diff --git a/Makefile b/Makefile
index 3e51c834e..333553e53 100644
--- a/Makefile
+++ b/Makefile
@@ -178,7 +178,25 @@ metalinter_all:
 	@echo "--> Running linter (all)"
 	gometalinter.v2 --vendor --deadline=600s --enable-all --disable=lll ./...
 
+###########################################################
+### Local testnet using docker
+
+# Build linux binary on other platforms
+build-linux:
+	GOOS=linux GOARCH=amd64 $(MAKE) build
+
+# Run a 4-node testnet locally
+docker-start:
+	@echo "Wait until 'Attaching to node0, node1, node2, node3' message appears"
+	@if ! [ -f build/node0/config/genesis.json ]; then docker run --rm -v `pwd`/build:/tendermint tendermint/localnode testnet --v 4 --o build --populate-persistent-peers --starting-ip-address 10.100.0.2 ; fi
+	docker-compose up
+
+# Stop testnet
+docker-stop:
+	docker-compose down
+
 # To avoid unintended conflicts with file names, always add to .PHONY
 # unless there is a reason not to.
 # https://www.gnu.org/software/make/manual/html_node/Phony-Targets.html
-.PHONY: check build build_race dist install check_tools get_tools update_tools get_vendor_deps draw_deps test_cover test_apps test_persistence test_p2p test test_race test_integrations test_release test100 vagrant_test fmt
+.PHONY: check build build_race dist install check_tools get_tools update_tools get_vendor_deps draw_deps test_cover test_apps test_persistence test_p2p test test_race test_integrations test_release test100 vagrant_test fmt build-linux docker-start docker-stop
+
diff --git a/docker-compose.yml b/docker-compose.yml
new file mode 100644
index 000000000..cc76d8dbf
--- /dev/null
+++ b/docker-compose.yml
@@ -0,0 +1,68 @@
+version: '3'
+
+services:
+  node0:
+    container_name: node0
+    image: "tendermint/localnode"
+    ports:
+      - "46656-46657:46656-46657"
+    environment:
+      - ID=0
+      - LOG=${LOG:-tendermint.log}
+    volumes:
+      - ${FOLDER:-./build}:/tendermint
+    networks:
+      localnet:
+        ipv4_address: 10.100.0.2
+
+  node1:
+    container_name: node1
+    image: "tendermint/localnode"
+    ports:
+      - "46659-46660:46656-46657"
+    environment:
+      - ID=1
+      - LOG=${LOG:-tendermint.log}
+    volumes:
+      - ${FOLDER:-./build}:/tendermint
+    networks:
+      localnet:
+        ipv4_address: 10.100.0.3
+
+  node2:
+    container_name: node2
+    image: "tendermint/localnode"
+    environment:
+      - ID=2
+      - LOG=${LOG:-tendermint.log}
+    ports:
+      - "46661-46662:46656-46657"
+    volumes:
+      - ${FOLDER:-./build}:/tendermint
+    networks:
+      localnet:
+        ipv4_address: 10.100.0.4
+
+  node3:
+    container_name: node3
+    image: "tendermint/localnode"
+    environment:
+      - ID=3
+      - LOG=${LOG:-tendermint.log}
+    ports:
+      - "46663-46664:46656-46657"
+    volumes:
+      - ${FOLDER:-./build}:/tendermint
+    networks:
+      localnet:
+        ipv4_address: 10.100.0.5
+
+networks:
+  localnet:
+    driver: bridge
+    ipam:
+      driver: default
+      config:
+      -
+        subnet: 10.100.0.0/16
+
diff --git a/docker-compose/Makefile b/docker-compose/Makefile
new file mode 100644
index 000000000..98517851d
--- /dev/null
+++ b/docker-compose/Makefile
@@ -0,0 +1,7 @@
+# Makefile for the "localnode" docker image.
+
+all:
+	docker build --tag tendermint/localnode localnode
+
+.PHONY: all
+
diff --git a/docker-compose/README.rst b/docker-compose/README.rst
new file mode 100644
index 000000000..d22a24d9b
--- /dev/null
+++ b/docker-compose/README.rst
@@ -0,0 +1,40 @@
+localnode
+=========
+
+It is assumed that you have already `setup docker <https://docs.docker.com/engine/installation/>`__.
+
+Description
+-----------
+Image for local testnets.
+
+Add the tendermint binary to the image by attaching it in a folder to the `/tendermint` mount point.
+
+It assumes that the configuration was created by the `tendermint testnet` command and it is also attached to the `/tendermint` mount point.
+
+Example:
+This example builds a linux tendermint binary under the `build/` folder, creates tendermint configuration for a single-node validator and runs the node:
+```
+cd $GOPATH/src/github.com/tendermint/tendermint
+
+#Build binary
+make build-linux
+
+#Create configuration
+docker run -e LOG="stdout" -v `pwd`/build:/tendermint tendermint/localnode testnet --o . --v 1
+
+#Run the node
+docker run -v `pwd`/build:/tendermint tendermint/localnode
+```
+
+Logging
+-------
+Log is saved under the attached volume, in the `tendermint.log` file. If the `LOG` environment variable is set to `stdout` at start, the log is not saved, but printed on the screen.
+
+Special binaries
+----------------
+If you have multiple binaries with different names, you can specify which one to run with the BINARY environment variable. The path of the binary is relative to the attached volume.
+
+docker-compose.yml
+==================
+This file creates a 4-node network using the localnode image. The nodes of the network are exposed to the host machine on ports 46656-46657, 46659-46660, 46661-46662, 46663-46664 respectively.
+
diff --git a/docker-compose/localnode/Dockerfile b/docker-compose/localnode/Dockerfile
new file mode 100644
index 000000000..9e5c4f8e2
--- /dev/null
+++ b/docker-compose/localnode/Dockerfile
@@ -0,0 +1,19 @@
+FROM alpine:3.7
+MAINTAINER Greg Szabo <greg@tendermint.com>
+
+RUN apk update && \
+    apk upgrade && \
+    apk --no-cache add curl jq file && \
+    addgroup tmuser && \
+    adduser -S -G tmuser tmuser -h /tendermint
+
+USER tmuser
+VOLUME [ /tendermint ]
+WORKDIR /tendermint
+EXPOSE 46656 46657
+ENTRYPOINT ["/usr/bin/wrapper.sh"]
+CMD ["node", "--proxy_app dummy"]
+STOPSIGNAL SIGTERM
+
+COPY --chown=tmuser:tmuser wrapper.sh /usr/bin/wrapper.sh
+
diff --git a/docker-compose/localnode/wrapper.sh b/docker-compose/localnode/wrapper.sh
new file mode 100755
index 000000000..8b55cbc10
--- /dev/null
+++ b/docker-compose/localnode/wrapper.sh
@@ -0,0 +1,33 @@
+#!/usr/bin/env sh
+
+##
+## Input parameters
+##
+BINARY=/tendermint/${BINARY:-tendermint}
+ID=${ID:-0}
+LOG=${LOG:-tendermint.log}
+
+##
+## Assert linux binary
+##
+if ! [ -f "${BINARY}" ]; then
+	echo "The binary `basename ${BINARY}` cannot be found. Please add the binary to the shared folder. Please use the BINARY environment variable if the name of the binary is not 'tendermint' E.g.: -e BINARY=tendermint_my_test_version"
+	exit 1
+fi
+BINARY_CHECK="`file $BINARY | grep 'ELF 64-bit LSB executable, x86-64'`"
+if [ -z "${BINARY_CHECK}" ]; then
+	echo "Binary needs to be OS linux, ARCH amd64"
+	exit 1
+fi
+
+##
+## Run binary with all parameters
+##
+export TMHOME="/tendermint/node${ID}"
+
+if [ -d "${TMHOME}/${LOG}" ]; then
+  "$BINARY" $@ | tee "${TMHOME}/${LOG}"
+else
+  "$BINARY" $@
+fi
+