diff --git a/docs/src/test-api/class-test.md b/docs/src/test-api/class-test.md
index 9b56fbf2e6462..b6ae7d1522116 100644
--- a/docs/src/test-api/class-test.md
+++ b/docs/src/test-api/class-test.md
@@ -1710,6 +1710,11 @@ Step body.
 
 Whether to box the step in the report. Defaults to `false`. When the step is boxed, errors thrown from the step internals point to the step call site. See below for more details.
 
+### option: Test.step.location
+* since: v1.48
+- `location` <[Location]>
+Specifies a custom location for the step to be shown in test reports. By default, location of the [`method: Test.step`] call is shown.
+
 ## method: Test.use
 * since: v1.10
 
diff --git a/packages/playwright/src/common/testType.ts b/packages/playwright/src/common/testType.ts
index 5c7850a3df07f..f0882735dc7e2 100644
--- a/packages/playwright/src/common/testType.ts
+++ b/packages/playwright/src/common/testType.ts
@@ -259,11 +259,11 @@ export class TestTypeImpl {
     suite._use.push({ fixtures, location });
   }
 
-  async _step<T>(title: string, body: () => Promise<T>, options: { box?: boolean } = {}): Promise<T> {
+  async _step<T>(title: string, body: () => Promise<T>, options: {box?: boolean, location?: Location } = {}): Promise<T> {
     const testInfo = currentTestInfo();
     if (!testInfo)
       throw new Error(`test.step() can only be called from a test`);
-    const step = testInfo._addStep({ category: 'test.step', title, box: options.box });
+    const step = testInfo._addStep({ category: 'test.step', title, location: options.location, box: options.box });
     return await zones.run('stepZone', step, async () => {
       try {
         const result = await body();
diff --git a/packages/playwright/types/test.d.ts b/packages/playwright/types/test.d.ts
index 09b5c7efdb82c..e576457d3b1d1 100644
--- a/packages/playwright/types/test.d.ts
+++ b/packages/playwright/types/test.d.ts
@@ -4703,7 +4703,7 @@ export interface TestType<TestArgs extends KeyValue, WorkerArgs extends KeyValue
    * @param body Step body.
    * @param options
    */
-  step<T>(title: string, body: () => T | Promise<T>, options?: { box?: boolean }): Promise<T>;
+  step<T>(title: string, body: () => T | Promise<T>, options?: { box?: boolean, location?: Location }): Promise<T>;
   /**
    * `expect` function can be used to create test assertions. Read more about [test assertions](https://playwright.dev/docs/test-assertions).
    *
diff --git a/tests/playwright-test/test-step.spec.ts b/tests/playwright-test/test-step.spec.ts
index f7538de3e9f79..cfd1b526d791e 100644
--- a/tests/playwright-test/test-step.spec.ts
+++ b/tests/playwright-test/test-step.spec.ts
@@ -1239,3 +1239,42 @@ fixture   |  fixture: page
 fixture   |  fixture: context
 `);
 });
+
+test('test location to test.step', async ({ runInlineTest }) => {
+  const result = await runInlineTest({
+    'reporter.ts': stepIndentReporter,
+    'helper.ts': `
+      import { test } from '@playwright/test';
+
+      export async function dummyStep(test, title, action, location) {
+        return await test.step(title, action, { location });
+      }
+
+      export function getCustomLocation() {
+        return { file: 'dummy-file.ts', line: 123, column: 45 };
+      }
+    `,
+    'playwright.config.ts': `
+      module.exports = {
+        reporter: './reporter',
+      };
+    `,
+    'a.test.ts': `
+      import { test } from '@playwright/test';
+      import { dummyStep, getCustomLocation } from './helper';
+
+      test('custom location test', async () => {
+        const location = getCustomLocation();
+        await dummyStep(test, 'Perform a dummy step', async () => {
+        }, location);
+      });
+    `
+  }, { reporter: '', workers: 1 });
+
+  expect(result.exitCode).toBe(0);
+  expect(stripAnsi(result.output)).toBe(`
+hook      |Before Hooks
+test.step |Perform a dummy step @ dummy-file.ts:123
+hook      |After Hooks
+`);
+});
\ No newline at end of file
diff --git a/utils/generate_types/overrides-test.d.ts b/utils/generate_types/overrides-test.d.ts
index 90ef7fa75a52c..be1fa7ee373d3 100644
--- a/utils/generate_types/overrides-test.d.ts
+++ b/utils/generate_types/overrides-test.d.ts
@@ -128,7 +128,7 @@ export interface TestType<TestArgs extends KeyValue, WorkerArgs extends KeyValue
   afterAll(inner: (args: TestArgs & WorkerArgs, testInfo: TestInfo) => Promise<any> | any): void;
   afterAll(title: string, inner: (args: TestArgs & WorkerArgs, testInfo: TestInfo) => Promise<any> | any): void;
   use(fixtures: Fixtures<{}, {}, TestArgs, WorkerArgs>): void;
-  step<T>(title: string, body: () => T | Promise<T>, options?: { box?: boolean }): Promise<T>;
+  step<T>(title: string, body: () => T | Promise<T>, options?: { box?: boolean, location?: Location }): Promise<T>;
   expect: Expect<{}>;
   extend<T extends KeyValue, W extends KeyValue = {}>(fixtures: Fixtures<T, W, TestArgs, WorkerArgs>): TestType<TestArgs & T, WorkerArgs & W>;
   info(): TestInfo;