diff --git a/.env.example b/.env.example
new file mode 100644
index 0000000..2bad871
--- /dev/null
+++ b/.env.example
@@ -0,0 +1,16 @@
+# AI Provider API Keys
+# Get Claude API key from: https://console.anthropic.com/
+ANTHROPIC_API_KEY=your_anthropic_api_key_here
+
+# Get OpenAI API key from: https://platform.openai.com/api-keys
+OPENAI_API_KEY=your_openai_api_key_here
+
+# Provider Settings
+DEFAULT_PROVIDER=claude
+CLAUDE_MODEL=claude-3-5-sonnet-20241022
+OPENAI_MODEL=gpt-4-turbo-preview
+
+# API Configuration
+MAX_TOKENS=4000
+TEMPERATURE=0.7
+FRONTEND_URL=http://localhost:3000
diff --git a/.gitignore b/.gitignore
new file mode 100644
index 0000000..1df3ea8
--- /dev/null
+++ b/.gitignore
@@ -0,0 +1,24 @@
+# Environment variables
+.env
+
+# Python
+backend/__pycache__/
+backend/**/__pycache__/
+backend/**/*.pyc
+*.py[cod]
+*$py.class
+
+# Logs
+*.log
+
+# OS
+.DS_Store
+Thumbs.db
+
+# IDE
+.vscode/
+.idea/
+.cursor/
+
+# Docker
+*.pid
diff --git a/CLAUDE.md b/CLAUDE.md
index a7238b1..04ec36b 100644
--- a/CLAUDE.md
+++ b/CLAUDE.md
@@ -6,11 +6,11 @@ This file provides guidance to Claude Code (claude.ai/code) when working with co
 
 DevDen is a self-hosted AI chat platform that enables organizations to provide AI-powered Q&A based on their own knowledge bases. Users interact through a clean chat interface while administrators manage knowledge bases, AI providers, and user access through a terminal-style dashboard.
 
-**Current Status:** Early prototype stage with static frontend (HTML/CSS/JS). Backend infrastructure is not yet implemented.
+**Current Status:** MVP with AI integration complete. Backend FastAPI server with Claude and OpenAI support. Frontend streams responses in real-time.
 
 ## Architecture
 
-**Planned Technology Stack:**
+**Technology Stack:**
 - **Frontend:** Vanilla JavaScript (prototype), potential migration to Svelte
 - **Backend:** FastAPI (Python)
 - **Database:** PostgreSQL (users, conversations, settings)
@@ -25,9 +25,24 @@ DevDen is a self-hosted AI chat platform that enables organizations to provide A
 
 ## Current Files
 
-- `index.html` - Main chat interface structure
-- `script.js` - Chat interaction logic (mock responses currently)
-- `style.css` - UI styling with fox-themed color scheme (accent: `#d4a574`)
+**Frontend:**
+- `index.html` - Main chat interface structure with welcome screen
+- `script.js` - Chat interaction logic with SSE streaming
+- `style.css` - Catppuccin Mocha theme with pixel aesthetic
+
+**Backend:**
+- `backend/app/main.py` - FastAPI application entry point
+- `backend/app/config.py` - Environment configuration
+- `backend/app/api/chat.py` - Chat endpoints (POST /api/chat, POST /api/chat/stream)
+- `backend/app/services/provider_manager.py` - Provider abstraction and fallback
+- `backend/app/services/provider_claude.py` - Claude implementation
+- `backend/app/services/provider_openai.py` - OpenAI implementation
+- `backend/app/models/schemas.py` - Pydantic request/response models
+
+**Infrastructure:**
+- `docker-compose.yml` - Multi-service orchestration
+- `backend/Dockerfile.backend` - Backend container
+- `.env.example` - Environment template
 
 ## Development Phases (from project.md)
 
@@ -39,14 +54,36 @@ DevDen is a self-hosted AI chat platform that enables organizations to provide A
 6. Git Integration - Auto-sync from repositories
 7. Polish - Production readiness
 
-## Commands (Future)
+## Commands
 
-When Docker infrastructure is implemented:
+**Start the application:**
 ```bash
-docker-compose up -d
-docker-compose exec devden-web python manage.py init-db
-docker-compose exec devden-web python manage.py create-admin --email admin@company.com
-docker-compose logs -f devden-web
+docker compose up -d --build
+```
+
+**View logs:**
+```bash
+docker compose logs -f backend
+docker compose logs -f frontend
+```
+
+**Stop the application:**
+```bash
+docker compose down
+```
+
+**Test backend API:**
+```bash
+# Health check
+curl http://localhost:8000/health
+
+# List available providers
+curl http://localhost:8000/api/chat/providers
+
+# Test chat (non-streaming)
+curl -X POST http://localhost:8000/api/chat \
+  -H "Content-Type: application/json" \
+  -d '{"message": "Hello!"}'
 ```
 
 ## Design Decisions
diff --git a/README.md b/README.md
index 16ef2fd..5a9b4fc 100644
--- a/README.md
+++ b/README.md
@@ -1,9 +1,50 @@
-## 🦊 DevDen
+## DevDen
 
 **Your AI assistant, powered by your knowledge**
 
 ---
 
+## 🚀 Quick Start
+
+### Prerequisites
+- Docker and Docker Compose installed
+- API key from [Anthropic](https://console.anthropic.com/) or [OpenAI](https://platform.openai.com/api-keys)
+
+### Setup
+
+1. **Clone the repository**
+```bash
+git clone https://github.com/yourusername/devden.git
+cd devden
+```
+
+2. **Configure environment variables**
+```bash
+cp .env.example .env
+# Edit .env and add your API keys
+```
+
+3. **Start the services**
+```bash
+docker compose up -d --build
+```
+
+4. **Access DevDen**
+- Frontend: http://localhost:3000
+- Backend API: http://localhost:8000
+- Health Check: http://localhost:8000/health
+
+### Environment Variables
+
+Required variables in `.env`:
+```
+ANTHROPIC_API_KEY=your_key_here    # For Claude
+OPENAI_API_KEY=your_key_here       # For OpenAI
+DEFAULT_PROVIDER=claude            # claude or openai
+```
+
+---
+
 ## What is DevDen?
 
 DevDen is a self-hosted AI chat platform that lets people ask questions and get answers from AI providers like Claude, OpenAI, Gemini, and others. The key difference? As an administrator, you control what knowledge the AI has access to by connecting your own documentation, manuals, wikis, or any other information sources.
diff --git a/backend/Dockerfile.backend b/backend/Dockerfile.backend
new file mode 100644
index 0000000..d0d57f4
--- /dev/null
+++ b/backend/Dockerfile.backend
@@ -0,0 +1,19 @@
+FROM python:3.11-slim
+
+WORKDIR /app
+
+# Install curl for health checks
+RUN apt-get update && apt-get install -y curl && rm -rf /var/lib/apt/lists/*
+
+# Install dependencies
+COPY requirements.txt .
+RUN pip install --no-cache-dir -r requirements.txt
+
+# Copy application
+COPY app/ ./app/
+
+# Expose port
+EXPOSE 8000
+
+# Run with uvicorn
+CMD ["uvicorn", "app.main:app", "--host", "0.0.0.0", "--port", "8000"]
diff --git a/backend/app/__init__.py b/backend/app/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/backend/app/api/__init__.py b/backend/app/api/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/backend/app/api/chat.py b/backend/app/api/chat.py
new file mode 100644
index 0000000..76571b8
--- /dev/null
+++ b/backend/app/api/chat.py
@@ -0,0 +1,69 @@
+import json
+
+from fastapi import APIRouter, HTTPException, status
+from fastapi.responses import StreamingResponse
+
+from ..config import settings
+from ..models.schemas import ChatRequest, ChatResponse, ProviderListResponse
+from ..services.provider_manager import provider_manager
+
+router = APIRouter(prefix="/api/chat", tags=["chat"])
+
+
+@router.post("/", response_model=ChatResponse)
+async def chat(request: ChatRequest):
+    """
+    Non-streaming chat endpoint
+    """
+    try:
+        provider = provider_manager.get_provider(request.provider)
+        response = await provider.chat(request.message)
+
+        return ChatResponse(message=response, provider=provider.get_provider_name())
+    except ValueError as e:
+        raise HTTPException(status_code=status.HTTP_400_BAD_REQUEST, detail=str(e))
+    except Exception as e:
+        raise HTTPException(
+            status_code=status.HTTP_500_INTERNAL_SERVER_ERROR,
+            detail=f"Error processing request: {str(e)}",
+        )
+
+
+@router.post("/stream")
+async def chat_stream(request: ChatRequest):
+    """
+    Streaming chat endpoint - returns SSE (Server-Sent Events)
+    """
+    try:
+        provider = provider_manager.get_provider(request.provider)
+
+        async def event_generator():
+            try:
+                async for chunk in provider.chat_stream(request.message):
+                    yield f"data: {json.dumps({'chunk': chunk})}\n\n"
+
+                yield f"data: {json.dumps({'done': True})}\n\n"
+            except Exception as e:
+                yield f"data: {json.dumps({'error': str(e)})}\n\n"
+
+        return StreamingResponse(
+            event_generator(),
+            media_type="text/event-stream",
+            headers={
+                "Cache-Control": "no-cache",
+                "Connection": "keep-alive",
+            },
+        )
+    except ValueError as e:
+        raise HTTPException(status_code=status.HTTP_400_BAD_REQUEST, detail=str(e))
+
+
+@router.get("/providers", response_model=ProviderListResponse)
+async def list_providers():
+    """
+    List available providers
+    """
+    return ProviderListResponse(
+        providers=provider_manager.get_available_providers(),
+        default=settings.DEFAULT_PROVIDER,
+    )
diff --git a/backend/app/config.py b/backend/app/config.py
new file mode 100644
index 0000000..36d17a3
--- /dev/null
+++ b/backend/app/config.py
@@ -0,0 +1,33 @@
+from typing import Optional
+
+from pydantic_settings import BaseSettings
+
+
+class Settings(BaseSettings):
+    # API Keys
+    ANTHROPIC_API_KEY: Optional[str] = None
+    OPENAI_API_KEY: Optional[str] = None
+
+    # Provider Settings
+    DEFAULT_PROVIDER: str = "claude"
+    CLAUDE_MODEL: str = "claude-3-5-sonnet-20241022"
+    OPENAI_MODEL: str = "gpt-4-turbo-preview"
+
+    # API Settings
+    MAX_TOKENS: int = 4000
+    TEMPERATURE: float = 0.7
+    TIMEOUT: int = 60
+
+    # CORS
+    FRONTEND_URL: str = "http://localhost:3000"
+
+    # Rate Limiting
+    RATE_LIMIT_REQUESTS: int = 10
+    RATE_LIMIT_WINDOW: int = 60
+
+    class Config:
+        env_file = ".env"
+        case_sensitive = True
+
+
+settings = Settings()
diff --git a/backend/app/main.py b/backend/app/main.py
new file mode 100644
index 0000000..808e300
--- /dev/null
+++ b/backend/app/main.py
@@ -0,0 +1,51 @@
+import logging
+
+from fastapi import FastAPI
+from fastapi.middleware.cors import CORSMiddleware
+from fastapi.responses import JSONResponse
+
+from .api import chat
+from .config import settings
+from .services.provider_manager import provider_manager
+
+# Setup logging
+logging.basicConfig(level=logging.INFO)
+logger = logging.getLogger(__name__)
+
+app = FastAPI(
+    title="DevDen API", description="AI chat backend for DevDen", version="1.0.0"
+)
+
+# CORS Configuration
+app.add_middleware(
+    CORSMiddleware,
+    allow_origins=[settings.FRONTEND_URL, "http://localhost:3000"],
+    allow_credentials=True,
+    allow_methods=["*"],
+    allow_headers=["*"],
+)
+
+# Include routers
+app.include_router(chat.router)
+
+
+@app.get("/health")
+async def health_check():
+    """Health check endpoint"""
+    return JSONResponse(
+        content={
+            "status": "healthy",
+            "providers": provider_manager.get_available_providers(),
+        }
+    )
+
+
+@app.on_event("startup")
+async def startup_event():
+    logger.info("DevDen API starting up...")
+    logger.info(f"Available providers: {provider_manager.get_available_providers()}")
+
+
+@app.on_event("shutdown")
+async def shutdown_event():
+    logger.info("DevDen API shutting down...")
diff --git a/backend/app/models/__init__.py b/backend/app/models/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/backend/app/models/schemas.py b/backend/app/models/schemas.py
new file mode 100644
index 0000000..b2fc6a8
--- /dev/null
+++ b/backend/app/models/schemas.py
@@ -0,0 +1,24 @@
+from typing import List, Optional
+
+from pydantic import BaseModel, Field, validator
+
+
+class ChatRequest(BaseModel):
+    message: str = Field(..., min_length=1, max_length=10000)
+    provider: Optional[str] = None
+
+    @validator("message")
+    def message_not_empty(cls, v):
+        if not v.strip():
+            raise ValueError("Message cannot be empty or whitespace")
+        return v.strip()
+
+
+class ChatResponse(BaseModel):
+    message: str
+    provider: str
+
+
+class ProviderListResponse(BaseModel):
+    providers: List[str]
+    default: str
diff --git a/backend/app/services/__init__.py b/backend/app/services/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/backend/app/services/provider_base.py b/backend/app/services/provider_base.py
new file mode 100644
index 0000000..88af879
--- /dev/null
+++ b/backend/app/services/provider_base.py
@@ -0,0 +1,27 @@
+from abc import ABC, abstractmethod
+from typing import AsyncGenerator
+
+
+class AIProvider(ABC):
+    """Abstract base class for AI providers"""
+
+    def __init__(self, api_key: str, model: str):
+        self.api_key = api_key
+        self.model = model
+
+    @abstractmethod
+    async def chat(self, message: str, system_prompt: str = None) -> str:
+        """Non-streaming chat"""
+        pass
+
+    @abstractmethod
+    async def chat_stream(
+        self, message: str, system_prompt: str = None
+    ) -> AsyncGenerator[str, None]:
+        """Streaming chat - yields chunks of text"""
+        pass
+
+    @abstractmethod
+    def get_provider_name(self) -> str:
+        """Return provider identifier"""
+        pass
diff --git a/backend/app/services/provider_claude.py b/backend/app/services/provider_claude.py
new file mode 100644
index 0000000..84611ec
--- /dev/null
+++ b/backend/app/services/provider_claude.py
@@ -0,0 +1,41 @@
+from typing import AsyncGenerator
+
+import anthropic
+
+from .provider_base import AIProvider
+
+
+class ClaudeProvider(AIProvider):
+    def __init__(self, api_key: str, model: str):
+        super().__init__(api_key, model)
+        self.client = anthropic.AsyncAnthropic(api_key=api_key)
+
+    async def chat(self, message: str, system_prompt: str = None) -> str:
+        """Non-streaming chat"""
+        messages = [{"role": "user", "content": message}]
+
+        kwargs = {"model": self.model, "max_tokens": 4000, "messages": messages}
+
+        if system_prompt:
+            kwargs["system"] = system_prompt
+
+        response = await self.client.messages.create(**kwargs)
+        return response.content[0].text
+
+    async def chat_stream(
+        self, message: str, system_prompt: str = None
+    ) -> AsyncGenerator[str, None]:
+        """Streaming chat"""
+        messages = [{"role": "user", "content": message}]
+
+        kwargs = {"model": self.model, "max_tokens": 4000, "messages": messages}
+
+        if system_prompt:
+            kwargs["system"] = system_prompt
+
+        async with self.client.messages.stream(**kwargs) as stream:
+            async for text in stream.text_stream:
+                yield text
+
+    def get_provider_name(self) -> str:
+        return "claude"
diff --git a/backend/app/services/provider_manager.py b/backend/app/services/provider_manager.py
new file mode 100644
index 0000000..c8d2daf
--- /dev/null
+++ b/backend/app/services/provider_manager.py
@@ -0,0 +1,75 @@
+from typing import Optional
+
+from ..config import settings
+from .provider_base import AIProvider
+from .provider_claude import ClaudeProvider
+from .provider_openai import OpenAIProvider
+
+
+class ProviderManager:
+    """Manages provider selection and fallback logic"""
+
+    def __init__(self):
+        self.providers = {}
+        self._initialize_providers()
+
+    def _initialize_providers(self):
+        """Initialize available providers based on API keys"""
+        if settings.ANTHROPIC_API_KEY and settings.ANTHROPIC_API_KEY.strip():
+            self.providers["claude"] = ClaudeProvider(
+                api_key=settings.ANTHROPIC_API_KEY, model=settings.CLAUDE_MODEL
+            )
+
+        if settings.OPENAI_API_KEY and settings.OPENAI_API_KEY.strip():
+            self.providers["openai"] = OpenAIProvider(
+                api_key=settings.OPENAI_API_KEY, model=settings.OPENAI_MODEL
+            )
+
+    def get_provider(self, provider_name: Optional[str] = None) -> AIProvider:
+        """
+        Get a provider by name, or use default.
+        Raises ValueError if provider not available.
+        """
+        name = provider_name or settings.DEFAULT_PROVIDER
+
+        if name not in self.providers:
+            raise ValueError(
+                f"Provider '{name}' not available. "
+                f"Available: {list(self.providers.keys())}"
+            )
+
+        return self.providers[name]
+
+    def get_available_providers(self) -> list[str]:
+        """Return list of available provider names"""
+        return list(self.providers.keys())
+
+    async def chat_with_fallback(
+        self, message: str, preferred_provider: Optional[str] = None
+    ) -> tuple[str, str]:
+        """
+        Try to chat with preferred provider, fallback to others if it fails.
+        Returns (response, provider_used)
+        """
+        providers_to_try = [preferred_provider or settings.DEFAULT_PROVIDER] + [
+            p
+            for p in self.providers.keys()
+            if p != (preferred_provider or settings.DEFAULT_PROVIDER)
+        ]
+
+        last_error = None
+
+        for provider_name in providers_to_try:
+            try:
+                provider = self.get_provider(provider_name)
+                response = await provider.chat(message)
+                return response, provider_name
+            except Exception as e:
+                last_error = e
+                continue
+
+        raise Exception(f"All providers failed. Last error: {last_error}")
+
+
+# Singleton instance
+provider_manager = ProviderManager()
diff --git a/backend/app/services/provider_openai.py b/backend/app/services/provider_openai.py
new file mode 100644
index 0000000..7488ac8
--- /dev/null
+++ b/backend/app/services/provider_openai.py
@@ -0,0 +1,48 @@
+from typing import AsyncGenerator
+
+from openai import AsyncOpenAI
+
+from .provider_base import AIProvider
+
+
+class OpenAIProvider(AIProvider):
+    def __init__(self, api_key: str, model: str):
+        super().__init__(api_key, model)
+        self.client = AsyncOpenAI(api_key=api_key)
+
+    async def chat(self, message: str, system_prompt: str = None) -> str:
+        """Non-streaming chat"""
+        messages = []
+
+        if system_prompt:
+            messages.append({"role": "system", "content": system_prompt})
+
+        messages.append({"role": "user", "content": message})
+
+        response = await self.client.chat.completions.create(
+            model=self.model, messages=messages, max_tokens=4000
+        )
+
+        return response.choices[0].message.content
+
+    async def chat_stream(
+        self, message: str, system_prompt: str = None
+    ) -> AsyncGenerator[str, None]:
+        """Streaming chat"""
+        messages = []
+
+        if system_prompt:
+            messages.append({"role": "system", "content": system_prompt})
+
+        messages.append({"role": "user", "content": message})
+
+        stream = await self.client.chat.completions.create(
+            model=self.model, messages=messages, max_tokens=4000, stream=True
+        )
+
+        async for chunk in stream:
+            if chunk.choices[0].delta.content:
+                yield chunk.choices[0].delta.content
+
+    def get_provider_name(self) -> str:
+        return "openai"
diff --git a/backend/requirements.txt b/backend/requirements.txt
new file mode 100644
index 0000000..e36f685
--- /dev/null
+++ b/backend/requirements.txt
@@ -0,0 +1,8 @@
+fastapi>=0.109.0
+uvicorn[standard]>=0.27.0
+anthropic>=0.18.1
+openai>=1.50.0
+pydantic>=2.6.0
+pydantic-settings>=2.1.0
+python-dotenv>=1.0.0
+httpx>=0.27.0
diff --git a/docker-compose.yml b/docker-compose.yml
index 845d9cd..0155b69 100644
--- a/docker-compose.yml
+++ b/docker-compose.yml
@@ -1,9 +1,36 @@
-version: '3.8'
-
 services:
-  devden-web:
-    build: .
-    container_name: devden
+  # Frontend (nginx serving static files)
+  frontend:
+    build:
+      context: .
+      dockerfile: Dockerfile
+    container_name: devden-frontend
     ports:
       - "3000:80"
     restart: unless-stopped
+    depends_on:
+      - backend
+
+  # Backend (FastAPI)
+  backend:
+    build:
+      context: ./backend
+      dockerfile: Dockerfile.backend
+    container_name: devden-backend
+    ports:
+      - "8000:8000"
+    environment:
+      - ANTHROPIC_API_KEY=${ANTHROPIC_API_KEY}
+      - OPENAI_API_KEY=${OPENAI_API_KEY}
+      - DEFAULT_PROVIDER=${DEFAULT_PROVIDER:-claude}
+      - CLAUDE_MODEL=${CLAUDE_MODEL:-claude-3-5-sonnet-20241022}
+      - OPENAI_MODEL=${OPENAI_MODEL:-gpt-4-turbo-preview}
+      - FRONTEND_URL=http://localhost:3000
+    env_file:
+      - .env
+    restart: unless-stopped
+    healthcheck:
+      test: ["CMD", "curl", "-f", "http://localhost:8000/health"]
+      interval: 30s
+      timeout: 10s
+      retries: 3
diff --git a/script.js b/script.js
index e47ae9f..f887b1f 100644
--- a/script.js
+++ b/script.js
@@ -4,6 +4,8 @@ const chatMessages = document.getElementById("chatMessages");
 const welcomeInput = document.getElementById("welcomeInput");
 const chatInput = document.getElementById("chatInput");
 
+const API_URL = "http://localhost:8000/api/chat";
+
 let isInChat = false;
 
 function switchToChat() {
@@ -53,7 +55,7 @@ function escapeHtml(text) {
   return div.innerHTML;
 }
 
-function sendMessage(text) {
+async function sendMessage(text) {
   if (!text.trim()) return;
 
   if (!isInChat) {
@@ -66,15 +68,72 @@ function sendMessage(text) {
 
   showTyping();
 
-  setTimeout(() => {
+  try {
+    const response = await fetch(`${API_URL}/stream`, {
+      method: "POST",
+      headers: {
+        "Content-Type": "application/json",
+      },
+      body: JSON.stringify({
+        message: text,
+        provider: null,
+      }),
+    });
+
+    if (!response.ok) {
+      throw new Error(`HTTP error! status: ${response.status}`);
+    }
+
     hideTyping();
-    addMessage(
-      "I'm DevDen - your AI assistant. Soon I'll be connected to your knowledge base!",
-      "assistant",
-    );
+
+    // Create message element for streaming
+    const msgDiv = document.createElement("div");
+    msgDiv.className = "message assistant";
+    const textDiv = document.createElement("div");
+    textDiv.className = "message-text";
+    msgDiv.appendChild(textDiv);
+    chatMessages.appendChild(msgDiv);
+
+    // Read stream
+    const reader = response.body.getReader();
+    const decoder = new TextDecoder();
+    let assistantMessage = "";
+
+    while (true) {
+      const { done, value } = await reader.read();
+      if (done) break;
+
+      const chunk = decoder.decode(value);
+      const lines = chunk.split("\n");
+
+      for (const line of lines) {
+        if (line.startsWith("data: ")) {
+          const data = JSON.parse(line.slice(6));
+
+          if (data.error) {
+            textDiv.textContent = `Error: ${data.error}`;
+            break;
+          }
+
+          if (data.chunk) {
+            assistantMessage += data.chunk;
+            textDiv.textContent = assistantMessage;
+            scrollToBottom();
+          }
+
+          if (data.done) {
+            break;
+          }
+        }
+      }
+    }
+  } catch (error) {
+    hideTyping();
+    addMessage(`Error: ${error.message}`, "assistant");
+  } finally {
     chatInput.disabled = false;
     chatInput.focus();
-  }, 1000);
+  }
 }
 
 // Welcome screen input handler