diff --git a/.gitignore b/.gitignore
index 8ace5268a8f0f565480fa8a19fb481f3c373d19f..02eaabaf4e56d2dc411199f3aeba6045faa5767a 100644
--- a/.gitignore
+++ b/.gitignore
@@ -12,7 +12,7 @@
 /build
 
 # local environment
-/local.env
+/frontend/local.env
 
 # misc
 .DS_Store
diff --git a/README.md b/README.md
index 93e2f2bd967c9ea8905e6c14a597928723c5df43..58babdfcf403cca5c3e8aa89d18fa9c67929af6e 100644
--- a/README.md
+++ b/README.md
@@ -86,7 +86,7 @@ into Stackspin applications that run on the cluster.
 #### 2. Environment for frontend
 
 The frontend needs to know where the backend API and hydra can be reached. To
-configure it, create a `local.env` file in the project root directory:
+configure it, create a `local.env` file in the `frontend` directory:
 
     cp local.env.example local.env
 
diff --git a/docker-compose.yml b/docker-compose.yml
index 3efeb435df6e0fef94c2ebff232fc1859e294043..ee050b186438ed3591b0cb121e67e762ea849cb4 100644
--- a/docker-compose.yml
+++ b/docker-compose.yml
@@ -4,7 +4,7 @@ services:
     build:
       context: ./frontend
     working_dir: "/home/node/app"
-    env_file: local.env
+    env_file: ./frontend/local.env
     ports:
       - "3000:3000"
     # command: "yarn start"
diff --git a/local.env.example b/frontend/local.env.example
similarity index 100%
rename from local.env.example
rename to frontend/local.env.example