diff --git a/changelog.d/5563.bugfix b/changelog.d/5563.bugfix
new file mode 100644
index 0000000000..09c4381a23
--- /dev/null
+++ b/changelog.d/5563.bugfix
@@ -0,0 +1 @@
+Docker: Use a sensible location for data files when generating a config file.
\ No newline at end of file
diff --git a/docker/README.md b/docker/README.md
index 5a596eecb9..5c85c538a8 100644
--- a/docker/README.md
+++ b/docker/README.md
@@ -179,3 +179,14 @@ docker run -d --name synapse \
     -e SYNAPSE_CONFIG_PATH=/data/homeserver.yaml \
     matrixdotorg/synapse:latest
 ```
+
+The following environment variables are supported in this mode:
+
+* `SYNAPSE_SERVER_NAME` (mandatory): the server public hostname.
+* `SYNAPSE_REPORT_STATS` (mandatory, `yes` or `no`): whether to enable
+  anonymous statistics reporting.
+* `SYNAPSE_CONFIG_PATH` (mandatory): path to the file to be generated.
+* `SYNAPSE_DATA_DIR`: where the generated config will put persistent data
+  such as the datatase and media store. Defaults to `/data`.
+* `UID`, `GID`: the user id and group id to use for creating the data
+  directories. Defaults to `991`, `991`.
diff --git a/docker/start.py b/docker/start.py
index 59527a5883..1e6acb464c 100755
--- a/docker/start.py
+++ b/docker/start.py
@@ -122,11 +122,12 @@ def generate_config_from_template(environ, ownership):
     return config_path
 
 
-def run_generate_config(environ):
+def run_generate_config(environ, ownership):
     """Run synapse with a --generate-config param to generate a template config file
 
     Args:
-        environ (dict): environment dictionary
+        environ (dict): env var dict
+        ownership (str): "userid:groupid" arg for chmod
 
     Never returns.
     """
@@ -134,6 +135,11 @@ def run_generate_config(environ):
         if v not in environ:
             error("Environment variable '%s' is mandatory in `generate` mode." % (v,))
 
+    data_dir = environ.get("SYNAPSE_DATA_DIR", "/data")
+
+    # make sure that synapse has perms to write to the data dir.
+    subprocess.check_output(["chown", ownership, data_dir])
+
     args = [
         "python",
         "-m",
@@ -144,8 +150,11 @@ def run_generate_config(environ):
         environ["SYNAPSE_REPORT_STATS"],
         "--config-path",
         environ["SYNAPSE_CONFIG_PATH"],
+        "--data-directory",
+        data_dir,
         "--generate-config",
     ]
+    # log("running %s" % (args, ))
     os.execv("/usr/local/bin/python", args)
 
 
@@ -153,9 +162,9 @@ def main(args, environ):
     mode = args[1] if len(args) > 1 else None
     ownership = "{}:{}".format(environ.get("UID", 991), environ.get("GID", 991))
 
-    # In generate mode, generate a configuration, missing keys, then exit
+    # In generate mode, generate a configuration and missing keys, then exit
     if mode == "generate":
-        return run_generate_config(environ)
+        return run_generate_config(environ, ownership)
 
     # In normal mode, generate missing keys if any, then run synapse
     if "SYNAPSE_CONFIG_PATH" in environ: