diff --git a/Dockerfile b/Dockerfile
index 565341fee3..0242be5f68 100644
--- a/Dockerfile
+++ b/Dockerfile
@@ -1,16 +1,32 @@
 FROM docker.io/python:2-alpine3.7
 
-RUN apk add --no-cache --virtual .nacl_deps su-exec build-base libffi-dev zlib-dev libressl-dev libjpeg-turbo-dev linux-headers postgresql-dev libxslt-dev
+RUN apk add --no-cache --virtual .nacl_deps \
+        build-base \
+        libffi-dev \
+        libjpeg-turbo-dev \
+        libressl-dev \
+        libxslt-dev \
+        linux-headers \
+        postgresql-dev \
+        su-exec \
+        zlib-dev
 
 COPY . /synapse
 
 # A wheel cache may be provided in ./cache for faster build
 RUN cd /synapse \
- && pip install --upgrade pip setuptools psycopg2 lxml \
+ && pip install --upgrade \
+        lxml \
+        pip \
+        psycopg2 \
+        setuptools \
  && mkdir -p /synapse/cache \
  && pip install -f /synapse/cache --upgrade --process-dependency-links . \
  && mv /synapse/contrib/docker/start.py /synapse/contrib/docker/conf / \
- && rm -rf setup.py setup.cfg synapse
+ && rm -rf \
+        setup.cfg \
+        setup.py \
+        synapse
 
 VOLUME ["/data"]
 
diff --git a/changelog.d/3543.misc b/changelog.d/3543.misc
new file mode 100644
index 0000000000..d231d17749
--- /dev/null
+++ b/changelog.d/3543.misc
@@ -0,0 +1 @@
+Improve Dockerfile and docker-compose instructions
diff --git a/contrib/docker/README.md b/contrib/docker/README.md
index 61592109cb..562cdaac2b 100644
--- a/contrib/docker/README.md
+++ b/contrib/docker/README.md
@@ -9,13 +9,7 @@ use that server.
 
 ## Build
 
-Build the docker image with the `docker build` command from the root of the synapse repository.
-
-```
-docker build -t docker.io/matrixdotorg/synapse .
-```
-
-The `-t` option sets the image tag. Official images are tagged `matrixdotorg/synapse:<version>` where `<version>` is the same as the release tag in the synapse git repository.
+Build the docker image with the `docker-compose build` command.
 
 You may have a local Python wheel cache available, in which case copy the relevant packages in the ``cache/`` directory at the root of the project.
 
diff --git a/contrib/docker/docker-compose.yml b/contrib/docker/docker-compose.yml
index 0b531949e0..3a8dfbae34 100644
--- a/contrib/docker/docker-compose.yml
+++ b/contrib/docker/docker-compose.yml
@@ -6,6 +6,7 @@ version: '3'
 services:
 
   synapse:
+    build: ../..
     image: docker.io/matrixdotorg/synapse:latest
     # Since snyapse does not retry to connect to the database, restart upon
     # failure