diff --git a/.dockerignore b/.dockerignore
new file mode 100644
index 0000000000..3dd7df3840
--- /dev/null
+++ b/.dockerignore
@@ -0,0 +1,29 @@
+# Docker context ignore list
+.azure
+.github
+.git
+.idea
+.vagrant
+AntennaTracker
+Rover
+ArduCopter
+ArduPlane
+ArduSub
+benchmarks
+build
+docs
+libraries
+mk
+modules
+tests
+Tools
+# autotest directories
+test.?
+terrain
+logs
+# mavproxy stuff
+mav.*
+
+# include the setup script and completion
+!Tools/environment_install/install-prereqs-ubuntu.sh
+!Tools/completion
diff --git a/Dockerfile b/Dockerfile
index 7130ae8153..a0620d460f 100644
--- a/Dockerfile
+++ b/Dockerfile
@@ -1,17 +1,19 @@
-FROM ubuntu:16.04
+FROM ubuntu:18.04
 WORKDIR /ardupilot
 
-RUN useradd -U -d /ardupilot ardupilot && \
+RUN useradd -U -m ardupilot && \
     usermod -G users ardupilot
 
 RUN DEBIAN_FRONTEND=noninteractive apt-get update && apt-get install --no-install-recommends -y \
     lsb-release \
     sudo \
-    software-properties-common \
-    python-software-properties
+    software-properties-common
 
+COPY Tools/environment_install/install-prereqs-ubuntu.sh /ardupilot/Tools/environment_install/
+COPY Tools/completion /ardupilot/Tools/completion/
+
+# Create non root user for pip
 ENV USER=ardupilot
-ADD . /ardupilot
 
 RUN echo "ardupilot ALL=(ALL) NOPASSWD:ALL" > /etc/sudoers.d/ardupilot
 RUN chmod 0440 /etc/sudoers.d/ardupilot
@@ -19,11 +21,18 @@ RUN chmod 0440 /etc/sudoers.d/ardupilot
 RUN chown -R ardupilot:ardupilot /ardupilot
 
 USER ardupilot
-RUN bash -c "Tools/environment_install/install-prereqs-ubuntu.sh -y"
-RUN sudo apt-get clean \
+
+ENV SKIP_AP_EXT_ENV=1 SKIP_AP_GRAPHIC_ENV=1 SKIP_AP_COV_ENV=1 SKIP_AP_GIT_CHECK=1
+RUN Tools/environment_install/install-prereqs-ubuntu.sh -y
+
+# add waf alias to ardupilot waf to .bashrc
+RUN echo "alias waf=\"/ardupilot/waf\"" >> ~/.bashrc
+
+# Check that local/bin are in PATH for pip --user installed package
+RUN echo "if [ -d \"\$HOME/.local/bin\" ] ; then\nPATH=\"\$HOME/.local/bin:\$PATH\"\nfi" >> ~/.bashrc
+
+# Cleanup
+RUN DEBIAN_FRONTEND=noninteractive sudo apt-get clean \
     && sudo rm -rf /var/lib/apt/lists/* /tmp/* /var/tmp/*
 
 ENV CCACHE_MAXSIZE=1G
-ENV PATH /usr/lib/ccache:/ardupilot/Tools:${PATH}
-ENV PATH /ardupilot/Tools/autotest:${PATH}
-ENV PATH /ardupilot/.local/bin:$PATH