diff --git a/package.json b/package.json
index d75c91baa..92c4f1330 100644
--- a/package.json
+++ b/package.json
@@ -1,17 +1,6 @@
 {
   "scripts": {
-    "vm:provision": "multipass launch --name umbrel-dev --cpus 4 --memory 8G --disk 50G 22.04 && npm run vm:stop && multipass mount --type native $PWD umbrel-dev:/opt/umbrel-mount && multipass exec umbrel-dev -- /opt/umbrel-mount/scripts/vm provision",
-    "vm:shell": "multipass shell umbrel-dev",
-    "vm:exec": "multipass exec --working-directory /home/ubuntu umbrel-dev --",
-    "vm:logs": "multipass exec umbrel-dev -- journalctl --unit umbreld-production --unit umbreld --unit ui --follow --lines 100 --output cat",
-    "vm:enable-development": "multipass exec umbrel-dev -- /opt/umbrel-mount/scripts/vm enable-development",
-    "vm:enable-production": "multipass exec umbrel-dev -- /opt/umbrel-mount/scripts/vm enable-production",
-    "vm:install-deps": "multipass exec umbrel-dev -- /opt/umbrel-mount/scripts/vm install-deps",
-    "vm:trpc": "npm run --silent vm:exec -- UMBREL_DATA_DIR=./data UMBREL_TRPC_ENDPOINT=http://localhost/trpc npm --prefix /home/ubuntu/umbrel/packages/umbreld run start -- client",
-    "vm:start": "multipass start umbrel-dev",
-    "vm:stop": "multipass stop umbrel-dev",
-    "vm:restart": "multipass restart umbrel-dev",
-    "vm:destroy": "multipass delete umbrel-dev && multipass purge",
-    "vm:remount": "multipass mount . umbrel-dev:/opt/umbrel-mount"
+    "dev": "./scripts/umbrel-dev",
+    "dev:help": "npm run dev help"
   }
 }
diff --git a/packages/umbreld/package.json b/packages/umbreld/package.json
index be32d0bbb..f3c55291e 100644
--- a/packages/umbreld/package.json
+++ b/packages/umbreld/package.json
@@ -14,7 +14,6 @@
 	"private": true,
 	"scripts": {
 		"start": "./source/cli.ts",
-		"start:vm": "sudo FORCE_COLOR=1 npm run start -- --data-directory ./data --port 80 --log-level verbose",
 		"client": "UMBREL_DATA_DIR=./data UMBREL_TRPC_ENDPOINT=http://localhost:3001/trpc npm run start -- client",
 		"format": "prettier --write .",
 		"format:check": "prettier --check .",
@@ -26,9 +25,8 @@
 		"test:integration": "npm run test -- integration",
 		"test:coverage": "open ./coverage/index.html",
 		"test-everything": "npm run format && npm run test -- --run && npm run lint",
-		"watch": "NODE_ENV=development nodemon --ext js,json,ts --watch source --exec npm run",
-		"dev": "UMBREL_UI_PROXY=http://localhost:3000 npm run watch -- start -- -- --data-directory ./data --port 3001 --log-level verbose",
-		"dev:vm": "sudo FORCE_COLOR=1 npm run dev -- --port 80",
+		"watch": "NODE_ENV=development nodemon --legacy-watch --ext js,json,ts --watch source --exec npm run",
+		"dev": "FORCE_COLOR=1 UMBREL_UI_PROXY=http://localhost:3000 npm run watch -- start -- -- --data-directory /home/umbrel/umbrel --log-level verbose",
 		"build": "tsx scripts/build.ts",
 		"prepare-release": "tsx scripts/prepare-release.ts",
 		"timestamp-release": "ots-cli.js stamp release/SHA256SUMS",
diff --git a/packages/umbreld/source/modules/cli-client.ts b/packages/umbreld/source/modules/cli-client.ts
index d02e52b53..5ced5f183 100644
--- a/packages/umbreld/source/modules/cli-client.ts
+++ b/packages/umbreld/source/modules/cli-client.ts
@@ -1,5 +1,4 @@
 import process from 'node:process'
-import os from 'node:os'
 
 import {createTRPCProxyClient, httpLink} from '@trpc/client'
 import fse from 'fs-extra'
@@ -9,7 +8,7 @@ import * as jwt from './jwt.js'
 import type {AppRouter} from './server/trpc/index.js'
 
 // TODO: Maybe just read the endpoint from the data dir
-const dataDir = process.env.UMBREL_DATA_DIR ?? `${os.homedir()}/umbrel`
+const dataDir = process.env.UMBREL_DATA_DIR ?? '/home/umbrel/umbrel'
 const trpcEndpoint = process.env.UMBREL_TRPC_ENDPOINT ?? `http://localhost/trpc`
 
 async function signJwt() {
diff --git a/packages/umbreld/umbreld b/packages/umbreld/umbreld
index aaa025b0d..44c1551b1 100755
--- a/packages/umbreld/umbreld
+++ b/packages/umbreld/umbreld
@@ -3,6 +3,15 @@
 # We need to add this shim as the main umbreld entrypoint so we can sets up the environmnet we need
 # like adding node_modules/.bin to the PATH so we have access to tsx.
 
+
+# Hook to run development mode
+if [[ -d "/umbrel-dev" ]]
+then
+    echo "Running in development mode"
+    cd /umbrel-dev
+    exec npm run dev container-init
+fi
+
 # Find the project directory and follow symlinks if necessary
 project_directory="$(dirname $(readlink -f "${BASH_SOURCE[0]}"))"
 
diff --git a/scripts/umbrel-dev b/scripts/umbrel-dev
new file mode 100755
index 000000000..baf5d1eb0
--- /dev/null
+++ b/scripts/umbrel-dev
@@ -0,0 +1,296 @@
+#!/usr/bin/env bash
+set -euo pipefail
+
+# The instance id is used to namespace the dev environment to allow for multiple instances to run
+# without conflicts. e.g:
+#   npm run dev start
+#   UMBREL_DEV_INSTANCE='apps' npm run dev start
+#
+# Will spin up two separate umbrel-dev instances accessible at:
+#   http://umbrel-dev.local
+#   http://umbrel-dev-apps.local
+INSTANCE_ID_PREFIX="umbrel-dev"
+INSTANCE_ID="${INSTANCE_ID_PREFIX}${UMBREL_DEV_INSTANCE:+-$UMBREL_DEV_INSTANCE}"
+
+show_help() {
+  cat << EOF
+umbrel-dev
+
+Automatically initialize and manage an umbrelOS development environment.
+
+Usage: npm run dev <command> [-- <args>]
+
+Commands:
+    help                      Show this help message
+    start                     Either start an existing dev environment or create and start a new one
+    logs                      Stream umbreld logs
+    shell                     Get a shell inside the running dev environment
+    exec -- <command>         Execute a command inside the running dev environment
+    client -- <rpc> [<args>]  Query the umbreld RPC server via a CLI client
+    rebuild                   Rebuild the operating system image from source and reboot the dev environment into it
+    restart                   Restart the dev environment
+    stop                      Stop the dev environment
+    reset                     Reset the dev environment to a fresh state
+    destroy                   Destroy the dev environment
+
+Environment Variables:
+    UMBREL_DEV_INSTANCE       The instance id of the dev environment. Allows running multiple instances of
+                              umbrel-dev in different namespaces.
+
+Note: umbrel-dev requires a Docker environment that exposes container IPs to the host. This is how Docker
+natively works on Linux and can be done with OrbStack on macOS. On Windows this should work with WSL 2.
+
+EOF
+}
+
+build_os_image() {
+  docker buildx build --load --file packages/os/umbrelos.Dockerfile --tag "${INSTANCE_ID}" .
+}
+
+create_instance() {
+  # --privileged is needed for systemd to work inside the container.
+  #
+  # We mount a named volume namespaced to the instance id at /data to immitate
+  # the data partition of a physical install.
+  #
+  # We mount the monorepo inside the container at /umbrel-dev as readonly. We
+  # setup a writeable fs overlay later to allow the container to install dependencies
+  # without modifying the hosts source code dir.
+  #
+  # --label "dev.orbstack.http-port=80" stops OrbStack from trying to guess which port
+  # we're trying to expose which causes some weirdness since it often gets it wrong.
+  #
+  # --label "dev.orbstack.domains=${INSTANCE_ID}.local" makes the instance accessble at
+  # umbrel-dev.local on OrbStack installs.
+  #
+  # /sbin/init kicks of systemd as the container entrypoint.
+  docker run \
+    --detach \
+    --interactive \
+    --tty \
+    --privileged \
+    --name "${INSTANCE_ID}" \
+    --hostname "${INSTANCE_ID}" \
+    --volume "${INSTANCE_ID}:/data" \
+    --volume "${PWD}:/umbrel-dev:ro" \
+    --label "dev.orbstack.http-port=80" \
+    --label "dev.orbstack.domains=${INSTANCE_ID}.local" \
+    "${INSTANCE_ID}" \
+    /sbin/init
+}
+
+start_instance() {
+  docker start "${INSTANCE_ID}"
+}
+
+exec_in_instance() {
+  docker exec --interactive --tty "${INSTANCE_ID}" "${@}"
+}
+
+stop_instance() {
+  # We first need to execute poweroff inside the instance so systemd gracefully stops services before we kill the container
+  exec_in_instance poweroff
+  docker stop "${INSTANCE_ID}"
+}
+
+remove_instance() {
+  docker rm --force "${INSTANCE_ID}"
+}
+
+remove_volume() {
+  docker volume rm "${INSTANCE_ID}"
+}
+
+get_instance_ip() {
+  docker inspect --format '{{ .NetworkSettings.IPAddress }}' "${INSTANCE_ID}"
+}
+
+# Get the command
+if [ -z ${1+x} ]; then
+  command=""
+else
+  command="$1"
+fi
+
+if [[ "${command}" = "start" ]] || [[ "${command}" = "" ]]
+then
+  echo "Starting umbrel-dev instance..."
+  if ! start_instance > /dev/null
+  then
+    echo "Instance not found, creating a new one..."
+    if ! docker image inspect "${INSTANCE_ID}" > /dev/null
+    then
+      build_os_image
+    fi
+    create_instance
+  fi
+  echo
+  echo "umbrel-dev instance is booting up..."
+
+  # Stream systemd logs until boot has completed
+  docker logs --tail 100 --follow "${INSTANCE_ID}" 2> /dev/null &
+  logs_pid=$!
+  exec_in_instance systemctl is-active --wait multi-user.target > /dev/null|| true
+  sleep 2
+  kill "${logs_pid}" || true
+  wait
+
+  # Stream umbreld logs until web server is up
+  docker exec "${INSTANCE_ID}" journalctl --unit umbrel --follow --lines 100 --output cat 2> /dev/null &
+  logs_pid=$!
+  docker exec "${INSTANCE_ID}" curl --silent --retry 300 --retry-delay 1 --retry-connrefused http://localhost > /dev/null 2>&1 || true
+  sleep 0.1
+  kill "${logs_pid}" || true
+  wait
+
+  # Done!
+  cat << 'EOF'
+
+
+            ,;###GGGGGGGGGGl#Sp
+         ,##GGGlW""^'  '`""%GGGG#S,
+       ,#GGG"                  "lGG#o
+      #GGl^                      '$GG#
+    ,#GGb                          \GGG,
+    lGG"                            "GGG
+   #GGGlGGGl##p,,p##lGGl##p,,p###ll##GGGG
+  !GGGlW"""*GGGGGGG#""""WlGGGGG#W""*WGGGGS
+   ""          "^          '"          ""
+
+EOF
+  echo "  Your umbrel-dev instance is ready at:"
+  echo
+  echo "    http://${INSTANCE_ID}.local"
+  echo "    http://$(get_instance_ip)"
+
+  exit
+fi
+
+if [[ "${command}" = "help" ]]
+then
+    show_help
+
+    exit
+fi
+
+if [[ "${command}" = "shell" ]]
+then
+    exec_in_instance bash
+
+    exit
+fi
+
+if [[ "${command}" = "exec" ]]
+then
+    shift
+    exec_in_instance "${@}"
+
+    exit
+fi
+
+if [[ "${command}" = "logs" ]]
+then
+    exec_in_instance journalctl --unit umbrel --follow --lines 100 --output cat
+
+    exit
+fi
+
+if [[ "${command}" = "client" ]]
+then
+    shift
+    exec_in_instance npm --prefix /umbrel-dev/packages/umbreld run start -- client ${@}
+
+    exit
+fi
+
+if [[ "${command}" = "rebuild" ]]
+then
+    echo "Rebuilding the operating system image from source..."
+    build_os_image
+    echo "Restarting the dev environment with the new image..."
+    stop_instance || true
+    remove_instance || true
+    create_instance
+
+    exit
+fi
+
+if [[ "${command}" = "destroy" ]]
+then
+    echo "Destroying the dev environment..."
+    remove_instance || true
+    remove_volume || true
+
+    exit
+fi
+
+if [[ "${command}" = "reset" ]]
+then
+    echo "Resetting the dev environment state..."
+    stop_instance || true
+    remove_instance || true
+    remove_volume || true
+    create_instance
+
+    exit
+fi
+
+if [[ "${command}" = "restart" ]]
+then
+    echo "Restarting the dev environment..."
+    stop_instance
+    start_instance
+
+    exit
+fi
+
+if [[ "${command}" = "stop" ]]
+then
+    echo "Stopping the dev environment..."
+    stop_instance
+
+    exit
+fi
+
+# This is a special command that runs directly inside the container to setup the environment
+# It is not intended to be run on the host machine!
+if [[ "${command}" = "container-init" ]]
+then
+    # Check if this is the first boot
+    first_boot=false
+    if [[ ! -d "/data/umbrel-dev-overlay" ]]
+    then
+        first_boot=true
+    fi
+
+    # Setup fs overlay so we can write to the source code dir without modifying it on the host
+    echo "Setting up fs overlay..."
+    mkdir -p /data/umbrel-dev-overlay/upperdir
+    mkdir -p /data/umbrel-dev-overlay/workdir
+    mount -t overlay overlay -o lowerdir=/umbrel-dev,upperdir=/data/umbrel-dev-overlay/upperdir,workdir=/data/umbrel-dev-overlay/workdir /umbrel-dev || true
+
+    # If this is the first boot we should nuke node_modules if they exist so we get fresh Linux deps instead
+    # of trying to reuse deps installed from the host. (causes issues with macos native deps)
+    if [[ "${first_boot}" = true ]]
+    then
+        echo "Nuking node_modules inherited from host..."
+        rm -rf /umbrel-dev/packages/ui/node_modules || true
+        rm -rf /umbrel-dev/packages/umbreld/node_modules || true
+    fi
+
+    # Install dependencies
+    echo "Installing dependencies..."
+    npm --prefix /umbrel-dev/packages/umbreld install
+    npm --prefix /umbrel-dev/packages/ui install
+
+    # Run umbreld and ui
+    echo "Starting umbreld and ui..."
+    npm --prefix /umbrel-dev/packages/umbreld run dev &
+    CHOKIDAR_USEPOLLING=true npm --prefix /umbrel-dev/packages/ui run dev &
+    wait
+
+    exit
+fi
+
+show_help
+exit
\ No newline at end of file
diff --git a/scripts/vm b/scripts/vm
deleted file mode 100755
index af4920501..000000000
--- a/scripts/vm
+++ /dev/null
@@ -1,147 +0,0 @@
-#!/usr/bin/env bash
-set -euo pipefail
-
-MOUNT_DIR="/opt/umbrel-mount"
-VM_DIR="/home/ubuntu/umbrel"
-
-function sync_umbrel_source() {
-    sudo mkdir -p "${VM_DIR}"
-    sudo chown ubuntu:ubuntu "${VM_DIR}"
-    rsync -avh \
-        --exclude packages/os/ \
-        --exclude packages/umbreld/data/ \
-        --exclude packages/ui/public/generated-tabler-icons/ \
-        --exclude packages/ui/dist/ \
-        --exclude packages/ui/dist-app-auth/ \
-        --exclude node_modules/ \
-        --exclude .git/ \
-        --exclude .pnpm-store/ \
-        "${MOUNT_DIR}/." "${VM_DIR}"
-}
-
-function install_deps() {
-    echo installing os deps
-    curl -fsSL https://deb.nodesource.com/setup_18.x | sudo DEBIAN_FRONTEND=noninteractive bash -
-    sudo DEBIAN_FRONTEND=noninteractive apt-get install --yes nodejs build-essential
-
-    echo installing umbreld deps
-    pushd "${VM_DIR}/packages/umbreld"
-    npm install
-    sudo DEBIAN_FRONTEND=noninteractive npm run start provision-os
-    popd
-
-    echo installing ui deps
-    pushd "${VM_DIR}/packages/ui"
-    sudo npm install -g pnpm@8
-    pnpm install
-    popd
-}
-
-function install_services() {
-
-    services=(
-        "sync"
-        "ui"
-        "umbreld"
-        "umbreld-production"
-    )
-
-    for service in "${services[@]}"
-    do
-        echo "
-[Unit]
-Description=${service}
-
-[Service]
-ExecStart="${MOUNT_DIR}/scripts/vm" ${service}
-Restart=always
-StartLimitInterval=0
-
-[Install]
-WantedBy=multi-user.target" | sudo tee "/etc/systemd/system/${service}.service"
-
-        sudo systemctl daemon-reload
-        if [[ "${service}" != "umbreld-production" ]]
-        then
-            sudo systemctl enable "${service}"
-            sudo systemctl start "${service}"
-        fi
-    done
-}
-
-command="${1}"
-
-if [[ "${command}" = "provision" ]]
-then
-    sync_umbrel_source
-    install_deps
-    install_services
-    echo
-    echo "  ☂️  VM setup complete"
-    echo
-    echo "  http://umbrel-dev.local"
-
-    exit
-fi
-
-if [[ "${command}" = "sync" ]]
-then
-    while true
-    do
-        sync_umbrel_source
-        sleep 0.1
-    done
-    exit
-fi
-
-if [[ "${command}" = "ui" ]]
-then
-    cd "${VM_DIR}/packages/ui"
-    exec npm run dev
-fi
-
-if [[ "${command}" = "umbreld" ]]
-then
-    cd "${VM_DIR}/packages/umbreld"
-    exec npm run dev:vm
-fi
-
-if [[ "${command}" = "umbreld-production" ]]
-then
-    cd "${VM_DIR}/packages/ui"
-    pnpm run build
-    rm -rf "${VM_DIR}/packages/umbreld/ui" || true
-    mv "${VM_DIR}/packages/ui/dist" "${VM_DIR}/packages/umbreld/ui"
-    cd "${VM_DIR}/packages/umbreld"
-    exec npm run start:vm
-fi
-
-if [[ "${command}" = "enable-production" ]]
-then
-    echo "Enabling production services"
-    sudo systemctl stop umbreld ui
-    sudo systemctl disable umbreld ui
-    sudo systemctl enable umbreld-production
-    sudo systemctl restart umbreld-production
-fi
-
-if [[ "${command}" = "enable-development" ]]
-then
-    echo "Enabling development services"
-    sudo systemctl stop umbreld-production
-    sudo systemctl disable umbreld-production
-    sudo systemctl enable umbreld ui
-    sudo systemctl start umbreld ui
-fi
-
-if [[ "${command}" = "install-deps" ]]
-then
-    echo installing umbreld deps
-    cd "${VM_DIR}/packages/umbreld"
-    npm install
-
-    echo installing ui deps
-    cd "${VM_DIR}/packages/ui"
-    pnpm install
-    exit
-fi
\ No newline at end of file