diff --git a/modules/docker/docker_compose.go b/modules/docker/docker_compose.go
index 2b48ffbcc..d90ccff36 100644
--- a/modules/docker/docker_compose.go
+++ b/modules/docker/docker_compose.go
@@ -1,6 +1,7 @@
 package docker
 
 import (
+	"regexp"
 	"strings"
 
 	"github.com/gruntwork-io/terratest/modules/logger"
@@ -62,7 +63,7 @@ func runDockerComposeE(t testing.TestingT, stdout bool, options *Options, args .
 	if result.ExitCode == 0 {
 		cmd = shell.Command{
 			Command:    "docker",
-			Args:       append([]string{"compose", "--project-name", strings.ToLower(t.Name())}, args...),
+			Args:       append([]string{"compose", "--project-name", generateValidDockerComposeProjectName(t.Name())}, args...),
 			WorkingDir: options.WorkingDir,
 			Env:        options.EnvVars,
 			Logger:     options.Logger,
@@ -72,7 +73,7 @@ func runDockerComposeE(t testing.TestingT, stdout bool, options *Options, args .
 			Command: "docker-compose",
 			// We append --project-name to ensure containers from multiple different tests using Docker Compose don't end
 			// up in the same project and end up conflicting with each other.
-			Args:       append([]string{"--project-name", strings.ToLower(t.Name())}, args...),
+			Args:       append([]string{"--project-name", generateValidDockerComposeProjectName(t.Name())}, args...),
 			WorkingDir: options.WorkingDir,
 			Env:        options.EnvVars,
 			Logger:     options.Logger,
@@ -84,3 +85,9 @@ func runDockerComposeE(t testing.TestingT, stdout bool, options *Options, args .
 	}
 	return shell.RunCommandAndGetOutputE(t, cmd)
 }
+
+// Note: docker-compose command doesn't like lower case or special characters, other than -.
+func generateValidDockerComposeProjectName(str string) string {
+	lower_str := strings.ToLower(str)
+	return regexp.MustCompile(`[^a-zA-Z0-9 ]+`).ReplaceAllString(lower_str, "-")
+}