diff --git a/devcontainers-cli/README.md b/devcontainers-cli/README.md
index 5ed3aed8..11961cd7 100644
--- a/devcontainers-cli/README.md
+++ b/devcontainers-cli/README.md
@@ -16,7 +16,7 @@ The devcontainers-cli module provides an easy way to install [`@devcontainers/cl
 ```tf
 module "devcontainers-cli" {
   source   = "registry.coder.com/modules/devcontainers-cli/coder"
-  version  = "1.0.0"
+  version  = "1.0.1"
   agent_id = coder_agent.example.id
 }
 ```
diff --git a/devcontainers-cli/main.test.ts b/devcontainers-cli/main.test.ts
index 8872f181..85686c46 100644
--- a/devcontainers-cli/main.test.ts
+++ b/devcontainers-cli/main.test.ts
@@ -30,7 +30,7 @@ const executeScriptInContainerWithPackageManager = async (
     await execContainer(id, [
       shell,
       "-c",
-      "apk add nodejs npm && npm install -g pnpm",
+      `wget -qO- https://get.pnpm.io/install.sh | ENV="$HOME/.shrc" SHELL="$(which sh)" sh -`,
     ]);
   } else if (packageManager === "yarn") {
     await execContainer(id, [
@@ -86,7 +86,7 @@ describe("devcontainers-cli", async () => {
     expect(output.stdout[output.stdout.length - 1]).toEqual(
       "🥳 @devcontainers/cli has been installed into /usr/local/bin/devcontainer!",
     );
-  });
+  }, 15000);
 
   it("installs devcontainers-cli with yarn", async () => {
     const state = await runTerraformApply(import.meta.dir, {
@@ -106,7 +106,7 @@ describe("devcontainers-cli", async () => {
     expect(output.stdout[output.stdout.length - 1]).toEqual(
       "🥳 @devcontainers/cli has been installed into /usr/local/bin/devcontainer!",
     );
-  });
+  }, 15000);
 
   it("displays warning if docker is not installed", async () => {
     const state = await runTerraformApply(import.meta.dir, {
@@ -126,5 +126,5 @@ describe("devcontainers-cli", async () => {
     expect(output.stdout[output.stdout.length - 1]).toEqual(
       "🥳 @devcontainers/cli has been installed into /usr/local/bin/devcontainer!",
     );
-  });
+  }, 15000);
 });
diff --git a/devcontainers-cli/run.sh b/devcontainers-cli/run.sh
index dce7a20e..03aac17f 100755
--- a/devcontainers-cli/run.sh
+++ b/devcontainers-cli/run.sh
@@ -12,26 +12,45 @@ if ! command -v docker > /dev/null 2>&1; then
 fi
 
 # Determine the package manager to use: npm, pnpm, or yarn
-if command -v pnpm > /dev/null 2>&1; then
-  PACKAGE_MANAGER="pnpm"
-elif command -v yarn > /dev/null 2>&1; then
+if command -v yarn > /dev/null 2>&1; then
   PACKAGE_MANAGER="yarn"
 elif command -v npm > /dev/null 2>&1; then
   PACKAGE_MANAGER="npm"
+elif command -v pnpm > /dev/null 2>&1; then
+  PACKAGE_MANAGER="pnpm"
 else
   echo "ERROR: No supported package manager (npm, pnpm, yarn) is installed. Please install one first." 1>&2
   exit 1
 fi
 
-echo "Installing @devcontainers/cli using $PACKAGE_MANAGER..."
+install() {
+  echo "Installing @devcontainers/cli using $PACKAGE_MANAGER..."
+  if [ "$PACKAGE_MANAGER" = "npm" ]; then
+    npm install -g @devcontainers/cli
+  elif [ "$PACKAGE_MANAGER" = "pnpm" ]; then
+    # Check if PNPM_HOME is set, if not, set it to the script's bin directory
+    # pnpm needs this to be set to install binaries
+    # coder agent ensures this part is part of the PATH
+    # so that the devcontainer command is available
+    if [ -z "$PNPM_HOME" ]; then
+      PNPM_HOME="$CODER_SCRIPT_BIN_DIR"
+      export M_HOME
+    fi
+    pnpm add -g @devcontainers/cli
+  elif [ "$PACKAGE_MANAGER" = "yarn" ]; then
+    yarn global add @devcontainers/cli
+  fi
+}
+
+if ! install; then
+  echo "Failed to install @devcontainers/cli" >&2
+  exit 1
+fi
 
-# Install @devcontainers/cli using the selected package manager
-if [ "$PACKAGE_MANAGER" = "npm" ] || [ "$PACKAGE_MANAGER" = "pnpm" ]; then
-  $PACKAGE_MANAGER install -g @devcontainers/cli \
-    && echo "🥳 @devcontainers/cli has been installed into $(which devcontainer)!"
-elif [ "$PACKAGE_MANAGER" = "yarn" ]; then
-  $PACKAGE_MANAGER global add @devcontainers/cli \
-    && echo "🥳 @devcontainers/cli has been installed into $(which devcontainer)!"
+if ! command -v devcontainer > /dev/null 2>&1; then
+  echo "Installation completed but 'devcontainer' command not found in PATH" >&2
+  exit 1
 fi
 
+echo "🥳 @devcontainers/cli has been installed into $(which devcontainer)!"
 exit 0