diff --git a/docker/README.md b/docker/README.md
index 474188c5..1dc79dbb 100644
--- a/docker/README.md
+++ b/docker/README.md
@@ -63,8 +63,12 @@ bitcoin into.
 # Init bitcoin network env variable:
 $ export NETWORK="simnet" 
 
+# Create persistent volumes for alice and bob.
+docker volume create simnet_lnd_alice
+docker volume create simnet_lnd_bob
+
 # Run the "Alice" container and log into it:
-$ docker-compose run -d --name alice lnd_btc
+$ docker-compose run -d --name alice --volume simnet_lnd_alice:/root/.lnd lnd_btc
 $ docker exec -i -t alice bash
 
 # Generate a new backward compatible nested p2sh address for Alice:
@@ -90,7 +94,7 @@ Connect `Bob` node to `Alice` node.
 
 ```bash
 # Run "Bob" node and log into it:
-$ docker-compose run -d --name bob lnd_btc
+$ docker-compose run -d --name bob --volume simnet_lnd_bob:/root/.lnd lnd_btc
 $ docker exec -i -t bob bash
 
 # Get the identity pubkey of "Bob" node:
diff --git a/docker/docker-compose.yml b/docker/docker-compose.yml
index fc0971b1..8794f688 100644
--- a/docker/docker-compose.yml
+++ b/docker/docker-compose.yml
@@ -9,8 +9,8 @@ services:
       build:
         context: btcd/
       volumes:
-            - shared:/rpc
-            - bitcoin:/data
+        - shared:/rpc
+        - bitcoin:/data
       environment:
         - RPCUSER
         - RPCPASS
@@ -41,8 +41,8 @@ services:
       build:
         context: ltcd/
       volumes:
-            - shared:/rpc
-            - litecoin:/data
+        - shared:/rpc
+        - litecoin:/data
       environment:
         - RPCUSER
         - RPCPASS
@@ -76,7 +76,8 @@ services:
           - CHAIN
           - DEBUG
         volumes:
-            - shared:/rpc
+          - shared:/rpc
+          - lnd:/root/.lnd
         entrypoint: ["./start-lnd.sh"]
 
     lnd_ltc:
@@ -102,6 +103,11 @@ volumes:
   bitcoin:
     driver: local
 
+  # lnd volume is used for persisting lnd application data and chain state
+  # during container lifecycle.
+  lnd:
+    driver: local
+
   # litecoin volume is needed for maintaining blockchain persistence
   # during ltcd container recreation.
   litecoin:
diff --git a/docker/lnd/start-lnd.sh b/docker/lnd/start-lnd.sh
index d65c145d..1fb8502f 100755
--- a/docker/lnd/start-lnd.sh
+++ b/docker/lnd/start-lnd.sh
@@ -51,7 +51,6 @@ fi
 
 exec lnd \
     --noseedbackup \
-    --logdir="/data" \
     "--$CHAIN.active" \
     "--$CHAIN.$NETWORK" \
     "--$CHAIN.node"="btcd" \