diff --git a/docker-compose-pro.yml b/docker-compose-pro.yml
index 3228f05247af8..ae25b828c8f70 100644
--- a/docker-compose-pro.yml
+++ b/docker-compose-pro.yml
@@ -15,6 +15,7 @@ services:
       - PERSISTENCE=${PERSISTENCE-}
       - LOCALSTACK_API_KEY=${LOCALSTACK_API_KEY-}  # required for Pro
       - DOCKER_HOST=unix:///var/run/docker.sock
+      # - USE_MANAGED_DOCKER_NETWORK=1  # allow LocalStack to manage networking
     volumes:
       - "${LOCALSTACK_VOLUME_DIR:-./volume}:/var/lib/localstack"
       - "/var/run/docker.sock:/var/run/docker.sock"
diff --git a/docker-compose.yml b/docker-compose.yml
index b19fcaf4da458..eb67d01d7acbe 100644
--- a/docker-compose.yml
+++ b/docker-compose.yml
@@ -10,6 +10,7 @@ services:
     environment:
       - DEBUG=${DEBUG-}
       - DOCKER_HOST=unix:///var/run/docker.sock
+      # - USE_MANAGED_DOCKER_NETWORK=1  # allow LocalStack to manage networking
     volumes:
       - "${LOCALSTACK_VOLUME_DIR:-./volume}:/var/lib/localstack"
       - "/var/run/docker.sock:/var/run/docker.sock"
diff --git a/localstack/config.py b/localstack/config.py
index b9520061e8ad8..066e3174d1d08 100644
--- a/localstack/config.py
+++ b/localstack/config.py
@@ -819,6 +819,13 @@ def get_gateway_listen(gateway_listen: str) -> List[HostAndPort]:
     os.environ.get("BUCKET_MARKER_LOCAL", "").strip() or DEFAULT_BUCKET_MARKER_LOCAL
 )
 
+# Create managed docker network
+USE_MANAGED_DOCKER_NETWORK = is_env_true("USE_MANAGED_DOCKER_NETWORK")
+MANAGED_DOCKER_NETWORK_NAME = os.environ.get(
+    "MANAGED_DOCKER_NETWORK_NAME",
+    "lsnet",
+)
+
 # PUBLIC: bridge (Docker default)
 # Docker network driver for the Lambda and ECS containers. https://docs.docker.com/network/
 LAMBDA_DOCKER_NETWORK = os.environ.get("LAMBDA_DOCKER_NETWORK", "").strip()
@@ -1120,6 +1127,7 @@ def get_gateway_listen(gateway_listen: str) -> List[HostAndPort]:
     "LS_LOG",
     "MAIN_CONTAINER_NAME",
     "MAIN_DOCKER_NETWORK",
+    "MANAGED_DOCKER_NETWORK_NAME",
     "OPENSEARCH_ENDPOINT_STRATEGY",
     "OUTBOUND_HTTP_PROXY",
     "OUTBOUND_HTTPS_PROXY",
@@ -1147,6 +1155,7 @@ def get_gateway_listen(gateway_listen: str) -> List[HostAndPort]:
     "TEST_IAM_USER_ID",
     "TEST_IAM_USER_NAME",
     "TF_COMPAT_MODE",
+    "USE_MANAGED_DOCKER_NETWORK",
     "USE_SINGLE_REGION",
     "USE_SSL",
     "WAIT_FOR_DEBUGGER",
@@ -1312,3 +1321,8 @@ def init_directories() -> Directories:
 # initialize directories
 dirs: Directories
 dirs = init_directories()
+
+# merge docker networks if required
+if USE_MANAGED_DOCKER_NETWORK:
+    LAMBDA_DOCKER_NETWORK = MANAGED_DOCKER_NETWORK_NAME
+    MAIN_DOCKER_NETWORK = MANAGED_DOCKER_NETWORK_NAME
diff --git a/localstack/utils/bootstrap.py b/localstack/utils/bootstrap.py
index ff6280ec5c03b..ea503823b25c7 100644
--- a/localstack/utils/bootstrap.py
+++ b/localstack/utils/bootstrap.py
@@ -16,6 +16,7 @@
 from localstack.utils.container_networking import get_main_container_name
 from localstack.utils.container_utils.container_client import (
     ContainerException,
+    NoSuchNetwork,
     PortMappings,
     SimpleVolumeBind,
     VolumeBind,
@@ -554,6 +555,10 @@ def configure_container(container: LocalstackContainer):
     # mount docker socket
     container.volumes.append((config.DOCKER_SOCK, config.DOCKER_SOCK))
 
+    # if using managed networking, set up the docker network
+    if config.USE_MANAGED_DOCKER_NETWORK:
+        setup_managed_docker_network(container)
+
     container.privileged = True
 
 
@@ -561,6 +566,18 @@ def configure_volume_mounts(container: LocalstackContainer):
     container.volumes.add(VolumeBind(config.VOLUME_DIR, DEFAULT_VOLUME_DIR))
 
 
+def setup_managed_docker_network(container: LocalstackContainer):
+    ensure_docker_network(config.MANAGED_DOCKER_NETWORK_NAME)
+    container.network = config.MANAGED_DOCKER_NETWORK_NAME
+
+
+def ensure_docker_network(network_name: str):
+    try:
+        DOCKER_CLIENT.inspect_network(network_name)
+    except NoSuchNetwork:
+        DOCKER_CLIENT.create_network(network_name)
+
+
 @log_duration()
 def prepare_host(console):
     """
diff --git a/localstack/utils/container_utils/docker_cmd_client.py b/localstack/utils/container_utils/docker_cmd_client.py
index c275c6b79566e..85334e8871be6 100644
--- a/localstack/utils/container_utils/docker_cmd_client.py
+++ b/localstack/utils/container_utils/docker_cmd_client.py
@@ -395,7 +395,7 @@ def _inspect_object(self, object_name_or_id: str) -> Dict[str, Union[dict, list,
         cmd = self._docker_cmd()
         cmd += ["inspect", "--format", "{{json .}}", object_name_or_id]
         try:
-            cmd_result = run(cmd)
+            cmd_result = run(cmd, stderr=subprocess.PIPE)
         except subprocess.CalledProcessError as e:
             # note: case-insensitive comparison, to support Docker and Podman output formats
             if "no such object" in to_str(e.stdout).lower():