When building applications with Docker, managing environment variables across different environments can be tricky. Here’s a clean, practical approach we’ll demonstrate with a real FastAPI application that keeps development smooth while ensuring production deployments are secure. The Problem We’re Solving Most developers start with a simple setup that works locally but creates problems in production: # This works locally but causes issues in production version: '3.8' 
services: 
  my-app: 
    build: . 
    env_file: .env  # This will override production env vars! version: '3.8' 
services: 
  my-app: 
    build: . 
    env_file: .env  # This will override production env vars! Problems: Problems: .env file overrides production environment variables
Sensitive data accidentally gets deployed
Production servers can’t inject their own configuration .env file overrides production environment variables .env Sensitive data accidentally gets deployed Production servers can’t inject their own configuration Our Solution: Clean Separation with Docker Compose We’ll build a FastAPI application that demonstrates the right way to handle this. The Application Structure fastapi-docker-env-demo/

├── main.py # FastAPI application
├── requirements.txt # Dependencies
├── Dockerfile # Production-ready container
├── docker-compose.yml # Base config (production-ready)
├── docker-compose.override.yml # Development overrides
├── .env # Local development variables
└── .env.production.example # Production reference fastapi-docker-env-demo/

├── main.py # FastAPI application
├── requirements.txt # Dependencies
├── Dockerfile # Production-ready container
├── docker-compose.yml # Base config (production-ready)
├── docker-compose.override.yml # Development overrides
├── .env # Local development variables
└── .env.production.example # Production reference Step 1: FastAPI Application with Environment Config main.py: main.py: import os
from fastapi import FastAPI
import uvicorn
from dotenv import load_dotenv

# Load environment variables from .env file if it exists
load_dotenv()

app = FastAPI(
    title="Docker Environment Demo",
    description="Demonstrating Docker environment variable best practices",
    version="1.0.0"
)

# Environment configuration with sensible defaults
class Config:
    # Application settings
    APP_NAME = os.getenv("APP_NAME", "Docker Environment Demo")
    ENVIRONMENT = os.getenv("ENVIRONMENT", "development")
    DEBUG = os.getenv("DEBUG", "false").lower() == "true"
    HOST = os.getenv("HOST", "0.0.0.0")
    PORT = int(os.getenv("PORT", "8000"))
    
    # Database settings
    DATABASE_URL = os.getenv("DATABASE_URL", "sqlite:///./dev.db")
    
    # API settings
    API_KEY = os.getenv("API_KEY", "dev-api-key-12345")
    SECRET_KEY = os.getenv("SECRET_KEY", "dev-secret-key")
    
    # Third-party services
    REDIS_URL = os.getenv("REDIS_URL", "redis://localhost:6379")
    EMAIL_SERVICE_URL = os.getenv("EMAIL_SERVICE_URL", "https://api.dev-email-service.com")
    
    # Feature flags
    ENABLE_CACHING = os.getenv("ENABLE_CACHING", "true").lower() == "true"
    ENABLE_ANALYTICS = os.getenv("ENABLE_ANALYTICS", "false").lower() == "true"

config = Config()

@app.get("/")
async def root():
    """Welcome endpoint with basic app info"""
    return {
        "message": f"Welcome to {config.APP_NAME}!",
        "environment": config.ENVIRONMENT,
        "debug": config.DEBUG,
        "version": "1.0.0"
    }



@app.get("/env")
async def get_environment_variables():
    """Shows all environment variables currently loaded by the app"""
    return {
        "APP_NAME": config.APP_NAME,
        "ENVIRONMENT": config.ENVIRONMENT,
        "DEBUG": config.DEBUG,
        "HOST": config.HOST,
        "PORT": config.PORT,
        "DATABASE_URL": config.DATABASE_URL,
        "API_KEY": config.API_KEY,
        "SECRET_KEY": config.SECRET_KEY,
        "REDIS_URL": config.REDIS_URL,
        "EMAIL_SERVICE_URL": config.EMAIL_SERVICE_URL,
        "ENABLE_CACHING": config.ENABLE_CACHING,
        "ENABLE_ANALYTICS": config.ENABLE_ANALYTICS
    }

if __name__ == "__main__":
    uvicorn.run(
        "main:app",
        host=config.HOST,
        port=config.PORT,
        reload=config.DEBUG,
        log_level="debug" if config.DEBUG else "info"
    ) import os
from fastapi import FastAPI
import uvicorn
from dotenv import load_dotenv

# Load environment variables from .env file if it exists
load_dotenv()

app = FastAPI(
    title="Docker Environment Demo",
    description="Demonstrating Docker environment variable best practices",
    version="1.0.0"
)

# Environment configuration with sensible defaults
class Config:
    # Application settings
    APP_NAME = os.getenv("APP_NAME", "Docker Environment Demo")
    ENVIRONMENT = os.getenv("ENVIRONMENT", "development")
    DEBUG = os.getenv("DEBUG", "false").lower() == "true"
    HOST = os.getenv("HOST", "0.0.0.0")
    PORT = int(os.getenv("PORT", "8000"))
    
    # Database settings
    DATABASE_URL = os.getenv("DATABASE_URL", "sqlite:///./dev.db")
    
    # API settings
    API_KEY = os.getenv("API_KEY", "dev-api-key-12345")
    SECRET_KEY = os.getenv("SECRET_KEY", "dev-secret-key")
    
    # Third-party services
    REDIS_URL = os.getenv("REDIS_URL", "redis://localhost:6379")
    EMAIL_SERVICE_URL = os.getenv("EMAIL_SERVICE_URL", "https://api.dev-email-service.com")
    
    # Feature flags
    ENABLE_CACHING = os.getenv("ENABLE_CACHING", "true").lower() == "true"
    ENABLE_ANALYTICS = os.getenv("ENABLE_ANALYTICS", "false").lower() == "true"

config = Config()

@app.get("/")
async def root():
    """Welcome endpoint with basic app info"""
    return {
        "message": f"Welcome to {config.APP_NAME}!",
        "environment": config.ENVIRONMENT,
        "debug": config.DEBUG,
        "version": "1.0.0"
    }



@app.get("/env")
async def get_environment_variables():
    """Shows all environment variables currently loaded by the app"""
    return {
        "APP_NAME": config.APP_NAME,
        "ENVIRONMENT": config.ENVIRONMENT,
        "DEBUG": config.DEBUG,
        "HOST": config.HOST,
        "PORT": config.PORT,
        "DATABASE_URL": config.DATABASE_URL,
        "API_KEY": config.API_KEY,
        "SECRET_KEY": config.SECRET_KEY,
        "REDIS_URL": config.REDIS_URL,
        "EMAIL_SERVICE_URL": config.EMAIL_SERVICE_URL,
        "ENABLE_CACHING": config.ENABLE_CACHING,
        "ENABLE_ANALYTICS": config.ENABLE_ANALYTICS
    }

if __name__ == "__main__":
    uvicorn.run(
        "main:app",
        host=config.HOST,
        port=config.PORT,
        reload=config.DEBUG,
        log_level="debug" if config.DEBUG else "info"
    ) Step 2: Production-Ready Docker Configuration Dockerfile: Dockerfile: FROM python:3.11-slim

WORKDIR /app

# Install dependencies
COPY requirements.txt .
RUN pip install --no-cache-dir -r requirements.txt

# Copy application
COPY . .

# Security: non-root user
RUN adduser --disabled-password appuser && chown -R appuser /app
USER appuser

EXPOSE 8000

CMD ["python", "main.py"] FROM python:3.11-slim

WORKDIR /app

# Install dependencies
COPY requirements.txt .
RUN pip install --no-cache-dir -r requirements.txt

# Copy application
COPY . .

# Security: non-root user
RUN adduser --disabled-password appuser && chown -R appuser /app
USER appuser

EXPOSE 8000

CMD ["python", "main.py"] docker-compose.yml (Production-ready base): docker-compose.yml version: '3.8'
services:
  fastapi-app:
    build: .
    image: fastapi-env-demo:latest
    container_name: fastapi-env-demo
    ports:
      - "8000:8000"
    environment:
      - PYTHONPATH=/app
    restart: unless-stopped version: '3.8'
services:
  fastapi-app:
    build: .
    image: fastapi-env-demo:latest
    container_name: fastapi-env-demo
    ports:
      - "8000:8000"
    environment:
      - PYTHONPATH=/app
    restart: unless-stopped Step 3: Development Override Configuration docker-compose.override.yml (Development additions): docker-compose.override.yml version: '3.8'

services:
  fastapi-app:
    env_file:
      - .env
    environment:
      # Override for development
      - ENVIRONMENT=development
      - DEBUG=true
    volumes:
      # Enable hot reload in development
      - .:/app
    command: ["uvicorn", "main:app", "--host", "0.0.0.0", "--port", "8000", "--reload"] version: '3.8'

services:
  fastapi-app:
    env_file:
      - .env
    environment:
      # Override for development
      - ENVIRONMENT=development
      - DEBUG=true
    volumes:
      # Enable hot reload in development
      - .:/app
    command: ["uvicorn", "main:app", "--host", "0.0.0.0", "--port", "8000", "--reload"] Step 4: Environment Variable Files .env (Local development): .env # Development environment variables
APP_NAME=Docker Environment Demo
ENVIRONMENT=development
DEBUG=true
HOST=0.0.0.0
PORT=8000

# Database settings
DATABASE_URL=sqlite:///./dev.db

# API settings
API_KEY=dev-api-key-12345
SECRET_KEY=dev-secret-key-for-local-development

# Third-party services
REDIS_URL=redis://localhost:6379
EMAIL_SERVICE_URL=https://api.dev-email-service.com

# Feature flags
ENABLE_CACHING=true
ENABLE_ANALYTICS=false # Development environment variables
APP_NAME=Docker Environment Demo
ENVIRONMENT=development
DEBUG=true
HOST=0.0.0.0
PORT=8000

# Database settings
DATABASE_URL=sqlite:///./dev.db

# API settings
API_KEY=dev-api-key-12345
SECRET_KEY=dev-secret-key-for-local-development

# Third-party services
REDIS_URL=redis://localhost:6379
EMAIL_SERVICE_URL=https://api.dev-email-service.com

# Feature flags
ENABLE_CACHING=true
ENABLE_ANALYTICS=false .env.production.example (Production reference): .env.production.example # Set these on your production server
APP_NAME=My Production API
ENVIRONMENT=production
DEBUG=false
DATABASE_URL=postgresql://user:pass@db:5432/prod
API_KEY=your-production-api-key
SECRET_KEY=your-super-secure-production-secret
REDIS_URL=redis://redis:6379
EMAIL_SERVICE_URL=https://api.your-email-service.com
ENABLE_CACHING=true
ENABLE_ANALYTICS=true # Set these on your production server
APP_NAME=My Production API
ENVIRONMENT=production
DEBUG=false
DATABASE_URL=postgresql://user:pass@db:5432/prod
API_KEY=your-production-api-key
SECRET_KEY=your-super-secure-production-secret
REDIS_URL=redis://redis:6379
EMAIL_SERVICE_URL=https://api.your-email-service.com
ENABLE_CACHING=true
ENABLE_ANALYTICS=true How It Works Local Development Workflow # Simply run this - Docker Compose automatically merges the files 
docker-compose up --build # Simply run this - Docker Compose automatically merges the files 
docker-compose up --build What happens: Loads base docker-compose.yml
Automatically merges docker-compose.override.yml
Loads your .env file via env_file directive
Enables hot reload and debug mode
Mounts source code for live editing Loads base docker-compose.yml docker-compose.yml Automatically merges docker-compose.override.yml docker-compose.override.yml Loads your .env file via env_file directive .env env_file Enables hot reload and debug mode Mounts source code for live editing Production Deployment # Deploy using only the base configuration docker-compose -f 
docker-compose.yml up -d --build # Deploy using only the base configuration docker-compose -f 
docker-compose.yml up -d --build then using .env.production.example file in the production environment.For example we are deploying to Digitalocean app platform that is using docker registry. you should connect to the docker registry, tag you images like the following then push. docker tag <image-name>:<tag> <registry-url>/<reg-name>/<image-name>:<tag>  docker push <registry-url>/<reg-name>/<image-name>:<tag> docker tag <image-name>:<tag> <registry-url>/<reg-name>/<image-name>:<tag>  docker push <registry-url>/<reg-name>/<image-name>:<tag> in Digitalocean app platform, you can bluk load the env variables by going to settings, then in the “App-LevelEnvironment Variables” section choose “Bulk Editor” like here: and here you go, let test now Testing Your Setup The /env endpoint makes it super easy to verify your configuration: /env Development Test curl http://localhost:8000/env curl http://localhost:8000/env Response: Response: Production Test curl http://your-server:8000/env curl http://your-server:8000/env For example you deploy to Digitalocean app platform that is Response: Response: Quick Start Clone the project
Start development: docker-compose up --build
Visit: http://localhost:8000/env to see your configuration Clone the project Clone the project Start development: docker-compose up --build Start development: docker-compose up --build Visit: http://localhost:8000/env to see your configuration Visit: http://localhost:8000/env Conclusion This approach gives you the best of both worlds: Easy local development with automatic .env loading
Clean production deployments that respect server environment variables
Same Docker image works in all environments
Simple testing with the /env endpoint Easy local development with automatic .env loading Easy local development .env Clean production deployments that respect server environment variables Clean production deployments Same Docker image works in all environments Same Docker image Simple testing with the /env endpoint Simple testing /env The key insight: Keep your base docker-compose.yml production-ready, and use override files for development conveniences. Keep your base docker-compose.yml This pattern scales from simple applications to complex microservices and works with any deployment platform. Your development team gets a smooth workflow, and your production deployments stay secure and maintainable. The complete working example is available as a FastAPI application that demonstrates all these concepts in action. The complete working example is available as a FastAPI application that demonstrates all these concepts in action.

Docker Environment Variables: Development vs Production Made Simple

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