Compose Variable Interpolation

Compose variable interpolation is the process by which Compose substitutes variable references — written as ${VARIABLE_NAME} — within the Compose file itself, sourcing their values from the host's environment or a .env file located alongside the Compose file.

Basic Variable Substitution

A variable reference anywhere within the Compose file is replaced with the corresponding value before Compose actually processes the file's configuration.

services:
  api:
    image: myapi:${APP_VERSION}

export APP_VERSION=2.3.0
docker compose up -d

This results in Compose actually using myapi:2.3.0, with the substitution happening before the configuration is applied.

Using a .env File for Interpolation Values

Rather than relying on variables already set in the host's shell environment, a .env file in the same directory as the Compose file provides default values for interpolation automatically.

APP_VERSION=2.3.0
LOG_LEVEL=debug

services:
  api:
    image: myapi:${APP_VERSION}
    environment:
      - LOG_LEVEL=${LOG_LEVEL}

Why This Differs From the Env File Field on a Service

This .env file convention is distinct from a service's own env_file field — the .env file specifically supports interpolation within the Compose file's own structure, while env_file supplies environment variables directly to a service's runtime container.

services:
  api:
    env_file:
      - .env.api

Providing a Default Value for an Unset Variable

A default can be specified directly within the interpolation syntax, used if the referenced variable isn't otherwise set.

services:
  api:
    image: myapi:${APP_VERSION:-latest}

Why Compose Variable Interpolation Matters

This mechanism allows a single Compose file to flexibly adapt based on external values, supporting different versions, environments, or configurations without needing separate, duplicated Compose files for each variation.