diff --git a/.changeset/major-kiwis-itch.md b/.changeset/major-kiwis-itch.md
new file mode 100644
index 000000000..95b4231a8
--- /dev/null
+++ b/.changeset/major-kiwis-itch.md
@@ -0,0 +1,5 @@
+---
+"@workflow/cli": patch
+---
+
+Display a notice when using an outdated version of the workflow package
diff --git a/packages/cli/src/lib/inspect/setup.ts b/packages/cli/src/lib/inspect/setup.ts
index 52f09d8cc..92c93bdb2 100644
--- a/packages/cli/src/lib/inspect/setup.ts
+++ b/packages/cli/src/lib/inspect/setup.ts
@@ -1,13 +1,28 @@
+import { join } from 'node:path';
 import { createWorld } from '@workflow/core/runtime';
 import chalk from 'chalk';
 import terminalLink from 'terminal-link';
+import XDGAppPaths from 'xdg-app-paths';
 import { logger, setJsonMode, setVerboseMode } from '../config/log.js';
+import { checkForUpdateCached } from '../update-check.js';
 import {
   inferLocalWorldEnvVars,
   inferVercelEnvVars,
   writeEnvVars,
 } from './env.js';
 
+// Get XDG-compliant cache directory for workflow
+const getXDGAppPaths = (app: string) => {
+  return (
+    XDGAppPaths as unknown as (app: string) => { dataDirs: () => string[] }
+  )(app);
+};
+
+const getWorkflowCacheDir = (): string => {
+  const dirs = getXDGAppPaths('workflow').dataDirs();
+  return dirs[0];
+};
+
 /**
  * Setup CLI world configuration.
  * If throwOnConfigError is false, will return null world with the error message
@@ -29,17 +44,45 @@ export const setupCliWorld = async (
   setJsonMode(Boolean(flags.json));
   setVerboseMode(Boolean(flags.verbose));
 
+  // Check for updates
+  const cacheFile = join(getWorkflowCacheDir(), 'version-check.json');
+  const updateCheck = await checkForUpdateCached(version, cacheFile);
+
   const withAnsiLinks = flags.json ? false : true;
   const docsUrl = withAnsiLinks
     ? terminalLink('https://useworkflow.dev/', 'https://useworkflow.dev/')
     : 'https://useworkflow.dev/';
 
-  logger.showBox(
-    'green',
+  // Prepare showBox lines
+  const boxLines = [
     `Workflow CLI v${version}`,
     `Docs at ${docsUrl}`,
-    chalk.yellow('This is a beta release')
-  );
+    chalk.yellow('This is a beta release'),
+  ];
+
+  // Add update message if available
+  if (updateCheck.needsUpdate && updateCheck.latestVersion) {
+    boxLines.push(
+      '',
+      chalk.cyan(
+        `Update available: ${updateCheck.currentVersion} → ${updateCheck.latestVersion}`
+      ),
+      // Note that we're suggesting install "latest" instead of the release tag that the user is
+      // on, because we currently tag beta releases as "latest". After GA, we need to adjust
+      // this to install the release tag that the user is on.
+      chalk.gray(
+        `Run: \`[npm|bun|pnpm] i workflow@${updateCheck.latestVersion}\``
+      ),
+      chalk.gray(
+        terminalLink(
+          'View changelog',
+          'https://github.com/vercel/workflow/releases'
+        )
+      )
+    );
+  }
+
+  logger.showBox('green', ...boxLines);
 
   logger.debug('Inferring env vars, backend:', flags.backend);
   writeEnvVars({
diff --git a/packages/cli/src/lib/update-check.ts b/packages/cli/src/lib/update-check.ts
new file mode 100644
index 000000000..730271be5
--- /dev/null
+++ b/packages/cli/src/lib/update-check.ts
@@ -0,0 +1,233 @@
+import { mkdir, readFile, writeFile } from 'node:fs/promises';
+import { dirname } from 'node:path';
+import { logger } from './config/log.js';
+
+// Constants
+const PACKAGE_NAME = '@workflow/cli';
+const NPM_REGISTRY = 'https://registry.npmjs.org';
+const CACHE_DURATION_MS = 3 * 24 * 60 * 60 * 1000; // 3 days
+const REQUEST_TIMEOUT_MS = 5000;
+
+interface VersionCheckResult {
+  currentVersion: string;
+  latestVersion?: string;
+  needsUpdate: boolean;
+}
+
+interface CachedVersionData {
+  currentVersion: string;
+  latestVersion: string;
+  timestamp: number;
+}
+
+/**
+ * Compare two semver versions including pre-release tags
+ * Returns true if version a is greater than version b
+ */
+function compareVersions(a: string, b: string): boolean {
+  const parseVersion = (v: string) => {
+    const [base, prerelease] = v.split('-');
+    const parts = base.split('.').map(Number);
+    return { parts, prerelease };
+  };
+
+  const versionA = parseVersion(a);
+  const versionB = parseVersion(b);
+
+  // Compare major, minor, patch
+  for (let i = 0; i < 3; i++) {
+    if (versionA.parts[i] > versionB.parts[i]) return true;
+    if (versionA.parts[i] < versionB.parts[i]) return false;
+  }
+
+  // If versions are equal up to patch level, check prerelease
+  // No prerelease is considered greater than prerelease
+  if (!versionA.prerelease && versionB.prerelease) return true;
+  if (versionA.prerelease && !versionB.prerelease) return false;
+
+  // Both have prereleases or both don't - they're equal
+  if (versionA.prerelease && versionB.prerelease) {
+    return versionA.prerelease > versionB.prerelease;
+  }
+
+  return false;
+}
+
+/**
+ * Fetch the latest version from npm registry
+ */
+async function fetchLatestVersion(
+  currentVersion: string
+): Promise<string | null> {
+  try {
+    const controller = new AbortController();
+    const timeoutId = setTimeout(() => controller.abort(), REQUEST_TIMEOUT_MS);
+
+    const url = `${NPM_REGISTRY}/${PACKAGE_NAME}`;
+    logger.debug(`Checking for updates at ${url}`);
+
+    const response = await fetch(url, {
+      headers: {
+        Accept: 'application/json',
+      },
+      signal: controller.signal,
+    });
+
+    clearTimeout(timeoutId);
+
+    if (!response.ok) {
+      logger.debug(
+        `Failed to fetch package info: ${response.status} ${response.statusText}`
+      );
+      return null;
+    }
+
+    const data = (await response.json()) as {
+      'dist-tags': { [tag: string]: string };
+    };
+
+    // Always use 'latest' tag - even beta versions are published as latest
+    const latestVersion = data['dist-tags']['latest'];
+    if (!latestVersion) {
+      logger.debug('No latest version found in registry');
+      return null;
+    }
+
+    logger.debug(`Current: ${currentVersion}, Latest: ${latestVersion}`);
+    return latestVersion;
+  } catch (error) {
+    if (error instanceof Error && error.name === 'AbortError') {
+      logger.debug('Version check timed out after 5 seconds');
+    } else {
+      logger.debug(`Error fetching version: ${error}`);
+    }
+    return null;
+  }
+}
+
+/**
+ * Check if there's a new version available
+ * Returns the current and latest version if an update is available
+ */
+export async function checkForUpdate(
+  currentVersion: string
+): Promise<VersionCheckResult> {
+  const latestVersion = await fetchLatestVersion(currentVersion);
+
+  if (!latestVersion) {
+    return {
+      currentVersion,
+      needsUpdate: false,
+    };
+  }
+
+  const needsUpdate = compareVersions(latestVersion, currentVersion);
+
+  return {
+    currentVersion,
+    latestVersion,
+    needsUpdate,
+  };
+}
+
+/**
+ * Read cached version data from file
+ */
+async function readCache(cacheFile: string): Promise<CachedVersionData | null> {
+  try {
+    const content = await readFile(cacheFile, 'utf-8');
+    const data = JSON.parse(content) as CachedVersionData;
+    return data;
+  } catch {
+    return null;
+  }
+}
+
+/**
+ * Write version data to cache file
+ */
+async function writeCache(
+  cacheFile: string,
+  data: CachedVersionData
+): Promise<void> {
+  try {
+    await mkdir(dirname(cacheFile), { recursive: true });
+    await writeFile(cacheFile, JSON.stringify(data, null, 2));
+  } catch (error) {
+    logger.debug(`Failed to write version cache: ${error}`);
+  }
+}
+
+/**
+ * Check if cache is still valid
+ */
+async function isCacheValid(
+  cacheFile: string,
+  currentVersion: string
+): Promise<boolean> {
+  try {
+    const cached = await readCache(cacheFile);
+    if (!cached) return false;
+
+    // Cache is invalid if version changed
+    if (cached.currentVersion !== currentVersion) {
+      logger.debug('Version changed, cache invalidated');
+      return false;
+    }
+
+    // Check if cache is still fresh
+    const now = Date.now();
+    const age = now - cached.timestamp;
+    const isValid = age < CACHE_DURATION_MS;
+
+    if (!isValid) {
+      logger.debug(
+        `Cache expired (age: ${Math.floor(age / 1000 / 60)} minutes)`
+      );
+    }
+
+    return isValid;
+  } catch {
+    return false;
+  }
+}
+
+/**
+ * Check for updates with filesystem caching
+ * Cache is valid unless the local version changes
+ */
+export async function checkForUpdateCached(
+  currentVersion: string,
+  cacheFile: string
+): Promise<VersionCheckResult> {
+  // Check if cache is valid
+  if (await isCacheValid(cacheFile, currentVersion)) {
+    logger.debug('Using cached version check result');
+    const cached = await readCache(cacheFile);
+    if (cached) {
+      return {
+        currentVersion: cached.currentVersion,
+        latestVersion: cached.latestVersion,
+        needsUpdate: compareVersions(
+          cached.latestVersion,
+          cached.currentVersion
+        ),
+      };
+    }
+  }
+
+  // Perform fresh check
+  logger.debug('Performing fresh version check');
+  const result = await checkForUpdate(currentVersion);
+
+  // Cache the result if we got a latest version
+  if (result.latestVersion) {
+    await writeCache(cacheFile, {
+      currentVersion: result.currentVersion,
+      latestVersion: result.latestVersion,
+      timestamp: Date.now(),
+    });
+  }
+
+  return result;
+}