diff --git a/scripts/setup-devnet.sh b/scripts/setup-devnet.sh
index 4c50e353..8c610fec 100755
--- a/scripts/setup-devnet.sh
+++ b/scripts/setup-devnet.sh
@@ -4,7 +4,7 @@
 # This script initializes a complete devnet environment including:
 # - Validator keys and configuration
 # - Genesis file with funded validator accounts
-# - Docker Compose configuration
+# - Docker Compose configuration (only when --ips is not specified)
 #
 # Usage:
 #   ./scripts/setup-devnet.sh [options]
@@ -17,6 +17,10 @@
 #   --network-id <ID>          Network identifier (default: cipherbft-devnet-1)
 #   --output <DIR>             Output directory (default: ./devnet)
 #   --extra-alloc <ADDR:ETH>   Extra account allocation (can be repeated)
+#   --ips <IP1,IP2,...>        Comma-separated list of validator IPs (one per validator).
+#                              When provided, peer addresses in node configs will use these
+#                              IPs instead of 127.0.0.1. Docker Compose is not generated.
+#                              The number of IPs must match --validators.
 #   --force                    Overwrite existing devnet directory
 #   --help                     Show this help message
 #
@@ -24,6 +28,7 @@
 #   ./scripts/setup-devnet.sh                                    # Default 4 validators, 100 ETH each
 #   ./scripts/setup-devnet.sh -n 7 --balance 1000                # 7 validators, 1000 ETH each
 #   ./scripts/setup-devnet.sh --extra-alloc 0x123...abc:5000     # Add extra funded account
+#   ./scripts/setup-devnet.sh --ips 10.0.0.1,10.0.0.2,10.0.0.3,10.0.0.4  # Multi-machine devnet
 
 set -e
 
@@ -39,6 +44,7 @@ NETWORK_ID="cipherbft-devnet-1"
 OUTPUT_DIR="$PROJECT_ROOT/devnet"
 EXTRA_ALLOC=()
 FORCE=false
+VALIDATOR_IPS=""  # Comma-separated IPs; empty means use localhost
 
 # Parse arguments
 while [[ $# -gt 0 ]]; do
@@ -71,6 +77,10 @@ while [[ $# -gt 0 ]]; do
             EXTRA_ALLOC+=("--extra-alloc" "$2")
             shift 2
             ;;
+        --ips)
+            VALIDATOR_IPS="$2"
+            shift 2
+            ;;
         --force)
             FORCE=true
             shift
@@ -103,6 +113,18 @@ if [ -d "$OUTPUT_DIR" ]; then
     fi
 fi
 
+# Validate --ips if provided
+if [ -n "$VALIDATOR_IPS" ]; then
+    IFS=',' read -ra IP_ARRAY <<< "$VALIDATOR_IPS"
+    IP_COUNT=${#IP_ARRAY[@]}
+    if [ "$IP_COUNT" -ne "$NUM_VALIDATORS" ]; then
+        echo "Error: --ips requires exactly $NUM_VALIDATORS IP addresses (got $IP_COUNT)"
+        echo "  Provided: $VALIDATOR_IPS"
+        echo "  Use -n/--validators to change the validator count"
+        exit 1
+    fi
+fi
+
 echo "Setting up devnet with $NUM_VALIDATORS validators..."
 echo ""
 echo "Configuration:"
@@ -112,6 +134,9 @@ echo "  Initial Balance:  $INITIAL_BALANCE_ETH ETH per validator"
 echo "  Chain ID:         $CHAIN_ID"
 echo "  Network ID:       $NETWORK_ID"
 echo "  Output:           $OUTPUT_DIR"
+if [ -n "$VALIDATOR_IPS" ]; then
+    echo "  Validator IPs:    $VALIDATOR_IPS"
+fi
 if [ ${#EXTRA_ALLOC[@]} -gt 0 ]; then
     echo "  Extra Allocs:     ${EXTRA_ALLOC[*]}"
 fi
@@ -146,24 +171,95 @@ echo "Generating devnet configuration..."
 
 echo ""
 
-# Generate docker-compose configuration
-echo "Generating Docker Compose configuration..."
-"$SCRIPT_DIR/generate-compose.sh" "$OUTPUT_DIR" "$PROJECT_ROOT/docker"
+# If custom IPs are provided, rewrite peer addresses in all node configs
+if [ -n "$VALIDATOR_IPS" ]; then
+    echo "Updating peer addresses in node configs with provided IPs..."
+    IFS=',' read -ra IP_ARRAY <<< "$VALIDATOR_IPS"
+
+    for ((i=0; i<NUM_VALIDATORS; i++)); do
+        CONFIG="${OUTPUT_DIR}/node${i}/config/node.json"
+        if [ ! -f "$CONFIG" ]; then
+            echo "Warning: Config not found: $CONFIG"
+            continue
+        fi
+
+        python3 << PYEOF
+import json, re
+
+with open("$CONFIG") as f:
+    config = json.load(f)
+
+ips = "$VALIDATOR_IPS".split(",")
+
+for peer in config.get("peers", []):
+    for key in ["primary_addr", "consensus_addr"]:
+        if key in peer:
+            addr = peer[key]
+            match = re.match(r"127\.0\.0\.1:(\d+)", addr)
+            if match:
+                port = int(match.group(1))
+                peer_node_num = (port - 9000) // 10
+                if 0 <= peer_node_num < len(ips):
+                    peer[key] = f"{ips[peer_node_num].strip()}:{port}"
+
+    if "worker_addrs" in peer:
+        new_addrs = []
+        for addr in peer["worker_addrs"]:
+            match = re.match(r"127\.0\.0\.1:(\d+)", addr)
+            if match:
+                port = int(match.group(1))
+                peer_node_num = (port - 9000) // 10
+                if 0 <= peer_node_num < len(ips):
+                    new_addrs.append(f"{ips[peer_node_num].strip()}:{port}")
+                else:
+                    new_addrs.append(addr)
+            else:
+                new_addrs.append(addr)
+        peer["worker_addrs"] = new_addrs
+
+with open("$CONFIG", "w") as f:
+    json.dump(config, f, indent=2)
+PYEOF
+
+        echo "  Updated: node${i}/config/node.json"
+    done
+    echo ""
+fi
+
+# Generate docker-compose configuration (only for localhost mode)
+if [ -z "$VALIDATOR_IPS" ]; then
+    echo "Generating Docker Compose configuration..."
+    "$SCRIPT_DIR/generate-compose.sh" "$OUTPUT_DIR" "$PROJECT_ROOT/docker"
+    echo ""
+fi
 
-echo ""
 echo "Devnet setup complete!"
 echo ""
 echo "Validator accounts funded with:"
 echo "  - $INITIAL_STAKE_ETH ETH staked in deposit contract"
 echo "  - $INITIAL_BALANCE_ETH ETH available balance (for gas)"
 echo ""
-echo "Next steps:"
-echo "  Start devnet:  ./scripts/start-devnet.sh"
-echo "  Reset state:   ./scripts/reset-devnet.sh"
-echo "  Stop devnet:   ./scripts/stop-devnet.sh"
-echo ""
-echo "RPC endpoints (after start):"
-for ((i=0; i<NUM_VALIDATORS; i++)); do
-    PORT=$((8545 + i * 10))
-    echo "  node$i: http://localhost:$PORT"
-done
+
+if [ -z "$VALIDATOR_IPS" ]; then
+    echo "Next steps:"
+    echo "  Start devnet:  ./scripts/start-devnet.sh"
+    echo "  Reset state:   ./scripts/reset-devnet.sh"
+    echo "  Stop devnet:   ./scripts/stop-devnet.sh"
+    echo ""
+    echo "RPC endpoints (after start):"
+    for ((i=0; i<NUM_VALIDATORS; i++)); do
+        PORT=$((8545 + i * 10))
+        echo "  node$i: http://localhost:$PORT"
+    done
+else
+    IFS=',' read -ra IP_ARRAY <<< "$VALIDATOR_IPS"
+    echo "Node configs are ready. Distribute each node directory to its machine:"
+    for ((i=0; i<NUM_VALIDATORS; i++)); do
+        PORT=$((8545 + i * 10))
+        IP="${IP_ARRAY[$i]}"
+        echo "  node$i -> ${IP} (RPC: http://${IP}:${PORT})"
+    done
+    echo ""
+    echo "On each machine, copy the corresponding node directory and run:"
+    echo "  cipherd start --config ./nodeN/config/node.json"
+fi