diff --git a/README.md b/README.md
index d5251a2967..7a8ad4a5dc 100644
--- a/README.md
+++ b/README.md
@@ -57,7 +57,7 @@ The PCD SDK is a framework for developing applications that use PCDs for the pro
 
 ### Requirements
 
-`passport-server` uses Postgres, and requires Postgres 15 or higher.
+`passport-server` uses Postgres, and requires Postgres 15 or higher. 
 
 ### Environment Variables
 
@@ -77,10 +77,8 @@ In the root of this project, execute the following to start the servers and stat
 # installs dependencies for all apps and packages in this repository
 yarn
 
-# starts local Postgres - you must have Postgres installed for this
-# to work properly. in case you want to restart a Postgres instance
-# you previously started in this project, you can also run the command
-# yarn localdb:restart
+# starts a dockerized local Postgres database on port 5432. 
+#  If you want to restart the instance you also can use yarn localdb:restart
 yarn localdb:init && yarn localdb:up
 
 # starts all the applications contained in the `/apps` directory of the
diff --git a/apps/passport-server/.gitignore b/apps/passport-server/.gitignore
index 9003b49318..4dd6848db0 100644
--- a/apps/passport-server/.gitignore
+++ b/apps/passport-server/.gitignore
@@ -4,4 +4,5 @@
 envs
 db
 *.ignore
-dev-build
\ No newline at end of file
+dev-build
+local-db-data
\ No newline at end of file
diff --git a/docker-compose.yml b/docker-compose.yml
new file mode 100644
index 0000000000..aa681c441c
--- /dev/null
+++ b/docker-compose.yml
@@ -0,0 +1,16 @@
+version: '3.8'
+services:
+  db:
+    image: postgres:latest
+    restart: always
+    ports:
+      - "5432:5432"
+    command: ['postgres', '-cshared_preload_libraries=pg_stat_statements']
+    environment:
+      POSTGRES_USER: admin
+      POSTGRES_PASSWORD: password
+      POSTGRES_DB: your_database
+      PGDATA: '/data/postgres'
+      POSTGRES_INITDB_ARGS: '-E UTF8 --locale=C'
+    volumes:
+      - ./apps/passport-server/local-db-data:/data/postgres
diff --git a/package.json b/package.json
index 8ed981a411..21b1887e12 100644
--- a/package.json
+++ b/package.json
@@ -14,10 +14,10 @@
     ]
   },
   "scripts": {
-    "localdb:restart": "yarn localdb:down && yarn localdb:init && yarn localdb:up",
-    "localdb:init": "bash -c 'rm -rf apps/passport-server/local-db-data/ && initdb -U admin --pwfile=<(echo password) -A password -D apps/passport-server/local-db-data'",
-    "localdb:up": "pg_ctl -D apps/passport-server/local-db-data -l apps/passport-server/local-db-log start",
-    "localdb:down": "pg_ctl -D apps/passport-server/local-db-data -l apps/passport-server/local-db-log stop",
+    "localdb:init": "bash -c 'rm -rf apps/passport-server/local-db-data/ && docker compose up db'",
+    "localdb:restart": "docker compose restart db",
+    "localdb:up": "docker compose up db",
+    "localdb:down": "docker compose down db",
     "build": "scripts/build.sh",
     "build:packages": "scripts/build.sh --filter=./packages/**/*  --filter=!./apps/*",
     "dev": "tsx scripts/watch.ts",