diff --git a/README.md b/README.md
index fd2f14860ae318e9bf84b7e5a8c07886d9c99dcb..0a9e10d6c6d6444845c3fadb7c0c11008af2f08c 100644
--- a/README.md
+++ b/README.md
@@ -1,3 +1,51 @@
 # Pmodules
 
-## 
\ No newline at end of file
+Pmodules are a hierarchical module environment based on [Environment Modules](http://modules.sourceforge.net).
+For the time being they are still using the C implementation of the Environment Modules.
+
+*Future plans*
+* Version 2 will be a re-implementation in Tcl using the modulecmd of Environment Modules.
+* Version 3 will be implementat as extension of Environment Modules.
+
+## Install a new Pmodules environment
+
+All Pmodules and all required software is installed in a directory hierarchy 
+in one unique root directory. If required or prefered dedicated directories can
+be defined for temporary files and/or downloaded files.
+
+In the most cases a Pmodules environment will be installed on a network file-system, 
+but local disk is of course also possible. Just make sure you have write access to
+to Pmodules root directory. The Pmodules root directory defaults to `/opt/psi`. 
+
+*Installation*
+1. clone this repository and cd into it.
+2. create the Pmodules root directory and make sure you have write access with
+   the user you want to use to setup the new Pmodules environment. In the following 
+   steps we use `$PMODULES_ROOT` as symbols for the root directory.
+3. Run  
+   ```
+   ./build configure --prefix=$PMODULES_ROOT
+   ```
+   to configure a new Pmodules environment. This command creates the configuration 
+   file `$PMODULES_ROOT/config/modbuild.conf` and some directories under `$PMODULES_ROOT`
+   required in the next steps.
+4. Run
+   ```
+   ./build compile --prefix=$PMODULES_ROOT
+   ```
+   to compile and install the required tools.
+5. Run
+   ```
+   ./build install --prefix=$PMODULES_ROOT
+   ```
+   to install the Pmodules scripts.
+   
+If you don't want to use `$PMODULES_ROOT/var/tmp/${USER}` for temporary files
+you can override the default by using the option `--tmpdir=TEMP_DIR` in step 3.
+
+If you don't want to use `$PMODULES_ROOT/var/distfiles` for downloaded files
+you can override the default by using the option `--distfilesdir=DISTDIR` in step 3.
+
+## Install a new Pmodules version
+
+TBW
\ No newline at end of file