Some people might think you can only use or set environment variable of the service in docker compose eg.:

    
my-service:
  image: lts-alpine
  environment:
    MY_SECRET_KEY: ${MY_SECRET_KEY}


  

But the same ${} syntax can be used to set a version of Docker image of PostgreSQL, like in this example below:

    
my-service:
  image: postgres:${POSTGRES_VERSION:-13}-alpine


  

If nothing is set, version 13 is the fallback value. Now you can set POSTGRES_VERSION environment via your shell. Or leverage the .env file of Docker:

    
POSTGRES_VERSION=16


  

When running: docker compose --env-file .env up, Docker should now use PostgreSQL v16 Alpine as Docker image.

Bonus: The docker-compose.yml filename is an old filename, use compose.yml from now. Same for other Compose files like compose.override.yml.

More info: https://docs.docker.com/compose/environment-variables/set-environment-variables/ and https://docs.docker.com/compose/environment-variables/set-environment-variables/