diff --git a/compose/cli/main.py b/compose/cli/main.py
index 9e49e2974..3932e4eae 100644
--- a/compose/cli/main.py
+++ b/compose/cli/main.py
@@ -254,6 +254,7 @@ class TopLevelCommand(object):
         Usage: build [options] [--build-arg key=val...] [SERVICE...]
 
         Options:
+            --compress              Compress the build context using gzip.
             --force-rm              Always remove intermediate containers.
             --no-cache              Do not use cache when building the image.
             --pull                  Always attempt to pull a newer version of the image.
@@ -277,7 +278,9 @@ class TopLevelCommand(object):
             pull=bool(options.get('--pull', False)),
             force_rm=bool(options.get('--force-rm', False)),
             memory=options.get('--memory'),
-            build_args=build_args)
+            build_args=build_args,
+            gzip=options.get('--compress', False),
+        )
 
     def bundle(self, options):
         """
diff --git a/compose/project.py b/compose/project.py
index 48095e938..f66e415fe 100644
--- a/compose/project.py
+++ b/compose/project.py
@@ -366,10 +366,10 @@ class Project(object):
         return containers
 
     def build(self, service_names=None, no_cache=False, pull=False, force_rm=False, memory=None,
-              build_args=None):
+              build_args=None, gzip=False):
         for service in self.get_services(service_names):
             if service.can_be_built():
-                service.build(no_cache, pull, force_rm, memory, build_args)
+                service.build(no_cache, pull, force_rm, memory, build_args, gzip)
             else:
                 log.info('%s uses an image, skipping' % service.name)
 
diff --git a/compose/service.py b/compose/service.py
index a4e5d9b82..cd9b4b568 100644
--- a/compose/service.py
+++ b/compose/service.py
@@ -967,7 +967,8 @@ class Service(object):
 
         return [build_spec(secret) for secret in self.secrets]
 
-    def build(self, no_cache=False, pull=False, force_rm=False, memory=None, build_args_override=None):
+    def build(self, no_cache=False, pull=False, force_rm=False, memory=None, build_args_override=None,
+              gzip=False):
         log.info('Building %s' % self.name)
 
         build_opts = self.options.get('build', {})
@@ -1003,6 +1004,7 @@ class Service(object):
             container_limits={
                 'memory': parse_bytes(memory) if memory else None
             },
+            gzip=gzip
         )
 
         try:
diff --git a/tests/integration/service_test.py b/tests/integration/service_test.py
index 7c1be24b9..260867fe0 100644
--- a/tests/integration/service_test.py
+++ b/tests/integration/service_test.py
@@ -1105,6 +1105,24 @@ class ServiceTest(DockerClientTestCase):
         service.build()
         assert service.image()
 
+    def test_build_with_gzip(self):
+        base_dir = tempfile.mkdtemp()
+        self.addCleanup(shutil.rmtree, base_dir)
+        with open(os.path.join(base_dir, 'Dockerfile'), 'w') as f:
+            f.write('\n'.join([
+                'FROM busybox',
+                'COPY . /src',
+                'RUN cat /src/hello.txt'
+            ]))
+        with open(os.path.join(base_dir, 'hello.txt'), 'w') as f:
+            f.write('hello world\n')
+
+        service = self.create_service('build_gzip', build={
+            'context': text_type(base_dir),
+        })
+        service.build(gzip=True)
+        assert service.image()
+
     def test_start_container_stays_unprivileged(self):
         service = self.create_service('web')
         container = create_and_start_container(service).inspect()
diff --git a/tests/unit/service_test.py b/tests/unit/service_test.py
index 9128b9550..1f322ce4e 100644
--- a/tests/unit/service_test.py
+++ b/tests/unit/service_test.py
@@ -487,6 +487,7 @@ class ServiceTest(unittest.TestCase):
             shmsize=None,
             extra_hosts=None,
             container_limits={'memory': None},
+            gzip=False,
         )
 
     def test_ensure_image_exists_no_build(self):
@@ -529,6 +530,7 @@ class ServiceTest(unittest.TestCase):
             shmsize=None,
             extra_hosts=None,
             container_limits={'memory': None},
+            gzip=False
         )
 
     def test_build_does_not_pull(self):