diff --git a/packages/env/README.md b/packages/env/README.md
index b9f549e1fbdc46..921c4da7aeb385 100644
--- a/packages/env/README.md
+++ b/packages/env/README.md
@@ -350,6 +350,29 @@ wp> ^C
 ✔ Ran `wp shell` in 'tests-cli'. (in 16s 400ms)
 ```
 
+#### Installing a plugin or theme on the development instance
+
+```sh
+wp-env run cli plugin install custom-post-type-ui
+
+Creating 500cd328b649d63e882d5c4695871d04_cli_run ... done
+Installing Custom Post Type UI (1.9.2)
+Downloading installation package from https://downloads.wordpress.org/plugin/custom-post-type-ui.zip...
+The authenticity of custom-post-type-ui.zip could not be verified as no signature was found.
+Unpacking the package...
+Installing the plugin...
+Plugin installed successfully.
+Success: Installed 1 of 1 plugins.
+✔ Ran `plugin install custom-post-type-ui` in 'cli'. (in 6s 483ms)
+```
+
+**NOTE**: Depending on your host OS, you may experience errors when trying to install plugins or themes (e.g. `Warning: Could not create directory.`). This is typically because the user ID used within the container does not have write access to the mounted directories created by `wp-env`. To resolve this, run the `docker-compose` command directly from the directory created by `wp-env` and add `-u $(id -u)` and `-e HOME=/tmp` the `run` command as options:
+
+```sh
+$ cd ~/wp-env/500cd328b649d63e882d5c4695871d04
+$ docker-compose run --rm -u $(id -u) -e HOME=/tmp cli [plugin|theme] install <plugin|theme>
+```
+
 ### `wp-env destroy`
 
 ```sh