diff --git a/docker/nginx/conf.d/include/location-skylink b/docker/nginx/conf.d/include/location-skylink
index ccb40e6f..d9e54e2f 100644
--- a/docker/nginx/conf.d/include/location-skylink
+++ b/docker/nginx/conf.d/include/location-skylink
@@ -1,8 +1,26 @@
 include /etc/nginx/conf.d/include/cors;
 
+proxy_cache skynet; # cache name
+proxy_cache_key $skylink$path$arg_format$arg_attachment$arg_start$arg_end$http_range; # unique cache key
+proxy_cache_min_uses 3; # cache after 3 uses
+proxy_cache_valid 200 206 307 308 48h; # keep 200, 206, 307 and 308 responses valid for up to 2 days
+add_header X-Proxy-Cache $upstream_cache_status; # add response header to indicate cache hits and misses
+
+# map skyd env variable value to "1" for true and "0" for false (expected by proxy_no_cache)
 set_by_lua_block $skyd_disk_cache_enabled {
     return os.getenv("SKYD_DISK_CACHE_ENABLED") == "true" and "1" or "0"
 }
 
+# bypass - this will bypass cache hit on request (status BYPASS)
+# but still stores file in cache if cache conditions are met
+proxy_cache_bypass $cookie_nocache $arg_nocache $skyd_disk_cache_enabled;
+
+# no cache - this will ignore cache on request (status MISS)
+# and does not store file in cache under no condition
+set_if_empty $nocache "0";
+
+# disable cache when nocache is set or skyd cache is enabled
+proxy_no_cache $nocache $skyd_disk_cache_enabled;
+
 proxy_set_header User-Agent: Sia-Agent;
 proxy_pass http://sia:9980/skynet/skylink/$skylink$path$is_args$args;