diff --git a/docs/4_work_plan/1.1-development-environment-setup.md b/docs/4_work_plan/1.1-development-environment-setup.md
index 1e877e7..15aa506 100644
--- a/docs/4_work_plan/1.1-development-environment-setup.md
+++ b/docs/4_work_plan/1.1-development-environment-setup.md
@@ -678,7 +678,7 @@ scrape_configs:
 ```bash
 # Database
 POSTGRES_USER=knowfoolery
-POSTGRES_PASSWORD=devpassword
+POSTGRES_PASSWORD=knowfoolery
 POSTGRES_HOST=localhost
 POSTGRES_PORT=5432
 POSTGRES_DB=knowfoolery
diff --git a/infrastructure/dev/docker-compose.yml b/infrastructure/dev/docker-compose.yml
new file mode 100644
index 0000000..cfa41c8
--- /dev/null
+++ b/infrastructure/dev/docker-compose.yml
@@ -0,0 +1,158 @@
+services:
+  # PostgreSQL Database
+  postgres:
+    image: postgres:15-alpine
+    container_name: knowfoolery-postgres
+    env_file:
+      - .env
+    environment:
+      POSTGRES_USER: ${POSTGRES_USER}
+      POSTGRES_PASSWORD: ${POSTGRES_PASSWORD}
+      POSTGRES_DB: ${POSTGRES_DB}
+    ports:
+      - "${POSTGRES_PORT}:5432"
+    volumes:
+      - postgres_data:/var/lib/postgresql/data
+      - ./init-scripts:/docker-entrypoint-initdb.d
+    healthcheck:
+      test: ["CMD-SHELL", "pg_isready -U ${POSTGRES_USER} -d ${POSTGRES_DB}"]
+      interval: 10s
+      timeout: 5s
+      retries: 5
+    networks:
+      - knowfoolery-network
+
+  # Redis Cache
+  redis:
+    image: redis:7-alpine
+    container_name: knowfoolery-redis
+    env_file:
+      - .env
+    ports:
+      - "${REDIS_PORT}:6379"
+    volumes:
+      - redis_data:/data
+    command: redis-server --appendonly yes
+    healthcheck:
+      test: ["CMD", "redis-cli", "ping"]
+      interval: 10s
+      timeout: 5s
+      retries: 5
+    networks:
+      - knowfoolery-network
+
+  # Zitadel Authentication (optional for initial setup)
+  zitadel:
+    image: ghcr.io/zitadel/zitadel:latest
+    container_name: knowfoolery-zitadel
+    command: start-from-init --masterkeyFromEnv --tlsMode disabled
+    env_file:
+      - .env
+    environment:
+      ZITADEL_MASTERKEY: "MasterkeyNeedsToHave32Characters"
+      ZITADEL_DATABASE_COCKROACH_HOST: crdb
+      ZITADEL_EXTERNALSECURE: false
+      ZITADEL_FIRSTINSTANCE_ORG_NAME: "KnowFoolery"
+      ZITADEL_FIRSTINSTANCE_ORG_HUMAN_USERNAME: "admin"
+      ZITADEL_FIRSTINSTANCE_ORG_HUMAN_PASSWORD: "AdminPassword123!"
+    ports:
+      - "${ZITADEL_PORT}:8080"
+    depends_on:
+      crdb:
+        condition: service_healthy
+    networks:
+      - knowfoolery-network
+    profiles:
+      - auth
+
+  # CockroachDB for Zitadel
+  crdb:
+    image: cockroachdb/cockroach:latest
+    container_name: knowfoolery-crdb
+    command: start-single-node --insecure --http-addr :9090
+    env_file:
+      - .env
+    ports:
+      - "${CRDB_PORT}:26257"
+      - "${CRDB_HTTP_PORT}:9090"
+    volumes:
+      - crdb_data:/cockroach/cockroach-data
+    healthcheck:
+      test: ["CMD", "curl", "-f", "http://localhost:9090/health?ready=1"]
+      interval: 10s
+      timeout: 5s
+      retries: 10
+    networks:
+      - knowfoolery-network
+    profiles:
+      - auth
+
+  # Prometheus Metrics
+  prometheus:
+    image: prom/prometheus:latest
+    container_name: knowfoolery-prometheus
+    env_file:
+      - .env
+    ports:
+      - "${PROMETHEUS_PORT}:9090"
+    volumes:
+      - ./prometheus/prometheus.yml:/etc/prometheus/prometheus.yml
+      - prometheus_data:/prometheus
+    command:
+      - '--config.file=/etc/prometheus/prometheus.yml'
+      - '--storage.tsdb.path=/prometheus'
+      - '--web.enable-lifecycle'
+    networks:
+      - knowfoolery-network
+    profiles:
+      - observability
+
+  # Grafana Dashboards
+  grafana:
+    image: grafana/grafana:latest
+    container_name: knowfoolery-grafana
+    env_file:
+      - .env
+    ports:
+      - "${GRAFANA_PORT}:3000"
+    environment:
+      GF_SECURITY_ADMIN_USER: admin
+      GF_SECURITY_ADMIN_PASSWORD: admin
+      GF_USERS_ALLOW_SIGN_UP: false
+    volumes:
+      - grafana_data:/var/lib/grafana
+      - ./grafana/provisioning:/etc/grafana/provisioning
+    depends_on:
+      - prometheus
+    networks:
+      - knowfoolery-network
+    profiles:
+      - observability
+
+  # Jaeger Tracing
+  jaeger:
+    image: jaegertracing/all-in-one:latest
+    container_name: knowfoolery-jaeger
+    env_file:
+      - .env
+    ports:
+      - "${JAEGER_UI_PORT}:16686"  # UI
+      - "${JAEGER_COLLECTOR_PORT}:14268"  # Collector HTTP
+      - "${JAEGER_AGENT_PORT}:6831/udp"  # Agent
+    environment:
+      COLLECTOR_ZIPKIN_HOST_PORT: ":9411"
+    networks:
+      - knowfoolery-network
+    profiles:
+      - observability
+
+volumes:
+  postgres_data:
+  redis_data:
+  crdb_data:
+  prometheus_data:
+  grafana_data:
+
+networks:
+  knowfoolery-network:
+    driver: bridge
diff --git a/infrastructure/dev/init-scripts/01-create-databases.sql b/infrastructure/dev/init-scripts/01-create-databases.sql
new file mode 100644
index 0000000..f5b782c
--- /dev/null
+++ b/infrastructure/dev/init-scripts/01-create-databases.sql
@@ -0,0 +1,18 @@
+-- Create separate databases for each service
+SELECT 'CREATE DATABASE game_sessions'
+WHERE NOT EXISTS (SELECT FROM pg_database WHERE datname = 'game_sessions')\gexec
+SELECT 'CREATE DATABASE questions'
+WHERE NOT EXISTS (SELECT FROM pg_database WHERE datname = 'questions')\gexec
+SELECT 'CREATE DATABASE users'
+WHERE NOT EXISTS (SELECT FROM pg_database WHERE datname = 'users')\gexec
+SELECT 'CREATE DATABASE leaderboards'
+WHERE NOT EXISTS (SELECT FROM pg_database WHERE datname = 'leaderboards')\gexec
+SELECT 'CREATE DATABASE admin'
+WHERE NOT EXISTS (SELECT FROM pg_database WHERE datname = 'admin')\gexec
+
+-- Grant privileges
+GRANT ALL PRIVILEGES ON DATABASE game_sessions TO knowfoolery;
+GRANT ALL PRIVILEGES ON DATABASE questions TO knowfoolery;
+GRANT ALL PRIVILEGES ON DATABASE users TO knowfoolery;
+GRANT ALL PRIVILEGES ON DATABASE leaderboards TO knowfoolery;
+GRANT ALL PRIVILEGES ON DATABASE admin TO knowfoolery;
diff --git a/infrastructure/dev/prometheus/prometheus.yml b/infrastructure/dev/prometheus/prometheus.yml
new file mode 100644
index 0000000..0382d50
--- /dev/null
+++ b/infrastructure/dev/prometheus/prometheus.yml
@@ -0,0 +1,33 @@
+global:
+  scrape_interval: 15s
+  evaluation_interval: 15s
+
+scrape_configs:
+  - job_name: 'prometheus'
+    static_configs:
+      - targets: ['localhost:9090']
+
+  - job_name: 'game-session-service'
+    static_configs:
+      - targets: ['host.docker.internal:8080']
+    metrics_path: /metrics
+
+  - job_name: 'question-bank-service'
+    static_configs:
+      - targets: ['host.docker.internal:8081']
+    metrics_path: /metrics
+
+  - job_name: 'user-service'
+    static_configs:
+      - targets: ['host.docker.internal:8082']
+    metrics_path: /metrics
+
+  - job_name: 'leaderboard-service'
+    static_configs:
+      - targets: ['host.docker.internal:8083']
+    metrics_path: /metrics
+
+  - job_name: 'gateway-service'
+    static_configs:
+      - targets: ['host.docker.internal:8086']
+    metrics_path: /metrics