diff --git a/README.md b/README.md
index 10711f0..e4b0ef4 100644
--- a/README.md
+++ b/README.md
@@ -21,7 +21,18 @@ Status   | Network    | Links   | Ansible
 
 We're using [asdf](https://github.com/asdf-vm/asdf) to make sure that we all use the same versions across tools. Our repositories should contain versions defined in .tools-versions.
 
-You can then use [`./setup.sh`](./asdf-setup.sh) to install all dependencies.
+For Python dependencies, we use [uv](https://github.com/astral-sh/uv) - a fast Python package manager that creates and manages virtual environments.
+
+You can then use [`./setup.sh`](./setup.sh) to install all dependencies. This script will:
+1. Install all asdf-managed tools
+2. Check for uv installation (and optionally install it)
+3. Create a Python virtual environment at `.venv`
+4. Install all Python dependencies from `pyproject.toml`
+
+After running the setup script, activate the virtual environment with:
+```shell
+source .venv/bin/activate
+```
 
 ## Terraform
 From [`./terraform/devnet-0/`](./terraform/devnet-0/)
diff --git a/pyproject.toml b/pyproject.toml
new file mode 100644
index 0000000..293f465
--- /dev/null
+++ b/pyproject.toml
@@ -0,0 +1,21 @@
+[project]
+name = "template-devnets"
+version = "0.1.0"
+description = "Infrastructure code for Dev/Testnets"
+requires-python = ">=3.9"
+dependencies = [
+    "ansible-lint==24.6.0",
+    "ansible==10.1.0",
+    "molecule-containers==2.0.0",
+    "molecule==24.6.0",
+    "netaddr==1.3.0",
+    "pip==24.0",
+    "requests==2.31",  # Fix for not being able to run 'molecule test' using docker on mac. Issue: https://github.com/docker/docker-py/issues/3256
+]
+
+[build-system]
+requires = ["hatchling"]
+build-backend = "hatchling.build"
+
+[tool.uv]
+dev-dependencies = []
\ No newline at end of file
diff --git a/setup.sh b/setup.sh
index 9e5e95f..b6754af 100755
--- a/setup.sh
+++ b/setup.sh
@@ -1,5 +1,45 @@
 #!/bin/bash -xe
 
+# Check if asdf is installed
+if ! command -v asdf &> /dev/null; then
+    echo "asdf not found. It is required to manage tool versions."
+
+    # Check if Go is installed
+    if ! command -v go &> /dev/null; then
+        echo "Go is not installed. Go is required to install asdf."
+        echo "Please install Go first: https://golang.org/doc/install"
+        exit 1
+    fi
+
+    echo ""
+    echo "Would you like to install asdf using Go? (y/n)"
+    read -r response
+
+    if [[ "$response" =~ ^[Yy]$ ]]; then
+        echo "Installing asdf v0.18.0 via Go..."
+        go install github.com/asdf-vm/asdf/cmd/asdf@v0.18.0
+
+        # Add Go bin to PATH for current session if not already there
+        export PATH="$HOME/go/bin:$PATH"
+
+        # Check if asdf is now available
+        if command -v asdf &> /dev/null; then
+            echo "asdf installed successfully!"
+            echo ""
+            echo "Add the following to your shell configuration file (.bashrc, .zshrc, etc.):"
+            echo "  export PATH=\"\$HOME/go/bin:\$PATH\""
+        else
+            echo "Failed to install asdf. Please install it manually."
+            exit 1
+        fi
+    else
+        echo "Aborting. Please install asdf manually:"
+        echo "  go install github.com/asdf-vm/asdf/cmd/asdf@v0.18.0"
+        echo "Or visit: https://asdf-vm.com/guide/getting-started.html"
+        exit 1
+    fi
+fi
+
 # Uninstall previous asdf plugins that shouldn't be managed anymore under asdf
 asdf uninstall ansible || true
 asdf uninstall ansible-lint || true
@@ -17,5 +57,34 @@ asdf plugin add awscli || true
 asdf install
 asdf reshim
 
-# Install python tools
-pip install -r requirements.txt
+# Check if uv is installed
+if ! command -v uv &> /dev/null; then
+    echo "uv not found. It is required to manage Python dependencies."
+    echo ""
+    echo "Would you like to install uv automatically? (y/n)"
+    read -r response
+
+    if [[ "$response" =~ ^[Yy]$ ]]; then
+        echo "Installing uv..."
+        curl -LsSf https://astral.sh/uv/install.sh | sh
+        # Add uv to PATH for current session
+        export PATH="$HOME/.cargo/bin:$PATH"
+        echo "uv installed successfully!"
+    else
+        echo "Aborting. Please install uv manually:"
+        echo "  curl -LsSf https://astral.sh/uv/install.sh | sh"
+        echo "Or visit: https://github.com/astral-sh/uv"
+        exit 1
+    fi
+fi
+
+# Create virtual environment with uv
+echo "Creating virtual environment with uv..."
+uv venv .venv
+
+# Install Python dependencies with uv (doesn't require activation)
+echo "Installing Python dependencies with uv..."
+uv pip sync pyproject.toml
+
+echo "Setup complete! Run:"
+echo "source .venv/bin/activate"