diff --git a/Makefile b/Makefile
index a8c061e15e..19378e89c5 100644
--- a/Makefile
+++ b/Makefile
@@ -3,6 +3,8 @@
 VERSION := $(shell echo $(shell git describe --tags) | sed 's/^v//')
 COMMIT := $(shell git log -1 --format='%H')
 
+export PROJECT_HOME=$(shell git rev-parse --show-toplevel)
+export GO_PKG_PATH=$(HOME)/go/pkg
 export GO111MODULE = on
 
 # process build tags
@@ -87,3 +89,41 @@ build:
 
 clean:
 	rm -rf ./build
+
+###############################################################################
+###                       Local testing using docker container              ###
+###############################################################################
+# To start a 4-node cluster from scratch:
+# make clean && make build-linux && make localnet-start
+###############################################################################
+
+
+# Build linux binary on other platforms
+# TODO: Support cross compile from Mac OS to Linux platforms
+build-linux:
+	GOOS=linux GOARCH=amd64 CGO_ENABLED=1 make build
+.PHONY: build-linux
+
+# Build docker image
+build-docker-localnode:
+	@cd docker && docker build --tag sei-chain/localnode localnode
+.PHONY: build-docker-localnode
+
+# Run a single docker container
+run-docker-localnode:
+	docker run --rm \
+	-v $(PROJECT_HOME)/build:/sei-protocol/sei-chain/build:Z \
+	-v $(PROJECT_HOME)/x/nitro:$(PROJECT_HOME)/x/nitro:Z \
+	-v $(GO_PKG_PATH)/mod:$(GO_PKG_PATH)/mod:Z \
+	sei-chain/localnode
+.PHONY: run-docker-localnode
+
+# Run a 4-node docker containers
+localnet-start: localnet-stop build-docker-localnode
+	@cd docker && docker-compose up
+.PHONY: localnet-start
+
+# Stop 4-node docker containers
+localnet-stop:
+	@cd docker && docker-compose down
+.PHONY: localnet-stop
\ No newline at end of file
diff --git a/docker/docker-compose.yml b/docker/docker-compose.yml
new file mode 100644
index 0000000000..b7c862fbec
--- /dev/null
+++ b/docker/docker-compose.yml
@@ -0,0 +1,71 @@
+version: '3.3'
+
+services:
+  node0:
+    container_name: sei-node0
+    image: "sei-chain/localnode"
+    ports:
+      - "26656-26657:26656-26657"
+    environment:
+      - ID=0
+    volumes:
+      - "${PROJECT_HOME}/build:/sei-protocol/sei-chain/build:Z"
+      - "${PROJECT_HOME}/x/nitro:${PROJECT_HOME}/x/nitro:Z"
+      - "${GO_PKG_PATH}/mod:${GO_PKG_PATH}/mod:Z"
+    networks:
+      localnet:
+        ipv4_address: 192.168.10.2
+
+  node1:
+    container_name: sei-node1
+    image: "sei-chain/localnode"
+    ports:
+      - "26659-26660:26656-26657"
+    environment:
+      - ID=1
+    volumes:
+      - "${PROJECT_HOME}/build:/sei-protocol/sei-chain/build:Z"
+      - "${PROJECT_HOME}/x/nitro:${PROJECT_HOME}/x/nitro:Z"
+      - "${GO_PKG_PATH}/mod:${GO_PKG_PATH}/mod:Z"
+    networks:
+      localnet:
+        ipv4_address: 192.168.10.3
+
+  node2:
+    container_name: sei-node2
+    image: "sei-chain/localnode"
+    environment:
+      - ID=2
+    ports:
+      - "26661-26662:26656-26657"
+    volumes:
+      - "${PROJECT_HOME}/build:/sei-protocol/sei-chain/build:Z"
+      - "${PROJECT_HOME}/x/nitro:${PROJECT_HOME}/x/nitro:Z"
+      - "${GO_PKG_PATH}/mod:${GO_PKG_PATH}/mod:Z"
+    networks:
+      localnet:
+        ipv4_address: 192.168.10.4
+
+  node3:
+    container_name: sei-node3
+    image: "sei-chain/localnode"
+    environment:
+      - ID=3
+    ports:
+      - "26663-26664:26656-26657"
+    volumes:
+      - "${PROJECT_HOME}/build:/sei-protocol/sei-chain/build:Z"
+      - "${PROJECT_HOME}/x/nitro:${PROJECT_HOME}/x/nitro:Z"
+      - "${GO_PKG_PATH}/mod:${GO_PKG_PATH}/mod:Z"
+    networks:
+      localnet:
+        ipv4_address: 192.168.10.5
+
+networks:
+  localnet:
+    driver: bridge
+    ipam:
+      driver: default
+      config:
+        -
+          subnet: 192.168.10.0/16
\ No newline at end of file
diff --git a/docker/localnode/Dockerfile b/docker/localnode/Dockerfile
new file mode 100644
index 0000000000..22be98a939
--- /dev/null
+++ b/docker/localnode/Dockerfile
@@ -0,0 +1,14 @@
+FROM ubuntu:latest
+RUN apt-get update && \
+    apt-get install -y make
+
+VOLUME [ /sei-protocol ]
+WORKDIR /sei-protocol/sei-chain
+
+EXPOSE 26656 26657
+
+CMD ["/usr/bin/init.sh"]
+
+STOPSIGNAL SIGTERM
+
+COPY init.sh /usr/bin/init.sh
\ No newline at end of file
diff --git a/docker/localnode/init.sh b/docker/localnode/init.sh
new file mode 100755
index 0000000000..5f778417b8
--- /dev/null
+++ b/docker/localnode/init.sh
@@ -0,0 +1,15 @@
+#!/usr/bin/env sh
+
+# Input parameters
+NODE_ID=${ID:-0}
+
+# Greeting output
+echo "hello-sei"
+
+# Uncomment the below line if there are any dependency issues
+# ldd build/seid
+
+# Testing whether seid works or not
+./build/seid version
+
+# TODO: Add sei-chain initialization logic
\ No newline at end of file