diff --git a/Dockerfile b/Dockerfile
new file mode 100644
index 0000000000..cf85aa1fc7
--- /dev/null
+++ b/Dockerfile
@@ -0,0 +1,19 @@
+FROM python:3.6
+
+# Set up code directory
+RUN mkdir -p /usr/src/app
+WORKDIR /usr/src/app
+
+# Install Linux dependencies
+RUN apt-get update && apt-get install -y libssl-dev
+
+# Copy over requirements
+COPY setup.py .
+COPY README.md .
+COPY requirements-dev.txt .
+
+# Install python dependencies
+RUN pip install -r requirements-dev.txt
+RUN pip install -e .
+
+WORKDIR /code
diff --git a/README.md b/README.md
index 7fa942850c..2ba934e393 100644
--- a/README.md
+++ b/README.md
@@ -104,6 +104,38 @@ pip install -r requirements-dev.txt
 pip install -e .
 ```
 
+## Using Docker
+
+If you would like to develop and test inside a docker environment, use the *sandbox* container provided in the **docker-compose.yml** file.
+
+To start up the test environment, run:
+
+```
+docker-compose up -d
+```
+
+This will build a docker container set up with an environment to run the Python test code.  
+
+**Note: This container does not have `go-ethereum` installed, so you cannot run the go-ethereum test suite.**
+
+To run the Python tests from your local machine:
+
+```
+docker-compose exec sandbox bash -c 'pytest -n 4 -f -k "not goethereum"'
+```
+
+You can run arbitrary commands inside the docker container by using the `bash -c` prefix.
+
+```
+docker-compose exec sandbox bash -c ''
+```
+
+Or, if you would like to just open a session to the container, run:
+
+```
+docker-compose exec sandbox bash
+```
+
 ### Testing Setup
 
 During development, you might like to have tests run on every file save.
diff --git a/docker-compose.yml b/docker-compose.yml
new file mode 100644
index 0000000000..2ffdfaede2
--- /dev/null
+++ b/docker-compose.yml
@@ -0,0 +1,8 @@
+version: '3'
+services:
+  sandbox:
+    build:
+      context: .
+    volumes:
+      - .:/code
+    command: tail -f /dev/null