diff --git a/.dockerignore b/.dockerignore
new file mode 100644
index 00000000..0d0e7ae3
--- /dev/null
+++ b/.dockerignore
@@ -0,0 +1,69 @@
+# Git
+.git
+.gitignore
+.gitattributes
+.gitmodules
+
+# Documentation
+doc/
+*.md
+!README.md
+
+# IDE and editor files
+.idea/
+.vscode/
+*.swp
+*.swo
+*~
+
+# Python cache
+__pycache__/
+*.py[cod]
+*$py.class
+*.so
+.Python
+build/
+develop-eggs/
+dist/
+downloads/
+eggs/
+.eggs/
+lib/
+lib64/
+parts/
+sdist/
+var/
+wheels/
+*.egg-info/
+.installed.cfg
+*.egg
+
+# Virtual environments
+venv/
+ENV/
+env/
+
+# Test and coverage
+.coverage
+.tox/
+.nox/
+coverage.xml
+*.cover
+.hypothesis/
+.pytest_cache/
+
+# CI/CD
+.travis.yml
+.github/
+
+# Linting configs
+.cardboardlint.yml
+.coveragerc
+.pycodestylerc
+.pydocstylerc
+.pylintrc
+
+# Docker (avoid recursion)
+Dockerfile
+docker-compose.yml
+.dockerignore
diff --git a/Dockerfile b/Dockerfile
new file mode 100644
index 00000000..fc4287e2
--- /dev/null
+++ b/Dockerfile
@@ -0,0 +1,55 @@
+# ChemTools Docker Configuration
+# Based on miniconda2 for Python 2.7 + conda support
+# Addresses GitHub Issue #42: Docker Update
+
+FROM continuumio/miniconda2:latest
+
+LABEL maintainer="ChemTools Dev Team <horton.chemtools@gmail.com>"
+LABEL description="ChemTools - Interpretive Chemical Tools for Quantum Chemistry"
+LABEL version="2.0"
+
+# Set environment variables
+ENV PYTHONDONTWRITEBYTECODE=1
+ENV PYTHONUNBUFFERED=1
+
+# Install system dependencies
+RUN apt-get update && apt-get install -y --no-install-recommends \
+    build-essential \
+    git \
+    git-lfs \
+    && rm -rf /var/lib/apt/lists/* \
+    && git lfs install
+
+# Configure conda channels
+RUN conda config --set always_yes yes && \
+    conda config --add channels theochem && \
+    conda config --add channels conda-forge
+
+# Create conda environment and install dependencies
+RUN conda create -n chemtools python=2.7 && \
+    /bin/bash -c "source activate chemtools && \
+    conda install -c theochem horton=2.1.0 && \
+    conda clean -afy"
+
+# Set up the conda environment to activate by default
+ENV PATH="/opt/conda/envs/chemtools/bin:$PATH"
+ENV CONDA_DEFAULT_ENV=chemtools
+
+# Set working directory
+WORKDIR /chemtools
+
+# Copy project files
+COPY . .
+
+# Install ChemTools
+RUN /bin/bash -c "source activate chemtools && pip install -e ."
+
+# Create a non-root user for security
+RUN useradd -m -s /bin/bash chemtools_user && \
+    chown -R chemtools_user:chemtools_user /chemtools
+
+USER chemtools_user
+
+# Default command
+ENTRYPOINT ["/bin/bash", "-c", "source activate chemtools && exec \"$@\"", "--"]
+CMD ["chemtools", "--help"]
diff --git a/README.md b/README.md
index 71aa6512..1e6abc50 100644
--- a/README.md
+++ b/README.md
@@ -66,6 +66,43 @@ To run tests:
 nosetests -v chemtools
 ```
 
+Docker
+------
+
+ChemTools can be run using Docker, which simplifies dependency management.
+
+### Building the Image
+
+```bash
+docker build -t chemtools:latest .
+```
+
+### Running ChemTools
+
+```bash
+# Show help
+docker run --rm chemtools:latest chemtools --help
+
+# Run with mounted data directory
+docker run --rm -v $(pwd)/data:/chemtools/data chemtools:latest chemtools <command>
+
+# Interactive shell
+docker run --rm -it chemtools:latest /bin/bash
+```
+
+### Using Docker Compose
+
+```bash
+# Build and run
+docker-compose up --build
+
+# Run tests
+docker-compose run chemtools-test
+
+# Run a specific command
+docker-compose run chemtools chemtools --help
+```
+
 Development
 -----------
 New contributors of all programming levels are welcome to join us. You can follow
diff --git a/docker-compose.yml b/docker-compose.yml
new file mode 100644
index 00000000..e929c1a2
--- /dev/null
+++ b/docker-compose.yml
@@ -0,0 +1,33 @@
+# ChemTools Docker Compose Configuration
+# Usage: docker-compose up --build
+# Or run commands: docker-compose run chemtools <command>
+
+version: '3.8'
+
+services:
+  chemtools:
+    build:
+      context: .
+      dockerfile: Dockerfile
+    image: chemtools:latest
+    container_name: chemtools
+    volumes:
+      # Mount local data directory for input/output files
+      - ./data:/chemtools/data
+      # Mount examples for easy access
+      - ./examples:/chemtools/examples:ro
+    working_dir: /chemtools/data
+    # Override entrypoint for interactive shell access
+    stdin_open: true
+    tty: true
+
+  # Service for running tests
+  chemtools-test:
+    build:
+      context: .
+      dockerfile: Dockerfile
+    image: chemtools:latest
+    container_name: chemtools-test
+    command: [ "nosetests", "-v", "chemtools" ]
+    volumes:
+      - ./chemtools:/chemtools/chemtools:ro