diff --git a/RELEASES.md b/RELEASES.md
index 133be52..0c17c5e 100644
--- a/RELEASES.md
+++ b/RELEASES.md
@@ -64,4 +64,7 @@
 - Update to v2.0.1 of `@actions/http-client` [#1087](https://github.com/actions/toolkit/pull/1087)
 
 ### 2.0.5
-- Fix to avoid saving empty cache when no files are available for caching. ([issue](https://github.com/actions/cache/issues/624))
\ No newline at end of file
+- Fix to avoid saving empty cache when no files are available for caching. ([issue](https://github.com/actions/cache/issues/624))
+
+### 2.0.6
+- Fix `Tar failed with error: The process '/usr/bin/tar' failed with exit code 1` issue when temp directory where tar is getting created is actually the subdirectory of the path mentioned by the user for caching. ([issue](https://github.com/actions/cache/issues/689))
diff --git a/package.json b/package.json
index 813ac88..d2f8d10 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@actions/cache",
-  "version": "2.0.5",
+  "version": "2.0.6",
   "preview": true,
   "description": "Actions cache lib",
   "keywords": [
diff --git a/src/internal/tar.ts b/src/internal/tar.ts
index fbea7c2..c809191 100644
--- a/src/internal/tar.ts
+++ b/src/internal/tar.ts
@@ -118,6 +118,8 @@ export async function createTar(
     ...getCompressionProgram(),
     '-cf',
     cacheFileName.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+    '--exclude',
+    cacheFileName.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
     '-P',
     '-C',
     workingDirectory.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),