diff --git a/builder/chroot-script.sh b/builder/chroot-script.sh
index ca1d251..1cde6e9 100644
--- a/builder/chroot-script.sh
+++ b/builder/chroot-script.sh
@@ -186,13 +186,13 @@ apt-get install -y \
 
 # install hypriot packages for docker-tools
 apt-get install -y \
-  "docker-hypriot=${DOCKER_ENGINE_VERSION}" \
   "docker-compose=${DOCKER_COMPOSE_VERSION}" \
   "docker-machine=${DOCKER_MACHINE_VERSION}" \
   "device-init=${DEVICE_INIT_VERSION}"
 
-# enable Docker systemd service
-systemctl enable docker
+# set up Docker APT repository and install docker-engine package
+#TODO: pin package version to ${DOCKER_ENGINE_VERSION}
+curl -sSL https://test.docker.com | /bin/sh
 
 
 echo "Installing rpi-serial-console script"
diff --git a/builder/files/etc/apt/perferences.d/hypriot b/builder/files/etc/apt/preferences.d/hypriot
similarity index 100%
rename from builder/files/etc/apt/perferences.d/hypriot
rename to builder/files/etc/apt/preferences.d/hypriot
diff --git a/builder/files/etc/apt/perferences.d/raspberrypi b/builder/files/etc/apt/preferences.d/raspberrypi
similarity index 100%
rename from builder/files/etc/apt/perferences.d/raspberrypi
rename to builder/files/etc/apt/preferences.d/raspberrypi
diff --git a/builder/files/etc/systemd/system/docker.service b/builder/files/etc/systemd/system/docker.service
deleted file mode 100644
index 10eb700..0000000
--- a/builder/files/etc/systemd/system/docker.service
+++ /dev/null
@@ -1,22 +0,0 @@
-[Unit]
-Description=Docker Application Container Engine
-Documentation=https://docs.docker.com
-After=network.target docker.socket
-Requires=docker.socket
-
-[Service]
-Type=notify
-# the default is not to use systemd for cgroups because the delegate issues still
-# exists and systemd currently does not support the cgroup feature set required
-# for containers run by docker
-ExecStart=/usr/bin/docker daemon -H fd:// --storage-driver overlay
-MountFlags=slave
-LimitNOFILE=1048576
-LimitNPROC=1048576
-LimitCORE=infinity
-TimeoutStartSec=0
-# set delegate yes so that systemd does not reset the cgroups of docker containers
-Delegate=yes
-
-[Install]
-WantedBy=multi-user.target
diff --git a/builder/test-integration/spec/hypriotos-image/docker_spec.rb b/builder/test-integration/spec/hypriotos-image/docker_spec.rb
index e562666..08aeb83 100644
--- a/builder/test-integration/spec/hypriotos-image/docker_spec.rb
+++ b/builder/test-integration/spec/hypriotos-image/docker_spec.rb
@@ -1,12 +1,12 @@
 require 'spec_helper'
 
-describe package('docker-hypriot') do
+describe package('docker-engine') do
   it { should be_installed }
 end
 
-describe command('dpkg -l docker-hypriot') do
-  its(:stdout) { should match /ii  docker-hypriot/ }
-  its(:stdout) { should match /1.11.1-1/ }
+describe command('dpkg -l docker-engine') do
+  its(:stdout) { should match /ii  docker-engine/ }
+  its(:stdout) { should match /1.12.1~rc1-0~jessie/ }
   its(:exit_status) { should eq 0 }
 end
 
@@ -56,7 +56,7 @@
   it { should be_file }
   it { should be_mode 644 }
   it { should be_owned_by 'root' }
-  its(:content) { should match /ExecStart=\/usr\/bin\/docker daemon -H fd:\/\/ --storage-driver overlay/ }
+  its(:content) { should match /ExecStart=\/usr\/bin\/dockerd --storage-driver overlay -H fd:\/\// }
 end
 
 describe file('/var/run/docker.sock') do
@@ -92,13 +92,13 @@
 end
 
 describe command('docker -v') do
-  its(:stdout) { should match /Docker version 1.11.1, build/ }
+  its(:stdout) { should match /Docker version 1.12.1-rc1, build/ }
   its(:exit_status) { should eq 0 }
 end
 
 describe command('docker version') do
-  its(:stdout) { should match /Client:. Version:      1.11.1. API version:  1.23/m }
-  its(:stdout) { should match /Server:. Version:      1.11.1. API version:  1.23/m }
+  its(:stdout) { should match /Client:. Version:      1.12.1-rc1. API version:  1.24/m }
+  its(:stdout) { should match /Server:. Version:      1.12.1-rc1. API version:  1.24/m }
   its(:exit_status) { should eq 0 }
 end
 
diff --git a/builder/test-integration/spec/hypriotos-image/raspberrypi-list_spec.rb b/builder/test-integration/spec/hypriotos-image/raspberrypi-list_spec.rb
new file mode 100644
index 0000000..0b1c527
--- /dev/null
+++ b/builder/test-integration/spec/hypriotos-image/raspberrypi-list_spec.rb
@@ -0,0 +1,8 @@
+require 'spec_helper'
+
+describe file('/etc/apt/sources.list.d/raspberrypi.list') do
+  it { should be_file }
+  it { should be_mode 644 }
+  it { should be_owned_by 'root' }
+  it { should contain 'deb http://archive.raspberrypi.org/debian/ jessie main' }
+end
diff --git a/versions.config b/versions.config
index 8812348..c22b5cf 100644
--- a/versions.config
+++ b/versions.config
@@ -10,7 +10,7 @@ RAW_IMAGE_CHECKSUM="2fbeb13b7b0f2308dbd0d82780b54c33003ad43d145ff08498b25fb8bbe1
 # specific versions of kernel/firmware and docker tools
 export KERNEL_BUILD="20160725-081443"
 export KERNEL_VERSION="4.4.15"
-export DOCKER_ENGINE_VERSION="1.11.1-1"
+export DOCKER_ENGINE_VERSION="1.12.1~rc1-0~jessie"
 export DOCKER_COMPOSE_VERSION="1.8.0-61"
 export DOCKER_MACHINE_VERSION="0.8.0-30"
 export DEVICE_INIT_VERSION="0.1.8"