diff --git a/CONTRIBUTING.md b/CONTRIBUTING.md
index 788f9d0bb..0f9c8809d 100644
--- a/CONTRIBUTING.md
+++ b/CONTRIBUTING.md
@@ -78,11 +78,13 @@ Ready to code? Check our [open issues](https://github.com/Merit-Systems/echo/iss
 
 - **Node.js**: 18.0.0 or higher
 - **pnpm**: 10.0.0 or higher
-- **PostgreSQL**: Required for running Echo Control locally
+- **Docker & Docker Compose**: Required for running PostgreSQL locally
 - **Git**: For version control
 
 ### Initial Setup
 
+The fastest way to get started is using the automated setup script:
+
 1. **Fork and clone the repository**
 
    ```bash
@@ -90,38 +92,52 @@ Ready to code? Check our [open issues](https://github.com/Merit-Systems/echo/iss
    cd echo
    ```
 
-2. **Install dependencies**
+2. **Run the setup script** (recommended)
 
    ```bash
-   pnpm install
+   bash scripts/setup-local.sh
    ```
 
-3. **Set up environment variables**
+   This script will:
+   - Check all prerequisites
+   - Install dependencies
+   - Set up environment variables
+   - Start PostgreSQL in Docker
+   - Run database migrations
+   - Provide next steps
+
+3. **Start development servers**
 
    ```bash
-   pnpm local-setup
+   pnpm dev
    ```
 
-4. **Set up the database** (for Echo Control)
+   This starts both Echo Control (localhost:3000) and Echo Server simultaneously.
+
+   Visit http://localhost:3000 to see Echo running!
+
+### Manual Setup (Alternative)
+
+If you prefer to set up manually or the script encounters issues:
 
+1. **Install dependencies**
    ```bash
-   cd packages/app/control
-   ./setup-db.sh
-   # Or manually:
-   npx prisma generate
-   npx prisma db push
+   pnpm install
    ```
 
-5. **Start development servers**
-
-   From the root directory:
+2. **Set up Echo Control**
+   ```bash
+   cd packages/app/control
+   pnpm local-setup
+   # This generates .env file, AUTH_SECRET, and runs migrations
+   cd ../..
+   ```
 
+3. **Start development**
    ```bash
    pnpm dev
    ```
 
-   This starts both Echo Control (localhost:3000) and Echo Server simultaneously.
-
 ## Development Workflow
 
 ### Creating a Branch
diff --git a/README.md b/README.md
index bba3874ae..188565552 100644
--- a/README.md
+++ b/README.md
@@ -118,7 +118,101 @@ Or run `npx echo-start my-app` to choose interactively.
 
 # Development
 
-Fill out `packages/app/control/.env` and `packages/app/server/.env`. Then...
+## Prerequisites
 
-- `pnpm i`
-- `pnpm dev`
+Before starting, ensure you have:
+
+- **Node.js 18+** - Download from [nodejs.org](https://nodejs.org/)
+- **pnpm 10+** - Install with `npm install -g pnpm`
+- **Docker & Docker Compose** - Download from [docker.com](https://www.docker.com/products/docker-desktop)
+
+## Quick Start
+
+### Automated Setup (Recommended)
+
+```bash
+# Run the setup script (handles dependencies, database, and configuration)
+bash scripts/setup-local.sh
+```
+
+Then start development:
+
+```bash
+pnpm dev
+```
+
+Visit [http://localhost:3000](http://localhost:3000) - you should see Echo running!
+
+### Manual Setup
+
+If you prefer manual setup or the script fails:
+
+1. **Install dependencies**:
+   ```bash
+   pnpm install
+   ```
+
+2. **Set up Echo Control (frontend/API)**:
+   ```bash
+   cd packages/app/control
+   cp .env.example .env
+   pnpm local-setup
+   ```
+
+3. **Start the development servers**:
+   ```bash
+   cd ../..  # Back to root
+   pnpm dev
+   ```
+
+## Configuration
+
+### Required Environment Variables
+
+**Echo Control** (`packages/app/control/.env`):
+- `AUTH_SECRET` - Generated automatically by the setup script
+- `DATABASE_URL` - PostgreSQL connection string (set to `postgresql://echo_user:echo_password@localhost:5469/echo_control_v2?schema=public`)
+
+**Echo Server** (`packages/app/server/.env`):
+- `DATABASE_URL` - PostgreSQL connection string (set to `postgresql://echo_user:echo_password@localhost:5469/echo_control_v2?schema=public`)
+- `ECHO_CONTROL_BASE_URL` - Set to `http://localhost:3000/`
+
+For local development, most other variables (Stripe, OAuth providers, API keys) are optional and can use mock values.
+
+## Database Management
+
+PostgreSQL runs in Docker. Useful commands:
+
+```bash
+# View database in Prisma Studio
+pnpm -C packages/app/control prisma studio
+
+# View database logs
+docker compose -f packages/app/control/docker-local-db.yml logs postgres
+
+# Stop the database
+docker compose -f packages/app/control/docker-local-db.yml down
+
+# Reset database (WARNING: deletes all data)
+pnpm -C packages/app/control prisma migrate reset
+```
+
+## Troubleshooting
+
+### Docker Connection Error
+Make sure Docker Desktop is running. On Mac/Windows, launch Docker Desktop. On Linux, ensure the Docker daemon is running.
+
+### Port Already in Use
+If port 3000 or 3070 is already in use:
+- Find the process: `lsof -i :3000`
+- Kill it: `kill -9 <PID>`
+- Or change the port in the `.env` files
+
+### Database Connection Failed
+1. Check Docker is running: `docker ps`
+2. Check PostgreSQL is running: `docker ps | grep postgres`
+3. View logs: `docker logs echo-control-postgres-v2`
+4. Reset: `docker compose -f packages/app/control/docker-local-db.yml down -v`
+
+### pnpm command not found
+Install pnpm globally: `npm install -g pnpm@10.11.0`
diff --git a/packages/app/control/README.md b/packages/app/control/README.md
index 99d3dce93..0db8b4257 100644
--- a/packages/app/control/README.md
+++ b/packages/app/control/README.md
@@ -46,44 +46,47 @@ A comprehensive Next.js application for managing Echo applications, API keys, an
 ### Prerequisites
 
 - Node.js 18+
-- PostgreSQL database
-- pnpm
+- Docker & Docker Compose (PostgreSQL runs in Docker)
+- pnpm 10+
 
-### Installation
+### Quick Start (From Root)
 
-1. **Clone and navigate to the project**:
+The easiest way is to use the root setup script:
 
-   ```bash
-   cd echo-control
-   ```
-
-2. **Install dependencies**:
+```bash
+bash scripts/setup-local.sh
+```
 
-   ```bash
-   pnpm install
-   ```
+Then:
+```bash
+pnpm dev
+```
 
-3. **Create .env file**:
+### Manual Setup (From echo-control directory)
 
+1. **Navigate to this directory**:
    ```bash
-   # Generate .env file
-   pnpm local-setup
+   cd packages/app/control
    ```
 
-4. **Run database migrations**:
-
+2. **Create .env file**:
    ```bash
-   npx prisma generate
-   npx prisma db push
+   cp .env.example .env
+   pnpm local-setup
    ```
 
-5. **Start the development server**:
+   This script will:
+   - Generate an AUTH_SECRET if not present
+   - Set database connection string
+   - Start PostgreSQL in Docker
+   - Run Prisma migrations
 
+3. **Start the development server**:
    ```bash
-   pnpm run dev
+   pnpm dev
    ```
 
-6. **Open the application**:
+4. **Open the application**:
    Visit [http://localhost:3000](http://localhost:3000)
 
 ## Features Overview
diff --git a/packages/app/control/scripts/setup.sh b/packages/app/control/scripts/setup.sh
index c7e3e89b7..7d0a8e83a 100755
--- a/packages/app/control/scripts/setup.sh
+++ b/packages/app/control/scripts/setup.sh
@@ -1,20 +1,86 @@
 #!/bin/bash
 
-# Check if .env file exists and if AUTH_SECRET is already set
-if [ -f .env ] && grep -q "^AUTH_SECRET=" .env; then
-    echo "AUTH_SECRET already exists in .env file. Skipping generation."
-else
+set -e
+
+echo "Setting up Echo Control local development..."
+echo ""
+
+# Create .env file if it doesn't exist
+if [ ! -f .env ]; then
+    echo "Creating .env file from template..."
+    cp .env.example .env
+fi
+
+# Generate AUTH_SECRET if not present
+if ! grep -q "^AUTH_SECRET=" .env || grep -q "^AUTH_SECRET=$" .env; then
     echo "Generating AUTH_SECRET..."
-    AUTH_SECRET=$(node -e "console.log('AUTH_SECRET=' + require('crypto').randomBytes(32).toString('base64'))")
-    echo $AUTH_SECRET
-    echo $AUTH_SECRET >> .env
+    AUTH_SECRET=$(node -e "console.log(require('crypto').randomBytes(32).toString('base64'))")
+    # Use grep and mv to safely update AUTH_SECRET, avoiding sed issues with special chars and improving portability.
+    grep -v "^AUTH_SECRET=" .env > .env.tmp
+    echo "AUTH_SECRET=$AUTH_SECRET" >> .env.tmp
+    mv .env.tmp .env
+    echo "OK: AUTH_SECRET generated"
+fi
+
+# Ensure DATABASE_URL is set for local dev
+if ! grep -q "^DATABASE_URL=" .env || grep -q "^DATABASE_URL=$" .env; then
+    echo "Setting DATABASE_URL..."
+    DB_URL="postgresql://echo_user:echo_password@localhost:5469/echo_control_v2?schema=public"
+    grep -v "^DATABASE_URL=" .env > .env.tmp
+    echo "DATABASE_URL=\"$DB_URL\"" >> .env.tmp
+    mv .env.tmp .env
+    echo "OK: DATABASE_URL configured"
 fi
 
-# Check if DATABASE_URL is already set
-if [ -f .env ] && grep -q "^DATABASE_URL=" .env; then
-    echo "DATABASE_URL already exists in .env file. Skipping."
-else
-    echo "DATABASE_URL='postgresql://echo_user:echo_password@localhost:5469/echo_control_v2?schema=public'" >> .env
+# Ensure ECHO_CONTROL_APP_BASE_URL is set
+if ! grep -q "^ECHO_CONTROL_APP_BASE_URL=" .env || grep -q "^ECHO_CONTROL_APP_BASE_URL=$" .env; then
+    echo "Setting ECHO_CONTROL_APP_BASE_URL..."
+    grep -v "^ECHO_CONTROL_APP_BASE_URL=" .env > .env.tmp
+    echo "ECHO_CONTROL_APP_BASE_URL=http://localhost:3000" >> .env.tmp
+    mv .env.tmp .env
 fi
 
-echo "Setup complete! You can now run 'pnpm dev' to start the development server."
+echo ""
+echo "Starting PostgreSQL Docker container..."
+
+# Start PostgreSQL container
+docker compose -f docker-local-db.yml up -d postgres
+
+# Wait for PostgreSQL to be ready with health check
+echo "Waiting for PostgreSQL to be ready..."
+max_attempts=30
+attempt=0
+while [ $attempt -lt $max_attempts ]; do
+    if docker compose -f docker-local-db.yml exec -T postgres pg_isready -U echo_user -d echo_control_v2 &> /dev/null; then
+        echo "OK: PostgreSQL is ready"
+        break
+    fi
+    attempt=$((attempt + 1))
+    if [ $((attempt % 5)) -eq 0 ]; then
+        echo "  Waiting... ($attempt/$max_attempts)"
+    fi
+    sleep 1
+done
+
+if [ $attempt -eq $max_attempts ]; then
+    echo "ERROR: PostgreSQL failed to start after 30 seconds"
+    echo "   Check Docker logs: docker compose -f docker-local-db.yml logs postgres"
+    exit 1
+fi
+
+echo ""
+echo "Running Prisma migrations..."
+pnpm prisma generate
+pnpm prisma db push --skip-generate
+
+echo ""
+echo "Setup complete!"
+echo ""
+echo "Next steps:"
+echo "   1. Return to the root directory: cd ../.."
+echo "   2. Start development: pnpm dev"
+echo "   3. Open http://localhost:3000 in your browser"
+echo ""
+echo "Useful commands:"
+echo "   pnpm prisma studio          # View the database GUI"
+echo "   docker logs <container>      # View Docker logs"
diff --git a/packages/app/server/setup-env.sh b/packages/app/server/setup-env.sh
new file mode 100755
index 000000000..6527c8c7d
--- /dev/null
+++ b/packages/app/server/setup-env.sh
@@ -0,0 +1,17 @@
+#!/bin/bash
+
+# Create .env file if it doesn't exist
+if [ ! -f .env ]; then
+    echo "Creating .env file for echo-server..."
+    cp .env.example .env
+
+    echo "OK: Created .env file"
+    echo ""
+    echo "NOTE: The following environment variables need to be configured:"
+    echo "   - ECHO_API_KEY: API key from echo-control (get from dashboard after setup)"
+    echo "   - Provider keys (OPENAI_API_KEY, ANTHROPIC_API_KEY, etc.)"
+    echo ""
+    echo "See the .env file for more information."
+else
+    echo "INFO: .env file already exists, skipping creation"
+fi
\ No newline at end of file
diff --git a/scripts/setup-local.sh b/scripts/setup-local.sh
new file mode 100755
index 000000000..5d059ff64
--- /dev/null
+++ b/scripts/setup-local.sh
@@ -0,0 +1,126 @@
+#!/bin/bash
+
+set -e
+
+echo "Welcome to Echo! Let's set up your local development environment."
+echo ""
+
+# Check prerequisites
+echo "Checking prerequisites..."
+echo ""
+
+# Check Node.js
+if ! command -v node &> /dev/null; then
+    echo "ERROR: Node.js is not installed. Please install Node.js 18+ from https://nodejs.org/"
+    exit 1
+fi
+
+NODE_VERSION=$(node -v | cut -d'v' -f2 | cut -d'.' -f1)
+if [ "$NODE_VERSION" -lt 18 ]; then
+    echo "ERROR: Node.js version 18+ is required. You have version $(node -v)"
+    exit 1
+fi
+echo "OK: Node.js $(node -v) detected"
+
+# Check pnpm
+if ! command -v pnpm &> /dev/null; then
+    echo "ERROR: pnpm is not installed. Installing pnpm..."
+    npm install -g pnpm
+fi
+echo "OK: pnpm $(pnpm -v) detected"
+
+# Check Docker
+if ! command -v docker &> /dev/null; then
+    echo "ERROR: Docker is not installed. Please install Docker from https://www.docker.com/products/docker-desktop"
+    exit 1
+fi
+echo "OK: Docker detected"
+
+# Check Docker Compose
+if ! docker compose version &> /dev/null; then
+    echo "ERROR: Docker Compose is not installed. Please install Docker Compose from https://docs.docker.com/compose/install/"
+    exit 1
+fi
+echo "OK: Docker Compose detected"
+
+echo ""
+echo "Installing dependencies..."
+pnpm install
+
+echo ""
+echo "Setting up databases..."
+
+# Setup control package database
+echo "Setting up Echo Control database..."
+cd packages/app/control
+
+# Create .env file if it doesn't exist
+if [ ! -f .env ]; then
+    echo "Creating .env file for echo-control..."
+    cp .env.example .env
+fi
+
+# Generate AUTH_SECRET if not present
+if ! grep -q "^AUTH_SECRET=" .env || grep -q "^AUTH_SECRET=$" .env; then
+    echo "Generating AUTH_SECRET..."
+    AUTH_SECRET=$(node -e "console.log(require('crypto').randomBytes(32).toString('base64'))")
+    grep -v "^AUTH_SECRET=" .env > .env.tmp
+    echo "AUTH_SECRET=$AUTH_SECRET" >> .env.tmp
+    mv .env.tmp .env
+    echo "OK: AUTH_SECRET generated"
+fi
+
+# Ensure DATABASE_URL is set for local dev
+if ! grep -q "^DATABASE_URL=" .env || grep -q "^DATABASE_URL=$" .env; then
+    echo "Setting DATABASE_URL..."
+    DB_URL="postgresql://echo_user:echo_password@localhost:5469/echo_control_v2?schema=public"
+    grep -v "^DATABASE_URL=" .env > .env.tmp
+    echo "DATABASE_URL=\"$DB_URL\"" >> .env.tmp
+    mv .env.tmp .env
+    echo "OK: DATABASE_URL configured"
+fi
+
+# Start PostgreSQL container
+echo "Starting PostgreSQL container..."
+docker compose -f docker-local-db.yml up -d postgres
+
+# Wait for PostgreSQL to be ready
+echo "Waiting for PostgreSQL to be ready..."
+max_attempts=30
+attempt=0
+while [ $attempt -lt $max_attempts ]; do
+    if docker compose -f docker-local-db.yml exec -T postgres pg_isready -U echo_user -d echo_control_v2 &> /dev/null; then
+        echo "OK: PostgreSQL is ready"
+        break
+    fi
+    attempt=$((attempt + 1))
+    sleep 1
+done
+
+if [ $attempt -eq $max_attempts ]; then
+    echo "ERROR: PostgreSQL failed to start. Please check Docker logs:"
+    echo "   docker compose -f docker-local-db.yml logs postgres"
+    exit 1
+fi
+
+# Run Prisma migrations
+echo "Setting up database schema..."
+pnpm prisma generate
+pnpm prisma db push --skip-generate
+
+cd ../..
+
+echo ""
+echo "Setup complete!"
+echo ""
+echo "You're ready to go! Start development with:"
+echo ""
+echo "   pnpm dev"
+echo ""
+echo "Then open http://localhost:3000 in your browser."
+echo ""
+echo "Useful commands:"
+echo "   pnpm dev              - Start both control and server"
+echo "   pnpm -C packages/app/control prisma studio  - View database GUI"
+echo "   docker compose -f packages/app/control/docker-local-db.yml logs postgres  - View database logs"
+echo ""