 
+  it('should return false when the request domain ends with .localhost', () => {
+    process.env.GITHUB_SERVER_URL = 'https://github.localhost'
+    expect(config.isGhes()).toBe(false)
+  })
+
   it('should return false when the request domain is specific to an enterprise', () => {
     process.env.GITHUB_SERVER_URL = 'https://my-enterprise.github.com'
     expect(config.isGhes()).toBe(true)
diff --git a/packages/artifact/package.json b/packages/artifact/package.json
index ab84d0f2..ba6d873d 100644
--- a/packages/artifact/package.json
+++ b/packages/artifact/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@actions/artifact",
-  "version": "2.1.7",
+  "version": "2.1.8",
   "preview": true,
   "description": "Actions artifact lib",
   "keywords": [
diff --git a/packages/artifact/src/internal/shared/config.ts b/packages/artifact/src/internal/shared/config.ts
index 089fae14..437a3624 100644
--- a/packages/artifact/src/internal/shared/config.ts
+++ b/packages/artifact/src/internal/shared/config.ts
@@ -30,10 +30,10 @@ export function isGhes(): boolean {
 
   const hostname = ghUrl.hostname.trimEnd().toUpperCase()
   const isGitHubHost = hostname === 'GITHUB.COM'
-  const isGheHost =
-    hostname.endsWith('.GHE.COM') || hostname.endsWith('.GHE.LOCALHOST')
+  const isGheHost = hostname.endsWith('.GHE.COM')
+  const isLocalHost = hostname.endsWith('.LOCALHOST')
 
-  return !isGitHubHost && !isGheHost
+  return !isGitHubHost && !isGheHost && !isLocalHost
 }
 
 export function getGitHubWorkspaceDir(): string {