diff --git a/setup/update/update.mjs b/setup/update/update.mjs
index b6a68fb..f41f0ab 100644
--- a/setup/update/update.mjs
+++ b/setup/update/update.mjs
@@ -196,6 +196,69 @@ async function extractZip(zipPath, destDir) {
   throw new Error('No extraction tool found (unzip, tar, or PowerShell required)')
 }
 
+// =============================================================================
+// ENVIRONMENT DETECTION
+// =============================================================================
+
+/**
+ * Detect if running inside a Docker container
+ * Checks multiple indicators for accuracy
+ */
+function isDocker() {
+  try {
+    // Method 1: Check for /.dockerenv file (most reliable)
+    if (existsSync('/.dockerenv')) {
+      return true
+    }
+    
+    // Method 2: Check /proc/1/cgroup for docker
+    if (existsSync('/proc/1/cgroup')) {
+      const cgroupContent = readFileSync('/proc/1/cgroup', 'utf8')
+      if (cgroupContent.includes('docker') || cgroupContent.includes('/kubepods/')) {
+        return true
+      }
+    }
+    
+    // Method 3: Check environment variables
+    if (process.env.DOCKER === 'true' || 
+        process.env.CONTAINER === 'docker' ||
+        process.env.KUBERNETES_SERVICE_HOST) {
+      return true
+    }
+    
+    // Method 4: Check /proc/self/mountinfo for overlay filesystem
+    if (existsSync('/proc/self/mountinfo')) {
+      const mountinfo = readFileSync('/proc/self/mountinfo', 'utf8')
+      if (mountinfo.includes('docker') || mountinfo.includes('overlay')) {
+        return true
+      }
+    }
+    
+    return false
+  } catch {
+    // If any error occurs (e.g., on Windows), assume not Docker
+    return false
+  }
+}
+
+/**
+ * Determine update mode based on config and environment
+ */
+function getUpdateMode(configData) {
+  const dockerMode = configData?.update?.dockerMode || 'auto'
+  
+  if (dockerMode === 'force-docker') {
+    return 'docker'
+  }
+  
+  if (dockerMode === 'force-host') {
+    return 'host'
+  }
+  
+  // Auto-detect
+  return isDocker() ? 'docker' : 'host'
+}
+
 // =============================================================================
 // MAIN UPDATE LOGIC
 // =============================================================================
@@ -281,17 +344,22 @@ async function performUpdate() {
     return 0 // Exit without creating update marker
   }
   
-  console.log(`\n📦 Update available: ${versionCheck.localVersion} → ${versionCheck.remoteVersion}`)
-  console.log('⏳ Updating... (this may take a moment)\n')
-  
-  // Step 1: Read user preferences (silent)
+  // Step 0.5: Detect environment and determine update mode
   const configData = readJsonConfig([
     'src/config.jsonc',
     'config.jsonc',
     'src/config.json',
     'config.json'
   ])
-
+  
+  const updateMode = getUpdateMode(configData)
+  const envIcon = updateMode === 'docker' ? '🐳' : '💻'
+  
+  console.log(`\n📦 Update available: ${versionCheck.localVersion} → ${versionCheck.remoteVersion}`)
+  console.log(`${envIcon} Environment: ${updateMode === 'docker' ? 'Docker container' : 'Host system'}`)
+  console.log('⏳ Updating... (this may take a moment)\n')
+  
+  // Step 1: Read user preferences (silent)
   const userConfig = {
     autoUpdateConfig: configData?.update?.autoUpdateConfig ?? false,
     autoUpdateAccounts: configData?.update?.autoUpdateAccounts ?? false
@@ -570,9 +638,19 @@ async function performUpdate() {
   rmSync(rollbackDir, { recursive: true, force: true })
 
   console.log(`\n✅ Updated successfully! (${versionCheck.localVersion} → ${versionCheck.remoteVersion})`)
-  console.log('🔄 Restarting...\n')
-
-  return 0
+  
+  // Different behavior for Docker vs Host
+  if (updateMode === 'docker') {
+    console.log('� Docker mode: Update complete')
+    console.log('   Container will restart automatically if configured\n')
+    // In Docker, don't restart - let orchestrator handle it
+    // Just exit cleanly so Docker can restart the container
+    return 0
+  } else {
+    console.log('�🔄 Restarting in same process...\n')
+    // In host mode, signal restart needed
+    return 0
+  }
 }
 
 // =============================================================================
diff --git a/src/config.jsonc b/src/config.jsonc
index 99a9ade..29acf3c 100644
--- a/src/config.jsonc
+++ b/src/config.jsonc
@@ -170,7 +170,7 @@
     "update": {
         "enabled": true,
         "method": "github-api",
-        "docker": false,
+        "dockerMode": "auto", // "auto" = detect automatically, "force-docker" = always use Docker mode, "force-host" = never use Docker mode
         "scriptPath": "setup/update/update.mjs",
         "autoUpdateConfig": true,
         "autoUpdateAccounts": false
diff --git a/src/index.ts b/src/index.ts
index a3f48bb..1c55e8a 100644
--- a/src/index.ts
+++ b/src/index.ts
@@ -943,10 +943,38 @@ async function main(): Promise<void> {
         process.exit(code)
     }
 
+    /**
+     * Detect if running in Docker container
+     */
+    const isDockerEnvironment = (): boolean => {
+        try {
+            // Check /.dockerenv file
+            if (fs.existsSync('/.dockerenv')) return true
+            
+            // Check /proc/1/cgroup
+            if (fs.existsSync('/proc/1/cgroup')) {
+                const content = fs.readFileSync('/proc/1/cgroup', 'utf8')
+                if (content.includes('docker') || content.includes('/kubepods/')) return true
+            }
+            
+            // Check environment variables
+            if (process.env.DOCKER === 'true' || 
+                process.env.CONTAINER === 'docker' ||
+                process.env.KUBERNETES_SERVICE_HOST) {
+                return true
+            }
+            
+            return false
+        } catch {
+            return false
+        }
+    }
+
     const bootstrap = async () => {
         try {
             // Check for updates BEFORE initializing and running tasks
             const updateMarkerPath = path.join(process.cwd(), '.update-happened')
+            const isDocker = isDockerEnvironment()
             
             try {
                 const updateResult = await rewardsBot.runAutoUpdate().catch((e) => {
@@ -966,23 +994,30 @@ async function main(): Promise<void> {
                             // Ignore cleanup errors
                         }
                         
-                        // Clear Node's require cache to reload updated modules
-                        Object.keys(require.cache).forEach(key => {
-                            // Only clear cache for project files, not node_modules
-                            if (key.includes('dist') || key.includes('src')) {
-                                delete require.cache[key]
-                            }
-                        })
-                        
-                        // Recursive restart in same process
-                        log('main', 'UPDATE', 'Reloading with new version...')
-                        setTimeout(() => {
-                            bootstrap().catch(e => {
-                                log('main', 'MAIN-ERROR', 'Fatal after update: ' + (e instanceof Error ? e.message : e), 'error')
-                                process.exit(1)
+                        if (isDocker) {
+                            // Docker mode: exit cleanly to let container restart
+                            log('main', 'UPDATE', 'Update complete - exiting for container restart', 'log', 'green')
+                            process.exit(0)
+                        } else {
+                            // Host mode: reload in same process
+                            // Clear Node's require cache to reload updated modules
+                            Object.keys(require.cache).forEach(key => {
+                                // Only clear cache for project files, not node_modules
+                                if (key.includes('dist') || key.includes('src')) {
+                                    delete require.cache[key]
+                                }
                             })
-                        }, 500)
-                        return
+                            
+                            // Recursive restart in same process
+                            log('main', 'UPDATE', 'Reloading with new version...')
+                            setTimeout(() => {
+                                bootstrap().catch(e => {
+                                    log('main', 'MAIN-ERROR', 'Fatal after update: ' + (e instanceof Error ? e.message : e), 'error')
+                                    process.exit(1)
+                                })
+                            }, 500)
+                            return
+                        }
                     }
                 }
             } catch (updateError) {