diff --git a/.github/actions/setup-runner/action.yml b/.github/actions/setup-runner/action.yml
index 65fc656df..e6a7f064c 100644
--- a/.github/actions/setup-runner/action.yml
+++ b/.github/actions/setup-runner/action.yml
@@ -37,17 +37,24 @@ runs:
           echo "Exported UV environment variables for current and subsequent steps"
         fi
 
-        echo "Clearing Python bytecode cache and uv cache to ensure fresh install"
+        echo "Clearing cached virtual environment to ensure fresh install"
+        # Remove cached venv that may contain old code
+        if [ -d ".venv" ]; then
+          echo "Removing cached .venv directory"
+          rm -rf .venv
+        fi
+        
+        # Clear Python bytecode cache
         find . -type d -name "__pycache__" -exec rm -rf {} + 2>/dev/null || true
         find . -name "*.pyc" -delete 2>/dev/null || true
-
+        
         # Clear uv's cache directory to force rebuilding wheels from source
         if [ -n "$UV_CACHE_DIR" ] && [ -d "$UV_CACHE_DIR" ]; then
           echo "Clearing UV cache at $UV_CACHE_DIR"
           rm -rf "$UV_CACHE_DIR"/*
         fi
 
-        echo "Syncing dependencies with uv"
+        echo "Syncing dependencies with uv (will create fresh venv)"
         uv sync --all-groups
 
         echo "Force reinstalling llama-stack from source to ensure latest changes"