Docker Compose is a tool for defining and running multi-container Docker applications. It uses a YAML-formatted docker-compose.yml file to configure application services. Common commands include: docker-compose up (start services), docker-compose down (stop and remove containers), docker-compose ps (view container status), docker-compose logs (view logs), docker-compose exec (execute commands in containers), docker-compose build (build images). Docker Compose simplifies development environment setup and is suitable for local development and testing.