diff --git a/runner/actions-runner-dind-rootless.ubuntu-20.04.dockerfile b/runner/actions-runner-dind-rootless.ubuntu-20.04.dockerfile
index bc84f460..9fa0a298 100644
--- a/runner/actions-runner-dind-rootless.ubuntu-20.04.dockerfile
+++ b/runner/actions-runner-dind-rootless.ubuntu-20.04.dockerfile
@@ -77,7 +77,9 @@ RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && curl -fLo /usr/bin/dumb-init https://github.com/Yelp/dumb-init/releases/download/v${DUMB_INIT_VERSION}/dumb-init_${DUMB_INIT_VERSION}_${ARCH} \
     && chmod +x /usr/bin/dumb-init
 
-ENV RUNNER_ASSETS_DIR=/runnertmp
+# Set this to /home/runner for compatibility with v1 runners
+ARG RUNNER_ASSETS_DIR=/runnertmp
+ENV RUNNER_ASSETS_DIR=$RUNNER_ASSETS_DIR
 RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && if [ "$ARCH" = "amd64" ] || [ "$ARCH" = "x86_64" ] || [ "$ARCH" = "i386" ]; then export ARCH=x64 ; fi \
     && mkdir -p "$RUNNER_ASSETS_DIR" \
diff --git a/runner/actions-runner-dind-rootless.ubuntu-22.04.dockerfile b/runner/actions-runner-dind-rootless.ubuntu-22.04.dockerfile
index 6fafdb5c..91794744 100644
--- a/runner/actions-runner-dind-rootless.ubuntu-22.04.dockerfile
+++ b/runner/actions-runner-dind-rootless.ubuntu-22.04.dockerfile
@@ -54,7 +54,9 @@ RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && curl -fLo /usr/bin/dumb-init https://github.com/Yelp/dumb-init/releases/download/v${DUMB_INIT_VERSION}/dumb-init_${DUMB_INIT_VERSION}_${ARCH} \
     && chmod +x /usr/bin/dumb-init
 
-ENV RUNNER_ASSETS_DIR=/runnertmp
+# Set this to /home/runner for compatibility with v1 runners
+ARG RUNNER_ASSETS_DIR=/runnertmp
+ENV RUNNER_ASSETS_DIR=$RUNNER_ASSETS_DIR
 RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && if [ "$ARCH" = "amd64" ] || [ "$ARCH" = "x86_64" ] || [ "$ARCH" = "i386" ]; then export ARCH=x64 ; fi \
     && mkdir -p "$RUNNER_ASSETS_DIR" \
diff --git a/runner/actions-runner-dind.ubuntu-20.04.dockerfile b/runner/actions-runner-dind.ubuntu-20.04.dockerfile
index 2b60c37c..e8ca8a9f 100644
--- a/runner/actions-runner-dind.ubuntu-20.04.dockerfile
+++ b/runner/actions-runner-dind.ubuntu-20.04.dockerfile
@@ -72,7 +72,9 @@ RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && curl -fLo /usr/bin/dumb-init https://github.com/Yelp/dumb-init/releases/download/v${DUMB_INIT_VERSION}/dumb-init_${DUMB_INIT_VERSION}_${ARCH} \
     && chmod +x /usr/bin/dumb-init
 
-ENV RUNNER_ASSETS_DIR=/runnertmp
+# Set this to /home/runner for compatibility with v1 runners
+ARG RUNNER_ASSETS_DIR=/runnertmp
+ENV RUNNER_ASSETS_DIR=$RUNNER_ASSETS_DIR
 RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && if [ "$ARCH" = "amd64" ] || [ "$ARCH" = "x86_64" ] || [ "$ARCH" = "i386" ]; then export ARCH=x64 ; fi \
     && mkdir -p "$RUNNER_ASSETS_DIR" \
diff --git a/runner/actions-runner-dind.ubuntu-22.04.dockerfile b/runner/actions-runner-dind.ubuntu-22.04.dockerfile
index 25ad586c..ad75c84b 100644
--- a/runner/actions-runner-dind.ubuntu-22.04.dockerfile
+++ b/runner/actions-runner-dind.ubuntu-22.04.dockerfile
@@ -48,7 +48,9 @@ RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && curl -fLo /usr/bin/dumb-init https://github.com/Yelp/dumb-init/releases/download/v${DUMB_INIT_VERSION}/dumb-init_${DUMB_INIT_VERSION}_${ARCH} \
     && chmod +x /usr/bin/dumb-init
 
-ENV RUNNER_ASSETS_DIR=/runnertmp
+# Set this to /home/runner for compatibility with v1 runners
+ARG RUNNER_ASSETS_DIR=/runnertmp
+ENV RUNNER_ASSETS_DIR=$RUNNER_ASSETS_DIR
 RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && if [ "$ARCH" = "amd64" ] || [ "$ARCH" = "x86_64" ] || [ "$ARCH" = "i386" ]; then export ARCH=x64 ; fi \
     && mkdir -p "$RUNNER_ASSETS_DIR" \
diff --git a/runner/actions-runner.ubuntu-20.04.dockerfile b/runner/actions-runner.ubuntu-20.04.dockerfile
index 2683d47f..c5cfeb12 100644
--- a/runner/actions-runner.ubuntu-20.04.dockerfile
+++ b/runner/actions-runner.ubuntu-20.04.dockerfile
@@ -68,7 +68,10 @@ RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && curl -fLo /usr/bin/dumb-init https://github.com/Yelp/dumb-init/releases/download/v${DUMB_INIT_VERSION}/dumb-init_${DUMB_INIT_VERSION}_${ARCH} \
     && chmod +x /usr/bin/dumb-init
 
-ENV RUNNER_ASSETS_DIR=/runnertmp
+# Set this to /home/runner for compatibility with v1 runners
+ARG RUNNER_ASSETS_DIR=/runnertmp
+ENV RUNNER_ASSETS_DIR=$RUNNER_ASSETS_DIR
+ARG EXTERNALS_DIR_NAME=externalstmp
 RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && if [ "$ARCH" = "amd64" ] || [ "$ARCH" = "x86_64" ] || [ "$ARCH" = "i386" ]; then export ARCH=x64 ; fi \
     && mkdir -p "$RUNNER_ASSETS_DIR" \
@@ -77,7 +80,7 @@ RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && tar xzf ./runner.tar.gz \
     && rm runner.tar.gz \
     && ./bin/installdependencies.sh \
-    && mv ./externals ./externalstmp \
+    && if [ "${EXTERNALS_DIR_NAME}" != externals ]; then mv ./externals ./${EXTERNALS_DIR_NAME}; fi \
     # libyaml-dev is required for ruby/setup-ruby action.
     # It is installed after installdependencies.sh and before removing /var/lib/apt/lists
     # to avoid rerunning apt-update on its own.
diff --git a/runner/actions-runner.ubuntu-22.04.dockerfile b/runner/actions-runner.ubuntu-22.04.dockerfile
index a85833b2..3112f86b 100644
--- a/runner/actions-runner.ubuntu-22.04.dockerfile
+++ b/runner/actions-runner.ubuntu-22.04.dockerfile
@@ -45,7 +45,11 @@ RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && curl -fLo /usr/bin/dumb-init https://github.com/Yelp/dumb-init/releases/download/v${DUMB_INIT_VERSION}/dumb-init_${DUMB_INIT_VERSION}_${ARCH} \
     && chmod +x /usr/bin/dumb-init
 
-ENV RUNNER_ASSETS_DIR=/runnertmp
+# Set this to /home/runner for compatibility with v1 runners
+ARG RUNNER_ASSETS_DIR=/runnertmp
+ENV RUNNER_ASSETS_DIR=$RUNNER_ASSETS_DIR
+# Set this to "externals" for compatibility with v1 runners
+ARG EXTERNALS_DIR_NAME=externalstmp
 RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && if [ "$ARCH" = "amd64" ] || [ "$ARCH" = "x86_64" ] || [ "$ARCH" = "i386" ]; then export ARCH=x64 ; fi \
     && mkdir -p "$RUNNER_ASSETS_DIR" \
@@ -54,7 +58,7 @@ RUN export ARCH=$(echo ${TARGETPLATFORM} | cut -d / -f2) \
     && tar xzf ./runner.tar.gz \
     && rm runner.tar.gz \
     && ./bin/installdependencies.sh \
-    && mv ./externals ./externalstmp \
+    && if [ "${EXTERNALS_DIR_NAME}" != externals ]; then mv ./externals ./${EXTERNALS_DIR_NAME}; fi \
     # libyaml-dev is required for ruby/setup-ruby action.
     # It is installed after installdependencies.sh and before removing /var/lib/apt/lists
     # to avoid rerunning apt-update on its own.
diff --git a/runner/startup.sh b/runner/startup.sh
index de60ff5f..e0717ff2 100755
--- a/runner/startup.sh
+++ b/runner/startup.sh
@@ -88,58 +88,73 @@ if [ "${DISABLE_RUNNER_UPDATE:-}" == "true" ]; then
   log.debug 'Passing --disableupdate to config.sh to disable automatic runner updates.'
 fi
 
-update-status "Registering"
+# This is for registering ARC v0 runners.
+# ARC v1 runners do not need config.sh for registering themselves.
+# ARC v1 runners are supposed to given the ACTIONS_RUNNER_INPUT_JITCONFIG envvars
+# so we use it as the trigger to skip config.sh.
+if [ -z "${ACTIONS_RUNNER_INPUT_JITCONFIG:-}" ]; then
+  update-status "Registering"
 
-retries_left=10
-while [[ ${retries_left} -gt 0 ]]; do
-  log.debug 'Configuring the runner.'
-  ./config.sh --unattended --replace \
-    --name "${RUNNER_NAME}" \
-    --url "${GITHUB_URL}${ATTACH}" \
-    --token "${RUNNER_TOKEN}" \
-    --runnergroup "${RUNNER_GROUPS}" \
-    --labels "${RUNNER_LABELS}" \
-    --work "${RUNNER_WORKDIR}" "${config_args[@]}"
+  retries_left=10
+  while [[ ${retries_left} -gt 0 ]]; do
+    log.debug 'Configuring the runner.'
+    ./config.sh --unattended --replace \
+      --name "${RUNNER_NAME}" \
+      --url "${GITHUB_URL}${ATTACH}" \
+      --token "${RUNNER_TOKEN}" \
+      --runnergroup "${RUNNER_GROUPS}" \
+      --labels "${RUNNER_LABELS}" \
+      --work "${RUNNER_WORKDIR}" "${config_args[@]}"
 
-  if [ -f .runner ]; then
-    log.debug 'Runner successfully configured.'
-    break
+    if [ -f .runner ]; then
+      log.debug 'Runner successfully configured.'
+      break
+    fi
+
+    log.debug 'Configuration failed. Retrying'
+    retries_left=$((retries_left - 1))
+    sleep 1
+  done
+
+  # Note that ARC v1 runners do create this file, but only after the runner
+  # agent is up and running.
+  # On the other hand, this logic assumes the file to be created BEFORE
+  # the runner is up, by running `config.sh`, which is not present in a v1 runner deployment.
+  # That's why we need to skip this check for v1 runners.
+  # Otherwise v1 runner will never start up due to this check.
+  if [ ! -f .runner ]; then
+    # we couldn't configure and register the runner; no point continuing
+    log.error 'Configuration failed!'
+    exit 2
   fi
 
-  log.debug 'Configuration failed. Retrying'
-  retries_left=$((retries_left - 1))
-  sleep 1
-done
-
-if [ ! -f .runner ]; then
-  # we couldn't configure and register the runner; no point continuing
-  log.error 'Configuration failed!'
-  exit 2
+  cat .runner
+  # Note: the `.runner` file's content should be something like the below:
+  #
+  # $ cat /runner/.runner
+  # {
+  # "agentId": 117, #=> corresponds to the ID of the runner
+  # "agentName": "THE_RUNNER_POD_NAME",
+  # "poolId": 1,
+  # "poolName": "Default",
+  # "serverUrl": "https://pipelines.actions.githubusercontent.com/SOME_RANDOM_ID",
+  # "gitHubUrl": "https://github.com/USER/REPO",
+  # "workFolder": "/some/work/dir" #=> corresponds to Runner.Spec.WorkDir
+  # }
+  #
+  # Especially `agentId` is important, as other than listing all the runners in the repo,
+  # this is the only change we could get the exact runnner ID which can be useful for further
+  # GitHub API call like the below. Note that 171 is the agentId seen above.
+  #   curl \
+  #     -H "Accept: application/vnd.github.v3+json" \
+  #     -H "Authorization: bearer ${GITHUB_TOKEN}"
+  #     https://api.github.com/repos/USER/REPO/actions/runners/171
 fi
 
-cat .runner
-# Note: the `.runner` file's content should be something like the below:
-#
-# $ cat /runner/.runner
-# {
-# "agentId": 117, #=> corresponds to the ID of the runner
-# "agentName": "THE_RUNNER_POD_NAME",
-# "poolId": 1,
-# "poolName": "Default",
-# "serverUrl": "https://pipelines.actions.githubusercontent.com/SOME_RANDOM_ID",
-# "gitHubUrl": "https://github.com/USER/REPO",
-# "workFolder": "/some/work/dir" #=> corresponds to Runner.Spec.WorkDir
-# }
-#
-# Especially `agentId` is important, as other than listing all the runners in the repo,
-# this is the only change we could get the exact runnner ID which can be useful for further
-# GitHub API call like the below. Note that 171 is the agentId seen above.
-#   curl \
-#     -H "Accept: application/vnd.github.v3+json" \
-#     -H "Authorization: bearer ${GITHUB_TOKEN}"
-#     https://api.github.com/repos/USER/REPO/actions/runners/171
-
 # Hack due to the DinD volumes
+# This is necessary only for legacy ARC v0.x.
+# ARC v1.x uses the "externals" as the copy source and "tmpDir" as the copy destionation.
+# See https://github.com/actions/actions-runner-controller/blob/91c8991835016f8c6568f101d4a28185baec3dcc/charts/gha-runner-scale-set/templates/_helpers.tpl#L76-L87
 if [ -z "${UNITTEST:-}" ] && [ -e ./externalstmp ]; then
   mkdir -p ./externals
   mv ./externalstmp/* ./externals/