diff --git a/.env.example b/.env.example
new file mode 100644
index 000000000..62ce92a8a
--- /dev/null
+++ b/.env.example
@@ -0,0 +1,43 @@
+# PraisonAI Environment Variables
+# Copy this file to .env and update with your actual values
+
+# === Required ===
+OPENAI_API_KEY=sk-...          # OpenAI key for LLM calls. Get yours at https://platform.openai.com
+
+# === Required for Claw web-search tool ===
+TAVILY_API_KEY=tvly-...        # Get yours at https://app.tavily.com (free tier available)
+
+# === Optional: Claw dashboard security ===
+PRAISONAI_ALLOW_LOCAL_TOOLS=0  # Set to 1 to enable local shell tools (security risk)
+
+# === Optional: Alternative LLM Providers ===
+ANTHROPIC_API_KEY=sk-ant-...   # Anthropic Claude models
+GOOGLE_API_KEY=...             # Google Gemini models  
+GROQ_API_KEY=gsk_...           # Groq (fast inference)
+COHERE_API_KEY=...             # Cohere models
+AZURE_OPENAI_API_KEY=...       # Azure OpenAI
+AZURE_OPENAI_ENDPOINT=...      # Azure OpenAI endpoint
+
+# === Optional: Memory backends ===
+MEM0_API_KEY=...               # Mem0 memory service
+REDIS_URL=redis://localhost:6379  # Redis for state management
+
+# === Optional: Observability ===
+LANGFUSE_SECRET_KEY=sk-lf-...  # Langfuse tracing
+LANGFUSE_PUBLIC_KEY=pk-lf-...  # Langfuse public key
+
+# === Optional: Bot platforms ===
+TELEGRAM_BOT_TOKEN=...         # Telegram bot token
+DISCORD_BOT_TOKEN=...          # Discord bot token  
+SLACK_BOT_TOKEN=xoxb-...       # Slack bot token
+SLACK_APP_TOKEN=xapp-...       # Slack app token
+WHATSAPP_ACCESS_TOKEN=...      # WhatsApp bot access token
+WHATSAPP_PHONE_NUMBER_ID=...   # WhatsApp phone number ID
+
+# === Optional: Database ===
+DATABASE_URL=sqlite:///~/.praison/database.sqlite  # Database connection string
+
+# === Optional: Development ===
+LOGLEVEL=INFO                  # Logging level (DEBUG, INFO, WARNING, ERROR)
+CHAINLIT_AUTH_SECRET=...       # Chainlit authentication secret
+DEBUG=false                    # Enable debug mode
diff --git a/README.md b/README.md
index 74414a97f..5cf046b7a 100644
--- a/README.md
+++ b/README.md
@@ -358,6 +358,15 @@ pip install "praisonai[claw]"
 praisonai claw
 ```
 
+#### Required Environment Variables
+
+Copy `.env.example` to `.env` and configure the following variables:
+
+| Variable | Required | Description |
+|----------|----------|-------------|
+| `OPENAI_API_KEY` | Yes | OpenAI API key for all LLM calls |
+| `TAVILY_API_KEY` | Yes (Claw) | Tavily key for the built-in web-search tool. Get one free at https://app.tavily.com |
+
 Open **http://localhost:8082** — the dashboard comes with 13 built-in pages: Chat, Agents, Memory, Knowledge, Channels, Guardrails, Cron, and more. Add messaging channels directly from the UI.
 
 > 📖 [Full Claw docs](https://docs.praison.ai/docs/concepts/claw) — platform tokens, CLI options, Docker, and YAML agent mode