diff --git a/go.mod b/go.mod
index 0fd8961ad..98870777c 100644
--- a/go.mod
+++ b/go.mod
@@ -32,7 +32,7 @@ require (
 	github.com/aws/aws-sdk-go v1.35.33
 	github.com/awslabs/goformation/v4 v4.15.6
 	github.com/buger/goterm v0.0.0-20200322175922-2f3e71b85129
-	github.com/compose-spec/compose-go v0.0.0-20201126191557-f67043ab8858
+	github.com/compose-spec/compose-go v0.0.0-20201208135325-bcfd1e07a97e
 	github.com/containerd/console v1.0.1
 	github.com/containerd/containerd v1.4.0-0
 	github.com/containerd/continuity v0.0.0-20200928162600-f2cc35102c2a // indirect
@@ -48,7 +48,7 @@ require (
 	github.com/gobwas/ws v1.0.4
 	github.com/golang/mock v1.4.4
 	github.com/golang/protobuf v1.4.3
-	github.com/google/go-cmp v0.5.3
+	github.com/google/go-cmp v0.5.4
 	github.com/gorilla/mux v1.7.4 // indirect
 	github.com/hashicorp/go-multierror v1.1.0
 	github.com/hashicorp/go-uuid v1.0.2
diff --git a/go.sum b/go.sum
index 0e21da6e7..5452c6740 100644
--- a/go.sum
+++ b/go.sum
@@ -156,8 +156,8 @@ github.com/cloudflare/cfssl v0.0.0-20181213083726-b94e044bb51e h1:Qux+lbuMaRzkQy
 github.com/cloudflare/cfssl v0.0.0-20181213083726-b94e044bb51e/go.mod h1:yMWuSON2oQp+43nFtAV/uvKQIFpSPerB57DCt9t8sSA=
 github.com/cncf/udpa/go v0.0.0-20191209042840-269d4d468f6f/go.mod h1:M8M6+tZqaGXZJjfX53e64911xZQV5JYwmTeXPW+k8Sc=
 github.com/codahale/hdrhistogram v0.0.0-20160425231609-f8ad88b59a58/go.mod h1:sE/e/2PUdi/liOCUjSTXgM1o87ZssimdTWN964YiIeI=
-github.com/compose-spec/compose-go v0.0.0-20201126191557-f67043ab8858 h1:WQwUE7mbwbCDuuVc53R9cROmEs7ilXjyFEtiRSZumxY=
-github.com/compose-spec/compose-go v0.0.0-20201126191557-f67043ab8858/go.mod h1:Pm8gjIoib7x9av1XGkijXddjyV4aTHEq9EwVOvWH624=
+github.com/compose-spec/compose-go v0.0.0-20201208135325-bcfd1e07a97e h1:sfRp4eLv+F9ml4Yh49DPkIlEj07N0p/56FzCLbbROJ0=
+github.com/compose-spec/compose-go v0.0.0-20201208135325-bcfd1e07a97e/go.mod h1:rz7rjxJGA/pWpLdBmDdqymGm2okEDYgBE7yx569xW+I=
 github.com/containerd/cgroups v0.0.0-20190919134610-bf292b21730f/go.mod h1:OApqhQ4XNSNC13gXIwDjhOQxjWa/NxkwZXJ1EvqT0ko=
 github.com/containerd/cgroups v0.0.0-20200217135630-d732e370d46d/go.mod h1:CStdkl05lBnJej94BPFoJ7vB8cELKXwViS+dgfW0/M8=
 github.com/containerd/cgroups v0.0.0-20200531161412-0dbf7f05ba59 h1:qWj4qVYZ95vLWwqyNJCQg7rDsG5wPdze0UaPolH7DUk=
@@ -363,8 +363,8 @@ github.com/google/go-cmp v0.4.1/go.mod h1:v8dTdLbMG2kIc/vJvl+f65V22dbkXbowE6jgT/
 github.com/google/go-cmp v0.5.0 h1:/QaMHBdZ26BB3SSst0Iwl10Epc+xhTquomWX0oZEB6w=
 github.com/google/go-cmp v0.5.0/go.mod h1:v8dTdLbMG2kIc/vJvl+f65V22dbkXbowE6jgT/gNBxE=
 github.com/google/go-cmp v0.5.1/go.mod h1:v8dTdLbMG2kIc/vJvl+f65V22dbkXbowE6jgT/gNBxE=
-github.com/google/go-cmp v0.5.3 h1:x95R7cp+rSeeqAMI2knLtQ0DKlaBhv2NrtrOvafPHRo=
-github.com/google/go-cmp v0.5.3/go.mod h1:v8dTdLbMG2kIc/vJvl+f65V22dbkXbowE6jgT/gNBxE=
+github.com/google/go-cmp v0.5.4 h1:L8R9j+yAqZuZjsqh/z+F1NCffTKKLShY6zXTItVIZ8M=
+github.com/google/go-cmp v0.5.4/go.mod h1:v8dTdLbMG2kIc/vJvl+f65V22dbkXbowE6jgT/gNBxE=
 github.com/google/gofuzz v0.0.0-20161122191042-44d81051d367/go.mod h1:HP5RmnzzSNb993RKQDq4+1A4ia9nllfqcQFTQJedwGI=
 github.com/google/gofuzz v1.0.0 h1:A8PeW59pxE9IoFRqBp37U+mSNaQoZ46F1f0f863XSXw=
 github.com/google/gofuzz v1.0.0/go.mod h1:dBl0BpW6vV/+mYPU4Po3pmUjxk6FQPldtuIdl/M65Eg=
@@ -541,8 +541,8 @@ github.com/mitchellh/hashstructure v0.0.0-20170609045927-2bca23e0e452/go.mod h1:
 github.com/mitchellh/iochan v1.0.0/go.mod h1:JwYml1nuB7xOzsp52dPpHFffvOCDupsG0QubkSMEySY=
 github.com/mitchellh/mapstructure v0.0.0-20160808181253-ca63d7c062ee/go.mod h1:FVVH3fgwuzCH5S8UJGiWEs2h04kUh9fWfEaFds41c1Y=
 github.com/mitchellh/mapstructure v1.1.2/go.mod h1:FVVH3fgwuzCH5S8UJGiWEs2h04kUh9fWfEaFds41c1Y=
-github.com/mitchellh/mapstructure v1.3.3 h1:SzB1nHZ2Xi+17FP0zVQBHIZqvwRN9408fJO8h+eeNA8=
-github.com/mitchellh/mapstructure v1.3.3/go.mod h1:bFUtVrKA4DC2yAKiSyO/QUcy7e+RRV2QTWOzhPopBRo=
+github.com/mitchellh/mapstructure v1.4.0 h1:7ks8ZkOP5/ujthUsT07rNv+nkLXCQWKNHuwzOAesEks=
+github.com/mitchellh/mapstructure v1.4.0/go.mod h1:bFUtVrKA4DC2yAKiSyO/QUcy7e+RRV2QTWOzhPopBRo=
 github.com/mitchellh/osext v0.0.0-20151018003038-5e2d6d41470f/go.mod h1:OkQIRizQZAeMln+1tSwduZz7+Af5oFlKirV/MSYes2A=
 github.com/moby/buildkit v0.7.0 h1:5T41l8i0f+OqHvRThh2NKVXiLpclXYmgO8QePoyIJrw=
 github.com/moby/buildkit v0.7.0/go.mod h1:zOhLO1TiQepuSfzoNDQ542IGJQy0CHr79T4MOJvaewY=
@@ -1076,6 +1076,8 @@ gopkg.in/yaml.v2 v2.2.4/go.mod h1:hI93XBmqTisBFMUTm0b8Fm+jr3Dg1NNxqwp+5A1VGuI=
 gopkg.in/yaml.v2 v2.2.8/go.mod h1:hI93XBmqTisBFMUTm0b8Fm+jr3Dg1NNxqwp+5A1VGuI=
 gopkg.in/yaml.v2 v2.3.0 h1:clyUAQHOM3G0M3f5vQj7LuJrETvjVot3Z5el9nffUtU=
 gopkg.in/yaml.v2 v2.3.0/go.mod h1:hI93XBmqTisBFMUTm0b8Fm+jr3Dg1NNxqwp+5A1VGuI=
+gopkg.in/yaml.v2 v2.4.0 h1:D8xgwECY7CYvx+Y2n4sBz93Jn9JRvxdiyyo8CTfuKaY=
+gopkg.in/yaml.v2 v2.4.0/go.mod h1:RDklbk79AGWmwhnvt/jBztapEOGDOx6ZbXqjP6csGnQ=
 gopkg.in/yaml.v3 v3.0.0-20200313102051-9f266ea9e77c h1:dUUwHk2QECo/6vqA44rthZ8ie2QXMNeKRTHCNY2nXvo=
 gopkg.in/yaml.v3 v3.0.0-20200313102051-9f266ea9e77c/go.mod h1:K4uyk7z7BCEPqu6E+C64Yfv1cQ7kz7rIZviUmN+EgEM=
 gotest.tools v2.1.0+incompatible/go.mod h1:DsYFclhRJ6vuDpmuTbkuFWG+y2sxOXAzmJt81HFBacw=
diff --git a/local/compose/compose_test.go b/local/compose/compose_test.go
index 94d8460b2..6aa295558 100644
--- a/local/compose/compose_test.go
+++ b/local/compose/compose_test.go
@@ -110,13 +110,34 @@ func TestStacksMixedStatus(t *testing.T) {
 }
 
 func TestBuildBindMount(t *testing.T) {
+	project := composetypes.Project{}
 	volume := composetypes.ServiceVolumeConfig{
 		Type:   composetypes.VolumeTypeBind,
 		Source: "e2e/volume-test",
 		Target: "/data",
 	}
-	mount, err := buildMount(volume)
+	mount, err := buildMount(project, volume)
 	assert.NilError(t, err)
 	assert.Assert(t, filepath.IsAbs(mount.Source))
 	assert.Equal(t, mount.Type, mountTypes.TypeBind)
 }
+
+func TestBuildVolumeMount(t *testing.T) {
+	project := composetypes.Project{
+		Name: "myProject",
+		Volumes: composetypes.Volumes(map[string]composetypes.VolumeConfig{
+			"myVolume": {
+				Name: "myProject_myVolume",
+			},
+		}),
+	}
+	volume := composetypes.ServiceVolumeConfig{
+		Type:   composetypes.VolumeTypeVolume,
+		Source: "myVolume",
+		Target: "/data",
+	}
+	mount, err := buildMount(project, volume)
+	assert.NilError(t, err)
+	assert.Equal(t, mount.Source, "myProject_myVolume")
+	assert.Equal(t, mount.Type, mountTypes.TypeVolume)
+}
diff --git a/local/compose/create.go b/local/compose/create.go
index 94bae858c..2eafbf2b7 100644
--- a/local/compose/create.go
+++ b/local/compose/create.go
@@ -144,7 +144,7 @@ func getContainerCreateOptions(p *types.Project, s types.ServiceConfig, number i
 		StopTimeout: convert.ToSeconds(s.StopGracePeriod),
 	}
 
-	mountOptions, err := buildContainerMountOptions(s, inherit)
+	mountOptions, err := buildContainerMountOptions(*p, s, inherit)
 	if err != nil {
 		return nil, nil, nil, err
 	}
@@ -191,7 +191,7 @@ func buildContainerBindingOptions(s types.ServiceConfig) nat.PortMap {
 	return bindings
 }
 
-func buildContainerMountOptions(s types.ServiceConfig, inherit *moby.Container) ([]mount.Mount, error) {
+func buildContainerMountOptions(p types.Project, s types.ServiceConfig, inherit *moby.Container) ([]mount.Mount, error) {
 	mounts := []mount.Mount{}
 	var inherited []string
 	if inherit != nil {
@@ -217,7 +217,7 @@ func buildContainerMountOptions(s types.ServiceConfig, inherit *moby.Container)
 		if contains(inherited, v.Target) {
 			continue
 		}
-		mount, err := buildMount(v)
+		mount, err := buildMount(p, v)
 		if err != nil {
 			return nil, err
 		}
@@ -226,9 +226,9 @@ func buildContainerMountOptions(s types.ServiceConfig, inherit *moby.Container)
 	return mounts, nil
 }
 
-func buildMount(volume types.ServiceVolumeConfig) (mount.Mount, error) {
+func buildMount(project types.Project, volume types.ServiceVolumeConfig) (mount.Mount, error) {
 	source := volume.Source
-	if volume.Type == "bind" && !filepath.IsAbs(source) {
+	if volume.Type == types.VolumeTypeBind && !filepath.IsAbs(source) {
 		// volume source has already been prefixed with workdir if required, by compose-go project loader
 		var err error
 		source, err = filepath.Abs(source)
@@ -236,6 +236,12 @@ func buildMount(volume types.ServiceVolumeConfig) (mount.Mount, error) {
 			return mount.Mount{}, err
 		}
 	}
+	if volume.Type == types.VolumeTypeVolume {
+		pVolume, ok := project.Volumes[volume.Source]
+		if ok {
+			source = pVolume.Name
+		}
+	}
 
 	return mount.Mount{
 		Type:          mount.Type(volume.Type),
diff --git a/tests/compose-e2e/compose_test.go b/tests/compose-e2e/compose_test.go
index f9e5f4d46..a36a67e3e 100644
--- a/tests/compose-e2e/compose_test.go
+++ b/tests/compose-e2e/compose_test.go
@@ -120,10 +120,20 @@ func TestLocalComposeVolume(t *testing.T) {
 		c.RunDockerOrExitError("rmi", "compose-e2e-volume_nginx")
 		c.RunDockerOrExitError("volume", "rm", projectName+"_staticVol")
 		c.RunDockerCmd("compose", "up", "-d", "--workdir", "volume-test", "--project-name", projectName)
+	})
 
+	t.Run("access bind mount data", func(t *testing.T) {
 		output := HTTPGetWithRetry(t, "http://localhost:8090", http.StatusOK, 2*time.Second, 20*time.Second)
 		assert.Assert(t, strings.Contains(output, "Hello from Nginx container"))
+	})
 
+	t.Run("check container volume specs", func(t *testing.T) {
+		res := c.RunDockerCmd("inspect", "compose-e2e-volume_nginx2_1", "--format", "{{ json .HostConfig.Mounts }}")
+		//nolint
+		res.Assert(t, icmd.Expected{Out: `[{"Type":"volume","Source":"compose-e2e-volume_staticVol","Target":"/usr/share/nginx/html","ReadOnly":true},{"Type":"volume","Target":"/usr/src/app/node_modules"}]`})
+	})
+
+	t.Run("cleanup volume project", func(t *testing.T) {
 		_ = c.RunDockerCmd("compose", "down", "--project-name", projectName)
 		_ = c.RunDockerCmd("volume", "rm", projectName+"_staticVol")
 	})
diff --git a/tests/compose-e2e/volume-test/docker-compose.yml b/tests/compose-e2e/volume-test/docker-compose.yml
index 2574ed0eb..57ec42fd0 100644
--- a/tests/compose-e2e/volume-test/docker-compose.yml
+++ b/tests/compose-e2e/volume-test/docker-compose.yml
@@ -9,7 +9,8 @@ services:
   nginx2:
     build: nginx-build
     volumes:
-      - staticVol:/usr/share/nginx/html
+      - staticVol:/usr/share/nginx/html:ro
+      - /usr/src/app/node_modules
     ports:
       - 9090:80