diff --git a/src/Runner.Worker/Dap/DapDebugger.cs b/src/Runner.Worker/Dap/DapDebugger.cs
index 3b3ec7cbf..9848b872b 100644
--- a/src/Runner.Worker/Dap/DapDebugger.cs
+++ b/src/Runner.Worker/Dap/DapDebugger.cs
@@ -860,6 +860,9 @@ namespace GitHub.Runner.Worker.Dap
             // Send stopped event to debugger (only if client is connected)
             SendStoppedEvent(reason, description);
 
+            // Emit a banner so the user knows where REPL commands will execute
+            SendExecutionContextBanner();
+
             // Wait for debugger command
             await WaitForCommandAsync(cancellationToken);
         }
@@ -1195,7 +1198,12 @@ namespace GitHub.Runner.Worker.Dap
 
                 case RunCommand run:
                     var context = GetExecutionContextForFrame(frameId);
-                    return await _replExecutor.ExecuteRunCommandAsync(run, context, cancellationToken);
+                    bool isActionStep;
+                    lock (_stateLock)
+                    {
+                        isActionStep = _currentStep is IActionRunner;
+                    }
+                    return await _replExecutor.ExecuteRunCommandAsync(run, context, isActionStep, cancellationToken);
 
                 default:
                     return new EvaluateResponseBody
@@ -1407,6 +1415,40 @@ namespace GitHub.Runner.Worker.Dap
             });
         }
 
+        /// <summary>
+        /// Emits a console output banner telling the user whether REPL
+        /// commands will execute on the host or inside the job container.
+        /// </summary>
+        private void SendExecutionContextBanner()
+        {
+            if (!_isClientConnected)
+            {
+                return;
+            }
+
+            bool isActionStep = _currentStep is IActionRunner;
+            var container = _jobContext?.Global?.Container;
+
+            string target;
+            if (isActionStep && container != null &&
+                (!string.IsNullOrEmpty(container.ContainerId) ||
+                 FeatureManager.IsContainerHooksEnabled(_jobContext?.Global?.Variables)))
+            {
+                var image = container.ContainerImage ?? "container";
+                var shortId = !string.IsNullOrEmpty(container.ContainerId) && container.ContainerId.Length >= 12
+                    ? container.ContainerId.Substring(0, 12)
+                    : container.ContainerId ?? "";
+                var idSuffix = !string.IsNullOrEmpty(shortId) ? $" ({shortId})" : "";
+                target = $"job container: {image}{idSuffix}";
+            }
+            else
+            {
+                target = "runner host";
+            }
+
+            SendOutput("console", $"\nCommands will run on {target}\n");
+        }
+
         private string MaskUserVisibleText(string value)
         {
             if (string.IsNullOrEmpty(value))
diff --git a/src/Runner.Worker/Dap/DapReplExecutor.cs b/src/Runner.Worker/Dap/DapReplExecutor.cs
index 751f92c51..434907c2c 100644
--- a/src/Runner.Worker/Dap/DapReplExecutor.cs
+++ b/src/Runner.Worker/Dap/DapReplExecutor.cs
@@ -9,6 +9,7 @@ using GitHub.DistributedTask.Pipelines.ContextData;
 using GitHub.Runner.Common;
 using GitHub.Runner.Common.Util;
 using GitHub.Runner.Sdk;
+using GitHub.Runner.Worker.Container;
 using GitHub.Runner.Worker.Handlers;
 
 namespace GitHub.Runner.Worker.Dap
@@ -43,6 +44,7 @@ namespace GitHub.Runner.Worker.Dap
         public async Task<EvaluateResponseBody> ExecuteRunCommandAsync(
             RunCommand command,
             IExecutionContext context,
+            bool isActionStep,
             CancellationToken cancellationToken)
         {
             if (context == null)
@@ -52,7 +54,7 @@ namespace GitHub.Runner.Worker.Dap
 
             try
             {
-                return await ExecuteScriptAsync(command, context, cancellationToken);
+                return await ExecuteScriptAsync(command, context, isActionStep, cancellationToken);
             }
             catch (Exception ex)
             {
@@ -65,9 +67,17 @@ namespace GitHub.Runner.Worker.Dap
         private async Task<EvaluateResponseBody> ExecuteScriptAsync(
             RunCommand command,
             IExecutionContext context,
+            bool isActionStep,
             CancellationToken cancellationToken)
         {
-            // 1. Resolve shell — same logic as ScriptHandler
+            // 1. Resolve step host — container or host, same as ActionRunner.
+            //    Only action steps (user-defined run:/uses:) execute inside the
+            //    container.  Infrastructure steps (Set up job, Initialize
+            //    containers, Complete job, etc.) always run on the host.
+            var stepHost = CreateStepHost(context, isActionStep);
+            var isContainerStepHost = stepHost is IContainerStepHost;
+
+            // 2. Resolve shell — same logic as ScriptHandler
             string shellCommand;
             string argFormat;
 
@@ -87,9 +97,9 @@ namespace GitHub.Runner.Worker.Dap
                 argFormat = ScriptHandlerHelpers.GetScriptArgumentsFormat(shellCommand);
             }
 
-            _trace.Info("Resolved REPL shell");
+            _trace.Info($"Resolved REPL shell (container={isContainerStepHost})");
 
-            // 2. Expand ${{ }} expressions in the script body, just like
+            // 3. Expand ${{ }} expressions in the script body, just like
             //    ActionRunner evaluates step inputs before ScriptHandler sees them
             var contents = ExpandExpressions(command.Script, context);
             contents = ScriptHandlerHelpers.FixUpScriptContents(shellCommand, contents);
@@ -111,25 +121,47 @@ namespace GitHub.Runner.Worker.Dap
 
             try
             {
-                // 3. Format arguments with script path
-                var resolvedPath = scriptFilePath.Replace("\"", "\\\"");
+                // 4. Resolve script path — translate for container if needed
+                var resolvedPath = stepHost.ResolvePathForStepHost(context, scriptFilePath).Replace("\"", "\\\"");
                 if (string.IsNullOrEmpty(argFormat) || !argFormat.Contains("{0}"))
                 {
                     return ErrorResult($"Invalid shell option '{shellCommand}'. Shell must be a valid built-in (bash, sh, cmd, powershell, pwsh) or a format string containing '{{0}}'");
                 }
                 var arguments = string.Format(argFormat, resolvedPath);
 
-                // 4. Resolve shell command path
+                // 5. Resolve shell command path — for containers, use the shell
+                //    name directly (it will be resolved inside the container);
+                //    for host execution, resolve the full path on the host.
                 string prependPath = string.Join(
                     Path.PathSeparator.ToString(),
                     Enumerable.Reverse(context.Global.PrependPath));
-                var commandPath = WhichUtil.Which(shellCommand, false, _trace, prependPath)
-                    ?? shellCommand;
+                var fileName = isContainerStepHost
+                    ? shellCommand
+                    : WhichUtil.Which(shellCommand, false, _trace, prependPath) ?? shellCommand;
 
-                // 5. Build environment — merge from execution context like a real step
+                // 6. Build environment — merge from execution context like a real step
                 var environment = BuildEnvironment(context, command.Env);
 
-                // 6. Resolve working directory
+                // 7. Handle PrependPath — mirrors Handler.AddPrependPathToEnvironment
+                if (context.Global.PrependPath.Count > 0)
+                {
+                    if (stepHost is IContainerStepHost containerHost)
+                    {
+                        containerHost.PrependPath = prependPath;
+                    }
+                    else
+                    {
+                        string taskEnvPATH;
+                        environment.TryGetValue(Constants.PathVariable, out taskEnvPATH);
+                        string originalPath = context.Global.Variables?.Get(Constants.PathVariable) ?? // Prefer a job variable.
+                            taskEnvPATH ?? // Then a task-environment variable.
+                            System.Environment.GetEnvironmentVariable(Constants.PathVariable) ?? // Then an environment variable.
+                            string.Empty;
+                        environment[Constants.PathVariable] = PathUtil.PrependPath(prependPath, originalPath);
+                    }
+                }
+
+                // 8. Resolve working directory — translate for container
                 var workingDirectory = command.WorkingDirectory;
                 if (string.IsNullOrEmpty(workingDirectory))
                 {
@@ -141,48 +173,60 @@ namespace GitHub.Runner.Worker.Dap
                         : null;
                     workingDirectory = workspace ?? _hostContext.GetDirectory(WellKnownDirectory.Work);
                 }
+                workingDirectory = stepHost.ResolvePathForStepHost(context, workingDirectory);
 
                 _trace.Info("Executing REPL command");
 
                 // Stream execution info to debugger
                 SendOutput("console", $"$ {shellCommand} {command.Script.Substring(0, Math.Min(command.Script.Length, 80))}{(command.Script.Length > 80 ? "..." : "")}\n");
 
-                // 7. Execute via IProcessInvoker (same as DefaultStepHost)
-                int exitCode;
-                using (var processInvoker = _hostContext.CreateService<IProcessInvoker>())
+                // NOTE: When container hooks are enabled, ContainerStepHost routes
+                // execution through IContainerHookManager which does not raise
+                // OutputDataReceived/ErrorDataReceived events. Output will not be
+                // streamed to the debug console in that mode.
+                if (isContainerStepHost && FeatureManager.IsContainerHooksEnabled(context.Global?.Variables))
                 {
-                    processInvoker.OutputDataReceived += (sender, args) =>
-                    {
-                        if (!string.IsNullOrEmpty(args.Data))
-                        {
-                            var masked = _hostContext.SecretMasker.MaskSecrets(args.Data);
-                            SendOutput("stdout", masked + "\n");
-                        }
-                    };
-
-                    processInvoker.ErrorDataReceived += (sender, args) =>
-                    {
-                        if (!string.IsNullOrEmpty(args.Data))
-                        {
-                            var masked = _hostContext.SecretMasker.MaskSecrets(args.Data);
-                            SendOutput("stderr", masked + "\n");
-                        }
-                    };
-
-                    exitCode = await processInvoker.ExecuteAsync(
-                        workingDirectory: workingDirectory,
-                        fileName: commandPath,
-                        arguments: arguments,
-                        environment: environment,
-                        requireExitCodeZero: false,
-                        outputEncoding: null,
-                        killProcessOnCancel: true,
-                        cancellationToken: cancellationToken);
+                    const string hookWarning = "Container hooks are enabled. REPL output will not be streamed to the debug console for this command.";
+                    _trace.Warning(hookWarning);
+                    SendOutput("stderr", hookWarning + "\n");
                 }
 
+                // 9. Execute via IStepHost — handles docker exec for containers,
+                //    direct process execution for host, and container hooks
+                stepHost.OutputDataReceived += (sender, args) =>
+                {
+                    if (!string.IsNullOrEmpty(args.Data))
+                    {
+                        var masked = _hostContext.SecretMasker.MaskSecrets(args.Data);
+                        SendOutput("stdout", masked + "\n");
+                    }
+                };
+
+                stepHost.ErrorDataReceived += (sender, args) =>
+                {
+                    if (!string.IsNullOrEmpty(args.Data))
+                    {
+                        var masked = _hostContext.SecretMasker.MaskSecrets(args.Data);
+                        SendOutput("stderr", masked + "\n");
+                    }
+                };
+
+                int exitCode = await stepHost.ExecuteAsync(
+                    context: context,
+                    workingDirectory: workingDirectory,
+                    fileName: fileName,
+                    arguments: arguments,
+                    environment: environment,
+                    requireExitCodeZero: false,
+                    outputEncoding: null,
+                    killProcessOnCancel: true,
+                    inheritConsoleHandler: false,
+                    standardInInput: null,
+                    cancellationToken: cancellationToken);
+
                 _trace.Info($"REPL command exited with code {exitCode}");
 
-                // 8. Return only the exit code summary (output was already streamed)
+                // 10. Return only the exit code summary (output was already streamed)
                 return new EvaluateResponseBody
                 {
                     Result = exitCode == 0 ? $"(exit code: {exitCode})" : $"Process completed with exit code {exitCode}.",
@@ -198,6 +242,43 @@ namespace GitHub.Runner.Worker.Dap
             }
         }
 
+        /// <summary>
+        /// Creates the appropriate <see cref="IStepHost"/> for the current
+        /// execution context, mirroring how <see cref="ActionRunner"/> decides
+        /// between host and container execution.
+        ///
+        /// Only action steps (user-defined run:/uses: steps) run inside the
+        /// job container.  Infrastructure steps like "Set up job", "Initialize
+        /// containers", "Stop containers", and "Complete job" always execute
+        /// on the host regardless of whether a container is configured.
+        /// </summary>
+        internal IStepHost CreateStepHost(IExecutionContext context, bool isActionStep)
+        {
+            if (!isActionStep)
+            {
+                _trace.Info("Creating DefaultStepHost for REPL execution (infrastructure step)");
+                return _hostContext.CreateService<IDefaultStepHost>();
+            }
+
+            var container = context?.Global?.Container;
+            if (container != null)
+            {
+                // Container hooks don't always set ContainerId, but the container
+                // step host handles that internally
+                var hooksEnabled = FeatureManager.IsContainerHooksEnabled(context.Global?.Variables);
+                if (hooksEnabled || !string.IsNullOrEmpty(container.ContainerId))
+                {
+                    _trace.Info("Creating ContainerStepHost for REPL execution");
+                    var containerStepHost = _hostContext.CreateService<IContainerStepHost>();
+                    containerStepHost.Container = container;
+                    return containerStepHost;
+                }
+            }
+
+            _trace.Info("Creating DefaultStepHost for REPL execution");
+            return _hostContext.CreateService<IDefaultStepHost>();
+        }
+
         /// <summary>
         /// Expands <c>${{ }}</c> expressions in the input string using the
         /// runner's template evaluator — the same evaluation path that processes
diff --git a/src/Test/L0/Worker/DapReplExecutorL0.cs b/src/Test/L0/Worker/DapReplExecutorL0.cs
index 687d2093a..e70c615fc 100644
--- a/src/Test/L0/Worker/DapReplExecutorL0.cs
+++ b/src/Test/L0/Worker/DapReplExecutorL0.cs
@@ -5,9 +5,12 @@ using System.Threading;
 using System.Threading.Tasks;
 using GitHub.DistributedTask.Expressions2;
 using GitHub.DistributedTask.Pipelines.ContextData;
+using GitHub.DistributedTask.WebApi;
 using GitHub.Runner.Common.Tests;
 using GitHub.Runner.Worker;
+using GitHub.Runner.Worker.Container;
 using GitHub.Runner.Worker.Dap;
+using GitHub.Runner.Worker.Handlers;
 using Moq;
 using Xunit;
 
@@ -40,7 +43,8 @@ namespace GitHub.Runner.Common.Tests.Worker
 
         private Mock<IExecutionContext> CreateMockContext(
             DictionaryContextData exprValues = null,
-            IDictionary<string, IDictionary<string, string>> jobDefaults = null)
+            IDictionary<string, IDictionary<string, string>> jobDefaults = null,
+            ContainerInfo container = null)
         {
             var mock = new Mock<IExecutionContext>();
             mock.Setup(x => x.ExpressionValues).Returns(exprValues ?? new DictionaryContextData());
@@ -51,6 +55,7 @@ namespace GitHub.Runner.Common.Tests.Worker
                 PrependPath = new List<string>(),
                 JobDefaults = jobDefaults
                     ?? new Dictionary<string, IDictionary<string, string>>(StringComparer.OrdinalIgnoreCase),
+                Container = container,
             };
             mock.Setup(x => x.Global).Returns(global);
 
@@ -65,7 +70,7 @@ namespace GitHub.Runner.Common.Tests.Worker
             using (CreateTestContext())
             {
                 var command = new RunCommand { Script = "echo hello" };
-                var result = await _executor.ExecuteRunCommandAsync(command, null, CancellationToken.None);
+                var result = await _executor.ExecuteRunCommandAsync(command, null, false, CancellationToken.None);
 
                 Assert.Equal("error", result.Type);
                 Assert.Contains("No execution context available", result.Result);
@@ -233,5 +238,101 @@ namespace GitHub.Runner.Common.Tests.Worker
                 Assert.False(result.ContainsKey("BAZ"));
             }
         }
+
+        [Fact]
+        [Trait("Level", "L0")]
+        [Trait("Category", "Worker")]
+        public void CreateStepHost_NoContainer_ReturnsDefaultStepHost()
+        {
+            using (var hc = CreateTestContext())
+            {
+                hc.EnqueueInstance<IDefaultStepHost>(new DefaultStepHost());
+                var context = CreateMockContext();
+                var result = _executor.CreateStepHost(context.Object, isActionStep: true);
+
+                Assert.IsType<DefaultStepHost>(result);
+            }
+        }
+
+        [Fact]
+        [Trait("Level", "L0")]
+        [Trait("Category", "Worker")]
+        public void CreateStepHost_WithContainer_ActionStep_ReturnsContainerStepHost()
+        {
+            using (var hc = CreateTestContext())
+            {
+                hc.EnqueueInstance<IContainerStepHost>(new ContainerStepHost());
+                var container = new ContainerInfo { ContainerId = "abc123" };
+                var context = CreateMockContext(container: container);
+                var result = _executor.CreateStepHost(context.Object, isActionStep: true);
+
+                Assert.IsType<ContainerStepHost>(result);
+                var containerHost = (ContainerStepHost)result;
+                Assert.Same(container, containerHost.Container);
+            }
+        }
+
+        [Fact]
+        [Trait("Level", "L0")]
+        [Trait("Category", "Worker")]
+        public void CreateStepHost_WithContainer_InfrastructureStep_ReturnsDefaultStepHost()
+        {
+            using (var hc = CreateTestContext())
+            {
+                hc.EnqueueInstance<IDefaultStepHost>(new DefaultStepHost());
+                var container = new ContainerInfo { ContainerId = "abc123" };
+                var context = CreateMockContext(container: container);
+                var result = _executor.CreateStepHost(context.Object, isActionStep: false);
+
+                Assert.IsType<DefaultStepHost>(result);
+            }
+        }
+
+        [Fact]
+        [Trait("Level", "L0")]
+        [Trait("Category", "Worker")]
+        public void CreateStepHost_ContainerWithoutId_NoHooks_ReturnsDefaultStepHost()
+        {
+            using (var hc = CreateTestContext())
+            {
+                hc.EnqueueInstance<IDefaultStepHost>(new DefaultStepHost());
+                // Container exists but hasn't been started yet (no ContainerId)
+                var container = new ContainerInfo();
+                var context = CreateMockContext(container: container);
+                var result = _executor.CreateStepHost(context.Object, isActionStep: true);
+
+                Assert.IsType<DefaultStepHost>(result);
+            }
+        }
+
+        [Fact]
+        [Trait("Level", "L0")]
+        [Trait("Category", "Worker")]
+        public void CreateStepHost_ContainerWithoutId_HooksEnabled_ReturnsContainerStepHost()
+        {
+            using (var hc = CreateTestContext())
+            {
+                hc.EnqueueInstance<IContainerStepHost>(new ContainerStepHost());
+                // Container hooks need both the feature flag and the env var
+                Environment.SetEnvironmentVariable("ACTIONS_RUNNER_CONTAINER_HOOKS", "/some/hook/path");
+                try
+                {
+                    var container = new ContainerInfo();
+                    var context = CreateMockContext(container: container);
+                    context.Object.Global.Variables = new Variables(
+                        hc,
+                        new Dictionary<string, VariableValue>
+                        {
+                            { Constants.Runner.Features.AllowRunnerContainerHooks, new VariableValue("true") }
+                        });
+                    var result = _executor.CreateStepHost(context.Object, isActionStep: true);
+                    Assert.IsAssignableFrom<IContainerStepHost>(result);
+                }
+                finally
+                {
+                    Environment.SetEnvironmentVariable("ACTIONS_RUNNER_CONTAINER_HOOKS", null);
+                }
+            }
+        }
     }
 }