diff --git a/README.md b/README.md
index a747b53a..6282b986 100644
--- a/README.md
+++ b/README.md
@@ -63,6 +63,19 @@ $ npm i
 $ npm start
 ```
 
+## 🔐 Environment Variables
+
+Create a `.env` file inside the `backend/` directory with the following variables:
+
+| Variable | Description | Default |
+|----------|-------------|---------|
+| `MONGO_URI` | MongoDB connection string | `mongodb://127.0.0.1:27017/github_tracker` |
+| `SESSION_SECRET` | Secret key for session encryption | (required) |
+| `PORT` | Backend server port | `5000` |
+| `LOG_LEVEL` | Winston logging level | `debug` (dev) / `info` (prod) |
+
+> **Note**: Copy `backend/.env.example` to `backend/.env` and update the values as needed.
+
 ## 🧪 Backend Unit & Integration Testing with Jasmine
 
 This project uses the Jasmine framework for backend unit and integration tests. The tests cover:
diff --git a/backend/.env.example b/backend/.env.example
new file mode 100644
index 00000000..45ca9fcc
--- /dev/null
+++ b/backend/.env.example
@@ -0,0 +1,13 @@
+# Backend Environment Variables
+
+# MongoDB Connection URI (required)
+MONGO_URI=mongodb://127.0.0.1:27017/github_tracker
+
+# Session Secret for express-session (required - use a strong random string)
+SESSION_SECRET=your_super_secret_key_change_this_in_production
+
+# Server Port (optional, defaults to 5000)
+PORT=5000
+
+# Log Level (optional: debug, info, warn, error)
+LOG_LEVEL=debug