diff --git a/pkgs/development/python-modules/colcon/0001-update-setuptools.patch b/pkgs/development/python-modules/colcon/0001-update-setuptools.patch
new file mode 100644
index 000000000000..3c955a3d4c7f
--- /dev/null
+++ b/pkgs/development/python-modules/colcon/0001-update-setuptools.patch
@@ -0,0 +1,13 @@
+diff --git a/setup.cfg b/setup.cfg
+index 3f97885..3b55c34 100644
+--- a/setup.cfg
++++ b/setup.cfg
+@@ -38,7 +38,7 @@ install_requires =
+   pytest-cov
+   pytest-repeat
+   pytest-rerunfailures
+-  setuptools>=30.3.0,<80
++  setuptools>=30.3.0
+   # toml is also supported but deprecated
+   tomli>=1.0.0; python_version < "3.11"
+ packages = find:
diff --git a/pkgs/development/python-modules/colcon/default.nix b/pkgs/development/python-modules/colcon/default.nix
index 8c53dc78bfed..4b8592491010 100644
--- a/pkgs/development/python-modules/colcon/default.nix
+++ b/pkgs/development/python-modules/colcon/default.nix
@@ -21,16 +21,20 @@
 
 buildPythonPackage rec {
   pname = "colcon-core";
-  version = "0.19.0";
+  version = "0.20.1";
   pyproject = true;
 
   src = fetchFromGitHub {
     owner = "colcon";
     repo = "colcon-core";
     tag = version;
-    hash = "sha256-R/TVHPT305PwaVSisP0TtbgjCFBwCZkXOAgkYhCKpyY=";
+    hash = "sha256-FV/G2FcnBgr7mUY/Jr+bVAdEfhHL9qAnpc92hpTfy7Y=";
   };
 
+  # Upstream tracking issue: https://github.com/ros2/ros2/issues/1738
+  # This will break some functionality of building setuptools packages using colcon, other package types should work fine
+  patches = [ ./0001-update-setuptools.patch ];
+
   build-system = [ setuptools ];
 
   dependencies = [
@@ -68,7 +72,10 @@ buildPythonPackage rec {
     description = "Command line tool to build sets of software packages";
     homepage = "https://github.com/colcon/colcon-core";
     license = lib.licenses.asl20;
-    maintainers = with lib.maintainers; [ guelakais ];
+    maintainers = with lib.maintainers; [
+      amronos
+      guelakais
+    ];
     mainProgram = "colcon";
   };
 }