diff --git a/__tests__/cache-utils.test.ts b/__tests__/cache-utils.test.ts
index 695c561cc..c848c3720 100644
--- a/__tests__/cache-utils.test.ts
+++ b/__tests__/cache-utils.test.ts
@@ -209,3 +209,41 @@ describe('isCacheFeatureAvailable', () => {
     expect(warningSpy).toHaveBeenCalledWith(warningMessage);
   });
 });
+
+describe('isGhes', () => {
+  const pristineEnv = process.env;
+
+  beforeEach(() => {
+    jest.resetModules();
+    process.env = {...pristineEnv};
+  });
+
+  afterAll(() => {
+    process.env = pristineEnv;
+  });
+
+  it('returns false when the GITHUB_SERVER_URL environment variable is not defined', async () => {
+    delete process.env['GITHUB_SERVER_URL'];
+    expect(cacheUtils.isGhes()).toBeFalsy();
+  });
+
+  it('returns false when the GITHUB_SERVER_URL environment variable is set to github.com', async () => {
+    process.env['GITHUB_SERVER_URL'] = 'https://github.com';
+    expect(cacheUtils.isGhes()).toBeFalsy();
+  });
+
+  it('returns false when the GITHUB_SERVER_URL environment variable is set to a GitHub Enterprise Cloud-style URL', async () => {
+    process.env['GITHUB_SERVER_URL'] = 'https://contoso.ghe.com';
+    expect(cacheUtils.isGhes()).toBeFalsy();
+  });
+
+  it('returns false when the GITHUB_SERVER_URL environment variable has a .localhost suffix', async () => {
+    process.env['GITHUB_SERVER_URL'] = 'https://mock-github.localhost';
+    expect(cacheUtils.isGhes()).toBeFalsy();
+  });
+
+  it('returns true when the GITHUB_SERVER_URL environment variable is set to some other URL', async () => {
+    process.env['GITHUB_SERVER_URL'] = 'https://src.onpremise.fabrikam.com';
+    expect(cacheUtils.isGhes()).toBeTruthy();
+  });
+});
diff --git a/dist/cache-save/index.js b/dist/cache-save/index.js
index 595ce8495..1936c6b15 100644
--- a/dist/cache-save/index.js
+++ b/dist/cache-save/index.js
@@ -81175,7 +81175,11 @@ const getCacheDirectoryPath = (packageManagerInfo) => __awaiter(void 0, void 0,
 exports.getCacheDirectoryPath = getCacheDirectoryPath;
 function isGhes() {
     const ghUrl = new URL(process.env['GITHUB_SERVER_URL'] || 'https://github.com');
-    return ghUrl.hostname.toUpperCase() !== 'GITHUB.COM';
+    const hostname = ghUrl.hostname.trimEnd().toUpperCase();
+    const isGitHubHost = hostname === 'GITHUB.COM';
+    const isGitHubEnterpriseCloudHost = hostname.endsWith('.GHE.COM');
+    const isLocalHost = hostname.endsWith('.LOCALHOST');
+    return !isGitHubHost && !isGitHubEnterpriseCloudHost && !isLocalHost;
 }
 exports.isGhes = isGhes;
 function isCacheFeatureAvailable() {
diff --git a/dist/setup/index.js b/dist/setup/index.js
index d4b4aa8a4..f21396aa6 100644
--- a/dist/setup/index.js
+++ b/dist/setup/index.js
@@ -88165,7 +88165,11 @@ const getCacheDirectoryPath = (packageManagerInfo) => __awaiter(void 0, void 0,
 exports.getCacheDirectoryPath = getCacheDirectoryPath;
 function isGhes() {
     const ghUrl = new URL(process.env['GITHUB_SERVER_URL'] || 'https://github.com');
-    return ghUrl.hostname.toUpperCase() !== 'GITHUB.COM';
+    const hostname = ghUrl.hostname.trimEnd().toUpperCase();
+    const isGitHubHost = hostname === 'GITHUB.COM';
+    const isGitHubEnterpriseCloudHost = hostname.endsWith('.GHE.COM');
+    const isLocalHost = hostname.endsWith('.LOCALHOST');
+    return !isGitHubHost && !isGitHubEnterpriseCloudHost && !isLocalHost;
 }
 exports.isGhes = isGhes;
 function isCacheFeatureAvailable() {
diff --git a/src/cache-utils.ts b/src/cache-utils.ts
index 545c97af1..41f8b32f0 100644
--- a/src/cache-utils.ts
+++ b/src/cache-utils.ts
@@ -63,7 +63,13 @@ export function isGhes(): boolean {
   const ghUrl = new URL(
     process.env['GITHUB_SERVER_URL'] || 'https://github.com'
   );
-  return ghUrl.hostname.toUpperCase() !== 'GITHUB.COM';
+
+  const hostname = ghUrl.hostname.trimEnd().toUpperCase();
+  const isGitHubHost = hostname === 'GITHUB.COM';
+  const isGitHubEnterpriseCloudHost = hostname.endsWith('.GHE.COM');
+  const isLocalHost = hostname.endsWith('.LOCALHOST');
+
+  return !isGitHubHost && !isGitHubEnterpriseCloudHost && !isLocalHost;
 }
 
 export function isCacheFeatureAvailable(): boolean {