diff --git a/.github/workflows/test_action.yml b/.github/workflows/test_action.yml
index fab1790..d31d2ed 100644
--- a/.github/workflows/test_action.yml
+++ b/.github/workflows/test_action.yml
@@ -7,7 +7,7 @@ on:
 jobs:
   build_pure:
     name: Test action (pure wheel)
-    runs-on: ubuntu-20.04
+    runs-on: ubuntu-latest
 
     steps:
       - uses: actions/checkout@v4
@@ -15,11 +15,12 @@ jobs:
         uses: ./
         with:
           pure_python_wheel: true
-          test_extras: test
+          test_groups: test, concurrency
+          test_extras: recommended
           test_command: pytest --pyargs test_package
   build_non_pure:
     name: Test action (not pure wheel)
-    runs-on: ubuntu-20.04
+    runs-on: ubuntu-latest
 
     steps:
       - uses: actions/checkout@v4
@@ -27,5 +28,6 @@ jobs:
         uses: ./
         with:
           pure_python_wheel: "false"
-          test_extras: test
+          test_groups: test
+          test_extras: recommended
           test_command: pytest --pyargs test_package
diff --git a/README.md b/README.md
index 6bb9838..50d852c 100644
--- a/README.md
+++ b/README.md
@@ -36,11 +36,19 @@ jobs:
       - id: build
         uses: OpenAstronomy/build-python-dist@v1
         with:
-          test_extras: test
+          test_groups: test
+          test_extras: recommended
           test_command: pytest --pyargs test_package
 ```
 
-The ``test_extras`` option, if specified, should contain a string (e.g. ``test`` or ``test,all``) that will be used to determine which 'extras' should be installed when testing. The ``test_command`` option should contain the full command to use for testing the installed package (this is run from an empty temporary directory).
+The ``test_groups`` option, if specified, should contain a comma-separated list
+of [PEP 735 Dependency Groups](https://peps.python.org/pep-0735/) that should be
+installed when testing (e.g. ``test``, or ``test, concurrency`` ...).
+Similarily, the ``test_extras`` option specifies optional dependencies
+(e.g. ``recommended`` or ``recommended, plotting``) that will be used to determine
+which 'extras' should be installed when testing. The ``test_command`` option
+should contain the full command to use for testing the installed package (this
+is run from an empty temporary directory).
 
 ### Build a source distribution and wheel for a pure-Python package
 
@@ -55,7 +63,8 @@ jobs:
         uses: OpenAstronomy/build-python-dist@v1
         with:
           pure_python_wheel: true
-          test_extras: test
+          test_groups: test
+          test_extras: recommended
           test_command: pytest --pyargs test_package
 ```
 
@@ -73,7 +82,8 @@ jobs:
       - id: build
         uses: OpenAstronomy/build-python-dist@v1
         with:
-          test_extras: test
+          test_groups: test
+          test_extras: recommended
           test_command: pytest --pyargs test_package
           python-version: '3.9'
 ```
diff --git a/action.yml b/action.yml
index d14b67d..bed5d03 100644
--- a/action.yml
+++ b/action.yml
@@ -4,6 +4,11 @@ branding:
   icon: package
   color: blue
 inputs:
+  test_groups:
+    description: Comma-separated PEP 735 dependency groups that should be installed for testing
+    required: false
+    default: ''
+    type: string
   test_extras:
     description: Any extras_requires modifier that should be used to install the package for testing
     required: false
@@ -44,13 +49,22 @@ runs:
     shell: bash
     run: python -m build --sdist .
 
-  - name: Test source distribution
+  - name: Create and activate a virtual environment
     shell: bash
     run: |
       python -m venv test-sdist
       source test-sdist/bin/activate
       which python
-      python -m pip install --force-reinstall `find dist -name "*.tar.gz"`[${{ inputs.test_extras }}]
+
+  - name: Parse dependency groups
+    shell: bash
+    run: |
+      echo "group_flags=$( python -c "print(' '.join(f'--group {g.strip()}' for g in '${{ inputs.test_groups }}'.split(',')))" ) " >> "$GITHUB_ENV"
+
+  - name: Test source distribution
+    shell: bash
+    run: |
+      python -m pip install --force-reinstall `find dist -name "*.tar.gz"`[${{ inputs.test_extras }}] $group_flags
       cd ${{ runner.temp }}
       ${{ inputs.test_command }}
     if: ${{ inputs.test_command != '' && inputs.test_extras != '' }}
@@ -58,10 +72,7 @@ runs:
   - name: Test source distribution
     shell: bash
     run: |
-      python -m venv test-sdist
-      source test-sdist/bin/activate
-      which python
-      python -m pip install --force-reinstall `find dist -name "*.tar.gz"`
+      python -m pip install --force-reinstall `find dist -name "*.tar.gz"` $group_flags
       cd ${{ runner.temp }}
       ${{ inputs.test_command }}
     if: ${{ inputs.test_command != '' && inputs.test_extras == '' }}
diff --git a/pyproject.toml b/pyproject.toml
index 5b3e573..309b538 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -1,4 +1,31 @@
 [build-system]
-requires = ["setuptools>=43.0.0",
-            "wheel"]
-build-backend = 'setuptools.build_meta'
+requires = ["setuptools>=61.2"]
+build-backend = "setuptools.build_meta"
+
+[project]
+name = "test-package"
+dynamic = ["version"]
+
+[project.optional-dependencies]
+recommended = [
+    # use small, pure-Python, extremely popular packages
+    "boto3",
+    "urllib3",
+]
+
+[dependency-groups]
+concurrency = [
+    {include-group = "test"},
+    "pytest-repeat",
+    "pytest-run-parallel",
+]
+test = [
+    "hypothesis>=6.135.14",
+    "pytest>=8.4.1",
+]
+
+[tool.setuptools]
+include-package-data = false
+
+[tool.setuptools.packages]
+find = {namespaces = false}
diff --git a/setup.cfg b/setup.cfg
deleted file mode 100644
index 0d63b1d..0000000
--- a/setup.cfg
+++ /dev/null
@@ -1,9 +0,0 @@
-[metadata]
-name = test-package
-
-[options]
-packages = find:
-
-[options.extras_require]
-test =
-    pytest