diff --git a/Makefile b/Makefile
index fee9fcf..feb5475 100644
--- a/Makefile
+++ b/Makefile
@@ -120,31 +120,81 @@ clean-example:  # Remove example code (use this to start your own project)
 init: setup  # Initialize a new project
 	uv run python scripts/init_project.py
 
-# Docker
-########
+# Container Engine Support
+########################
+# Auto-detect container engine (podman or docker)
+CONTAINER_ENGINE ?= $(shell command -v podman >/dev/null 2>&1 && echo podman || echo docker)
+
+# Podman-specific adjustments
+ifeq ($(CONTAINER_ENGINE),podman)
+    # Use podman-compose for compose functionality
+    COMPOSE_CMD = podman-compose
+    # Use host UID/GID for rootless containers
+    CONTAINER_USER_OPTS = --userns=keep-id
+    # Podman machine status check
+    PODMAN_MACHINE_RUNNING = $(shell podman machine list --format json 2>/dev/null | grep '"Running": true' >/dev/null && echo yes || echo no)
+else
+    # Docker: use native compose
+    COMPOSE_CMD = $(CONTAINER_ENGINE) compose
+    # Docker: use current user's UID/GID to avoid permission issues
+    CONTAINER_USER_OPTS = --user $(shell id -u):$(shell id -g)
+endif
+
+# Docker/Podman Images
+#####################
 IMAGE_NAME = container-registry.io/python-collab-template
 IMAGE_TAG = latest
 
-dev-env: refresh-containers
-	@echo "Spinning up a dev environment ."
-	@docker compose -f docker/docker-compose.yml down
-	@docker compose -f docker/docker-compose.yml up -d dev
-	@docker exec -ti composed_dev /bin/bash
+dev-env: ensure-container-ready refresh-containers
+	@echo "Spinning up a dev environment using $(CONTAINER_ENGINE)..."
+	@$(COMPOSE_CMD) -f docker/docker-compose.yml down
+	@$(COMPOSE_CMD) -f docker/docker-compose.yml up -d dev
+	@$(CONTAINER_ENGINE) exec -ti composed_dev /bin/bash
 
-refresh-containers:
-	@echo "Rebuilding containers..."
-	@docker compose -f docker/docker-compose.yml build
+refresh-containers: ensure-container-ready
+	@echo "Rebuilding containers using $(CONTAINER_ENGINE)..."
+	@$(COMPOSE_CMD) -f docker/docker-compose.yml build
 
 rebuild-images:
-	@echo "Rebuilding images with the --no-cache flag..."
-	@docker compose -f docker/docker-compose.yml build --no-cache
+	@echo "Rebuilding images with the --no-cache flag using $(CONTAINER_ENGINE)..."
+	@$(COMPOSE_CMD) -f docker/docker-compose.yml build --no-cache
 
 build-image:
-	@echo Building dev image and tagging as ${IMAGE_NAME}:${IMAGE_TAG}
-	@docker compose -f docker/docker-compose.yml down
-	@docker compose -f docker/docker-compose.yml up -d dev
-	@docker tag dev ${IMAGE_NAME}:${IMAGE_TAG}
+	@echo Building dev image using $(CONTAINER_ENGINE) and tagging as ${IMAGE_NAME}:${IMAGE_TAG}
+	@$(COMPOSE_CMD) -f docker/docker-compose.yml down
+	@$(COMPOSE_CMD) -f docker/docker-compose.yml up -d dev
+	@$(CONTAINER_ENGINE) tag dev ${IMAGE_NAME}:${IMAGE_TAG}
 
 push-image: build-image
-	@echo Pushing image to container registry
-	@docker push ${IMAGE_NAME}:${IMAGE_TAG}
+	@echo Pushing image to container registry using $(CONTAINER_ENGINE)
+	@$(CONTAINER_ENGINE) push ${IMAGE_NAME}:${IMAGE_TAG}
+
+# Container Engine Info
+######################
+ensure-container-ready:  # Ensure container engine is ready
+ifeq ($(CONTAINER_ENGINE),podman)
+	@echo "Checking Podman machine status..."
+	@if [ "$(PODMAN_MACHINE_RUNNING)" = "no" ]; then \
+		echo "Podman machine is not running. Starting it..."; \
+		podman machine start; \
+		echo "Waiting for Podman machine to be ready..."; \
+		sleep 3; \
+	fi
+	@if ! command -v podman-compose >/dev/null 2>&1; then \
+		echo "Error: podman-compose not found. Install with: brew install podman-compose"; \
+		exit 1; \
+	fi
+else
+	@echo "Using Docker engine..."
+endif
+
+container-info:  # Display detected container engine and configuration
+	@echo "Container Engine: $(CONTAINER_ENGINE)"
+	@echo "Compose Command: $(COMPOSE_CMD)"
+	@echo "User Options: $(CONTAINER_USER_OPTS)"
+ifeq ($(CONTAINER_ENGINE),podman)
+	@echo "Podman Machine Running: $(PODMAN_MACHINE_RUNNING)"
+	@echo "podman-compose Available: $(shell command -v podman-compose >/dev/null 2>&1 && echo yes || echo no)"
+endif
+	@echo ""
+	@echo "To override, use: CONTAINER_ENGINE=podman make dev-env"
diff --git a/README.md b/README.md
index 583b96e..8b3d02d 100644
--- a/README.md
+++ b/README.md
@@ -87,17 +87,28 @@ To remove the example code and start fresh:
 ```bash
 make clean-example
 ```
-## Docker Support
+## Container Support (Docker/Podman)
 
 ### Development Environment
+
+The project automatically detects and uses either Docker or Podman:
+
 ```bash
-make dev-env    # Start a development container
+make dev-env    # Uses podman if available, otherwise docker
+
+# Or explicitly choose:
+CONTAINER_ENGINE=docker make dev-env
+CONTAINER_ENGINE=podman make dev-env
+
+# Check which engine will be used:
+make container-info
 ```
 
 This creates a container with:
 - All dependencies installed
 - Source code mounted (changes reflect immediately)
 - Development tools ready to use
+- Automatic UID/GID mapping for file permissions
 
 ### Production Image
 ```bash
@@ -110,7 +121,7 @@ make push-image     # Push to container registry
 .
 ├── src/                # Source code
 ├── tests/             # Test files
-├── docker/            # Docker configuration
+├── docker/            # Container configuration (Docker/Podman)
 ├── .github/           # GitHub Actions workflows
 ├── pyproject.toml     # Project configuration
 └── Makefile          # Development commands
diff --git a/docker/Dockerfile b/docker/Dockerfile
index 7984e0d..92f18ff 100644
--- a/docker/Dockerfile
+++ b/docker/Dockerfile
@@ -14,16 +14,17 @@ RUN apt-get update && apt-get install -y \
     vim \
     && rm -rf /var/lib/apt/lists/*
 
-WORKDIR /src
+WORKDIR /workspace
 
-COPY pyproject.toml .
-COPY README.md .
-COPY src/ ./src/
-COPY tests/ ./tests/
+# Copy essential files for dependency resolution to temp location
+COPY pyproject.toml /tmp/
+COPY README.md /tmp/
 
 RUN pip install -U pip uv \
+    && cd /tmp \
     && uv pip compile pyproject.toml -o requirements.txt \
     && uv pip compile pyproject.toml --extra dev -o requirements-dev.txt \
-    && uv pip sync requirements.txt requirements-dev.txt
+    && uv pip sync --system requirements.txt requirements-dev.txt \
+    && rm -rf /tmp/pyproject.toml /tmp/README.md
 
 CMD ["/bin/bash"]
diff --git a/docker/docker-compose.yml b/docker/docker-compose.yml
index 8118e55..eed0854 100644
--- a/docker/docker-compose.yml
+++ b/docker/docker-compose.yml
@@ -11,33 +11,7 @@ services:
       EXAMPLE: ${EXAMPLE}
       EXAMPLE_SECRET: ${EXAMPLE_SECRET}
     command: /bin/bash
-    # Bind to local files
+    # Note: user mapping handled by Podman rootless automatically
+    # Bind whole project directory for simplicity  
     volumes:
-      - type: bind
-        source: ../src
-        target: /src/src
-        read_only: False
-      - type: bind
-        source: ../tests
-        target: /src/tests
-        read_only: False
-      - type: bind
-        source: /var/run/docker.sock
-        target: /var/run/docker.sock
-      # Dev files in top level directory
-      - type: bind
-        source: ../docker/Makefile
-        target: /src/Makefile
-        read_only: False
-      - type: bind
-        source: ../mypy.ini
-        target: /src/mypy.ini
-        read_only: False
-      - type: bind
-        source: ../pylintrc
-        target: /src/pylintrc
-        read_only: False
-      - type: bind
-        source: ../README.md
-        target: /src/README.md
-        read_only: False
+      - ../:/workspace:Z
diff --git a/docker/template.env b/docker/template.env
index 8d2cd85..1b7ed75 100644
--- a/docker/template.env
+++ b/docker/template.env
@@ -8,3 +8,8 @@ DEBUG=true
 # Secrets (do not commit actual values)
 API_KEY=
 DATABASE_URL=
+
+# Container runtime settings (optional)
+# UID=${UID}  # Uncomment to use your system UID
+# GID=${GID}  # Uncomment to use your system GID
+# DOCKER_SOCK=/var/run/docker.sock  # Override socket path for Podman
diff --git a/docs/container-setup.md b/docs/container-setup.md
new file mode 100644
index 0000000..58d4f72
--- /dev/null
+++ b/docs/container-setup.md
@@ -0,0 +1,138 @@
+# Container Setup Guide
+
+This project supports both Docker and Podman for containerized development.
+
+## Quick Start
+
+The Makefile automatically detects your container engine:
+
+```bash
+# Automatic detection (prefers Podman if available)
+make dev-env
+
+# Explicit engine selection
+CONTAINER_ENGINE=docker make dev-env
+CONTAINER_ENGINE=podman make dev-env
+```
+
+## Podman vs Docker
+
+### Key Differences
+
+| Feature | Docker | Podman |
+|---------|--------|--------|
+| Root privileges | Runs as root by default | Rootless by default |
+| Daemon | Requires dockerd daemon | Daemonless |
+| Security | Good with proper setup | Better default security |
+| Compose support | Native | Via podman-compose |
+
+### When to Use Which
+
+**Use Docker when:**
+- It's your team's standard
+- You need Docker Desktop features
+- You're using Docker-specific tooling
+
+**Use Podman when:**
+- Security is a top priority
+- You can't/don't want to run a daemon
+- You're in a restricted environment
+
+## Troubleshooting
+
+### Permission Issues
+
+If you encounter permission issues with mounted volumes:
+
+1. **For Podman**: Should work automatically with rootless mode
+2. **For Docker**: Set your UID/GID in `docker/.env`:
+   ```bash
+   echo "UID=$(id -u)" >> docker/.env
+   echo "GID=$(id -g)" >> docker/.env
+   ```
+
+### Socket Issues
+
+If Podman can't find the Docker socket:
+
+```bash
+# Set the socket path in your .env
+echo "DOCKER_SOCK=${XDG_RUNTIME_DIR}/podman/podman.sock" >> docker/.env
+```
+
+### Compose Command Not Found
+
+For Podman, you need to install podman-compose:
+
+```bash
+# macOS
+brew install podman-compose
+
+# Linux
+pip install podman-compose
+```
+
+### Podman Machine Not Running (macOS/Windows)
+
+Podman needs a Linux VM to run containers. The Makefile will automatically start it, but you can also manage it manually:
+
+```bash
+# Initialize a new machine
+podman machine init
+
+# Start the machine
+podman machine start
+
+# Check machine status
+podman machine list
+
+# Stop the machine
+podman machine stop
+```
+
+### Auto-Setup with Make
+
+The project's Makefile handles most Podman setup automatically:
+
+- Checks if Podman machine is running
+- Starts it if needed
+- Verifies podman-compose is installed
+- Uses appropriate socket paths
+
+Just run `make container-info` to see the current status.
+
+## Compatibility with Project Initialization
+
+The container setup is designed to work both before and after running `make init`:
+
+### Before `make init`
+- Source code is in `src/` directory
+- Container mounts entire project as `/workspace`
+- All development tools work normally
+
+### After `make init` 
+- Source code moves to your project module directory (e.g., `my_project/`)
+- Container setup continues to work unchanged
+- Volume mounts and dependencies remain intact
+
+The `make init` command:
+1. Renames `src/` to your project name
+2. Updates import statements in tests
+3. Modifies `pyproject.toml` and `Makefile`
+
+**The Docker/Podman setup survives this transformation** because:
+- The Dockerfile doesn't hardcode directory names
+- Dependencies are installed from temporary copied files
+- The entire project is mounted, regardless of internal structure
+
+This means you can:
+```bash
+# Set up development environment
+make dev-env
+
+# Initialize your project later
+make init
+
+# Continue using the same development environment
+make dev-env  # Still works!
+```
\ No newline at end of file