diff --git a/.gitignore b/.gitignore
index 30a29907..a7867ac1 100644
--- a/.gitignore
+++ b/.gitignore
@@ -12,6 +12,15 @@ diff.diff
 # Bundler config
 /.bundle
 
+# docker-compose override file
+docker-compose.override.yml
+
+# dotenv files
+.env
+.env.production
+.env.development
+.env.test
+
 # Static files in public
 public/111
 public/112
@@ -37,9 +46,3 @@ public/package
 locale/*/software.edit.po
 locale/*/software.po.time_stamp
 
-# Local databases
-/db/*.sqlite3
-/db/*.db
-
-.byebug_history
-docker-compose.override.yml
diff --git a/Gemfile b/Gemfile
index cc1e1b33..b90e0883 100644
--- a/Gemfile
+++ b/Gemfile
@@ -41,6 +41,9 @@ gem 'sentry-ruby'
 # for versioning
 gem 'paper_trail'
 
+# for setting environment variables
+gem 'dotenv-rails'
+
 gem 'dalli'
 gem 'hashie'
 gem 'mini_magick'
diff --git a/Gemfile.lock b/Gemfile.lock
index c1ec2ed2..288da30c 100644
--- a/Gemfile.lock
+++ b/Gemfile.lock
@@ -109,6 +109,10 @@ GEM
     delayed_job_active_record (4.1.8)
       activerecord (>= 3.0, < 8.0)
       delayed_job (>= 3.0, < 5)
+    dotenv (2.8.1)
+    dotenv-rails (2.8.1)
+      dotenv (= 2.8.1)
+      railties (>= 3.2)
     drb (2.1.1)
       ruby2_keywords
     erubi (1.12.0)
@@ -376,6 +380,7 @@ DEPENDENCIES
   clockwork
   dalli
   delayed_job_active_record (~> 4.1)
+  dotenv-rails
   faker
   faraday
   faraday-decode_xml
diff --git a/config/database.yml b/config/database.yml
index e44f0dba..4cf7ec5b 100644
--- a/config/database.yml
+++ b/config/database.yml
@@ -1,4 +1,4 @@
-default: &default
+defaults: &defaults
   adapter: postgresql
   encoding: utf8
   pool: 5
@@ -10,15 +10,16 @@ default: &default
   database: <%= ENV.fetch('SOFTWARE_DB_NAME', 'postgres') %>
 
 development:
-  <<: *default
+  <<: *defaults
   database: software_development
 
 test:
-  <<: *default
+  <<: *defaults
   database: software_test
 
 production:
-  adapter: postgresql
-  encoding: utf8
-  pool: 5
-  timeout: 5000
+  <<: *defaults
+  # no defaults for host/port as we might want to connect through a socket
+  host: <%= ENV.fetch('SOFTWARE_DB_HOST', nil) %>
+  port: <%= ENV.fetch('SOFTWARE_DB_PORT', nil)  %>
+  database: software_production
diff --git a/config/options.yml b/config/options.yml
index be621470..0eb704b5 100644
--- a/config/options.yml
+++ b/config/options.yml
@@ -1,8 +1,8 @@
 defaults: &defaults
   api_host: https://api.opensuse.org
   web_host: https://build.opensuse.org
-  api_username: <%= ENV['API_USERNAME'] %>
-  api_password: <%= ENV['API_PASSWORD'] %>
+  api_username: <%= ENV['SOFTWARE_OBS_API_USERNAME'] %>
+  api_password: <%= ENV['SOFTWARE_OBS_API_PASSWORD'] %>
   relative_url_root:
 development:
   <<: *defaults
@@ -12,7 +12,4 @@ test:
 production:
   <<: *defaults
   relative_url_root:
-  api_username: <%= ENV['API_USERNAME'] %>
-  api_password: <%= ENV['API_PASSWORD'] %>
-  use_static: software.o.o
-  opensuse_cookie: <%= ENV['OPENSUSE_COOKIE'] %>
+  opensuse_cookie: <%= ENV['SOFTWARE_OPENSUSE_COOKIE'] %>
diff --git a/docker-compose.override.yml.example b/docker-compose.override.yml.example
index b1a88489..7942c2e2 100644
--- a/docker-compose.override.yml.example
+++ b/docker-compose.override.yml.example
@@ -4,6 +4,3 @@ services:
     build:
       args:
         CONTAINER_USERID: 1000
-    environment:
-      - API_USERNAME=yourusername
-      - API_PASSWORD=password123
diff --git a/dotenv.example b/dotenv.example
new file mode 100644
index 00000000..b9bf3be3
--- /dev/null
+++ b/dotenv.example
@@ -0,0 +1,17 @@
+# Rails Secret Key Base
+# https://guides.rubyonrails.org/security.html#session-storage
+# generate one with rails secret
+SECRET_KEY_BASE=12345
+
+# OBS API Secrets
+# https://api.opensuse.org/apidocs/
+SOFTWARE_API_USERNAME=myusername
+SOFTWARE_API_PASSWORD=mypassword
+SOFTWARE_OPENSUSE_COOKIE=12345
+
+# Postgres Database configuration
+SOFTWARE_DB_USER=postgres
+SOFTWARE_DB_PASSWORD=postgres
+SOFTWARE_DB_NAME=postgres
+SOFTWARE_DB_HOST=database
+SOFTWARE_DB_PORT=5432
diff --git a/vendor/cache/dotenv-2.8.1.gem b/vendor/cache/dotenv-2.8.1.gem
new file mode 100644
index 00000000..1e952071
Binary files /dev/null and b/vendor/cache/dotenv-2.8.1.gem differ
diff --git a/vendor/cache/dotenv-rails-2.8.1.gem b/vendor/cache/dotenv-rails-2.8.1.gem
new file mode 100644
index 00000000..1aab6b48
Binary files /dev/null and b/vendor/cache/dotenv-rails-2.8.1.gem differ