diff --git a/.github/workflows/e2e-extension.yml b/.github/workflows/e2e-extension.yml
new file mode 100644
index 000000000..0ccb923e7
--- /dev/null
+++ b/.github/workflows/e2e-extension.yml
@@ -0,0 +1,41 @@
+name: e2e-cache
+
+on:
+  pull_request:
+    paths-ignore:
+      - '**.md'
+  push:
+    branches:
+      - main
+      - releases/*
+    paths-ignore:
+      - '**.md'
+  workflow_dispatch:
+
+permissions:
+  contents: read
+jobs:
+  python-extension:
+    name: Test building extensions (Python ${{ matrix.python-version}}, ${{ matrix.os }})
+    runs-on: ${{ matrix.os }}
+    strategy:
+      fail-fast: false
+      matrix:
+        os: [ubuntu-latest, windows-latest, macos-latest]
+        python-version: ['3.9', 'pypy-3.9-v7.x']
+    steps:
+      - uses: actions/checkout@v4
+      - name: Setup Python
+        uses: ./
+        with:
+          python-version: ${{ matrix.python-version }}
+          cache: 'pip'
+      - name: Install dependencies
+        run: pip install setuptools
+      - name: Build extension
+        run: pip install .
+        workdir: __tests__/data/extension/
+      - name: Check output
+        run: |
+          output=$(python3 -c "import helloworld; helloworld.say_hello('world')")
+          test "$output" == "Hello, world!"
diff --git a/.gitignore b/.gitignore
index c087a78f2..0efb3fbae 100644
--- a/.gitignore
+++ b/.gitignore
@@ -1,3 +1,7 @@
+# Ignore build/ and .egg-info/ directories of Python extension
+__tests__/data/extension/build/
+__tests__/data/extension/helloworld.egg-info/
+
 # Ignore node_modules, ncc is used to compile nodejs modules into a single file in the releases branch
 node_modules/
 __tests__/runner/*
diff --git a/__tests__/data/extension/hello_world.c b/__tests__/data/extension/hello_world.c
new file mode 100644
index 000000000..e9d6a6bf0
--- /dev/null
+++ b/__tests__/data/extension/hello_world.c
@@ -0,0 +1,27 @@
+#include <Python.h>
+
+static PyObject * say_hello(PyObject *self, PyObject *args) {
+	const char *name;
+	if (!PyArg_ParseTuple(args, "s", &name))
+		return NULL;
+	PySys_WriteStdout("Hello, %s!", name);
+	Py_RETURN_NONE;
+}
+
+static PyMethodDef HelloWorldMethods[] = {
+	{"say_hello", say_hello, METH_VARARGS, "Say hello"},
+	{NULL, NULL, 0, NULL}
+};
+
+static struct PyModuleDef hello_world_module = {
+	PyModuleDef_HEAD_INIT,
+	"helloworld",
+	NULL,
+	-1,
+	HelloWorldMethods
+};
+
+PyMODINIT_FUNC PyInit_helloworld(void)
+{
+	return PyModule_Create(&hello_world_module);
+}
diff --git a/__tests__/data/extension/pyproject.toml b/__tests__/data/extension/pyproject.toml
new file mode 100644
index 000000000..5c9e1a907
--- /dev/null
+++ b/__tests__/data/extension/pyproject.toml
@@ -0,0 +1,7 @@
+[build-system]
+requires = ["setuptools"]
+build-backend = "setuptools.build_meta"
+
+[project]
+name = "helloworld"
+version = "1.0"
diff --git a/__tests__/data/extension/setup.py b/__tests__/data/extension/setup.py
new file mode 100644
index 000000000..c352b4ffb
--- /dev/null
+++ b/__tests__/data/extension/setup.py
@@ -0,0 +1,10 @@
+from setuptools import Extension, setup
+
+setup(
+    ext_modules=[
+        Extension(
+            name="helloworld",
+            sources=["hello_world.c"],
+        ),
+    ]
+)
diff --git a/dist/setup/index.js b/dist/setup/index.js
index e28c3be0e..5e2c9ce08 100644
--- a/dist/setup/index.js
+++ b/dist/setup/index.js
@@ -90880,6 +90880,9 @@ function findPyPyVersion(versionSpec, architecture, updateEnvironment, checkLate
             // https://cmake.org/cmake/help/latest/module/FindPython3.html#module:FindPython3
             core.exportVariable('Python3_ROOT_DIR', installDir);
             core.exportVariable('PKG_CONFIG_PATH', pythonLocation + '/lib/pkgconfig');
+            if (utils_1.IS_WINDOWS) {
+                core.exportVariable('LIB', pythonLocation + '/libs');
+            }
             core.addPath(pythonLocation);
             core.addPath(_binDir);
         }
@@ -94123,4 +94126,4 @@ module.exports = JSON.parse('[[[0,44],"disallowed_STD3_valid"],[[45,46],"valid"]
 /******/ 	module.exports = __webpack_exports__;
 /******/ 	
 /******/ })()
-;
\ No newline at end of file
+;
diff --git a/src/find-pypy.ts b/src/find-pypy.ts
index 9807878a9..3b99d38bf 100644
--- a/src/find-pypy.ts
+++ b/src/find-pypy.ts
@@ -93,6 +93,10 @@ export async function findPyPyVersion(
     // https://cmake.org/cmake/help/latest/module/FindPython3.html#module:FindPython3
     core.exportVariable('Python3_ROOT_DIR', installDir);
     core.exportVariable('PKG_CONFIG_PATH', pythonLocation + '/lib/pkgconfig');
+    // https://learn.microsoft.com/en-us/cpp/build/reference/linking?view=msvc-170#link-environment-variables
+    if (IS_WINDOWS) {
+      core.exportVariable('LIB', pythonLocation + '/libs');
+    }
     core.addPath(pythonLocation);
     core.addPath(_binDir);
   }