diff --git a/docker-compose.yaml b/docker-compose.yaml
index 0206289d71..14e9659681 100644
--- a/docker-compose.yaml
+++ b/docker-compose.yaml
@@ -77,7 +77,7 @@ services:
 
   postgrest:
     container_name: postgrest
-    image: postgrest/postgrest:v12.0.2
+    image: postgrest/postgrest:v12.2.0
     ports:
       - "3001:3000"
     env_file:
diff --git a/docker/dev-entrypoint.sh b/docker/dev-entrypoint.sh
index 4bc6a24000..84e156059b 100644
--- a/docker/dev-entrypoint.sh
+++ b/docker/dev-entrypoint.sh
@@ -25,6 +25,31 @@ else
   ./server/scripts/wait-for-it.sh "$PG_HOST:$PG_PORT" --strict --timeout=300 -- echo "PostgreSQL is up"
 fi
 
+# Create databases if they don't exist
+echo "Ensuring required databases exist..."
+
+# Create main application database (tooljet_production)
+echo "Checking for database: ${PG_DB}"
+if ! PGPASSWORD=${PG_PASS} psql -h ${PG_HOST:-postgres} -U ${PG_USER:-postgres} -lqt | cut -d \| -f 1 | grep -qw ${PG_DB}; then
+  echo "Creating database ${PG_DB}..."
+  PGPASSWORD=${PG_PASS} psql -h ${PG_HOST:-postgres} -U ${PG_USER:-postgres} -c "CREATE DATABASE ${PG_DB}"
+  echo "Database ${PG_DB} created successfully"
+else
+  echo "Database ${PG_DB} already exists"
+fi
+
+# Create ToolJet internal database (tooljet_db)
+echo "Checking for database: ${TOOLJET_DB}"
+if ! PGPASSWORD=${TOOLJET_DB_PASS} psql -h ${TOOLJET_DB_HOST:-postgres} -U ${TOOLJET_DB_USER:-postgres} -lqt | cut -d \| -f 1 | grep -qw ${TOOLJET_DB}; then
+  echo "Creating database ${TOOLJET_DB}..."
+  PGPASSWORD=${TOOLJET_DB_PASS} psql -h ${TOOLJET_DB_HOST:-postgres} -U ${TOOLJET_DB_USER:-postgres} -c "CREATE DATABASE ${TOOLJET_DB}"
+  echo "Database ${TOOLJET_DB} created successfully"
+else
+  echo "Database ${TOOLJET_DB} already exists"
+fi
+
+echo "All required databases are ready"
+
 # Wait for Redis (external service)
 echo "Waiting for Redis..."
 REDIS_HOST=${REDIS_HOST:-redis}
diff --git a/server/dev-entrypoint.sh b/server/dev-entrypoint.sh
new file mode 100755
index 0000000000..08411bad05
--- /dev/null
+++ b/server/dev-entrypoint.sh
@@ -0,0 +1,75 @@
+#!/bin/bash
+set -e
+
+# Default to CE edition if not specified
+TOOLJET_EDITION=${TOOLJET_EDITION:-ce}
+export TOOLJET_EDITION
+
+echo "Starting ToolJet in ${TOOLJET_EDITION} mode..."
+
+# Load environment variables from .env if the file exists
+if [ -f "./.env" ]; then
+  export $(grep -v '^#' ./.env | xargs -d '\n') || true
+fi
+
+# For development, we expect Redis and PostgREST to run as separate services
+# Check connectivity to external services
+
+# Wait for PostgreSQL
+echo "Waiting for PostgreSQL..."
+if [ -z "$DATABASE_URL" ]; then
+  ./server/scripts/wait-for-it.sh ${PG_HOST:-postgres}:${PG_PORT:-5432} --strict --timeout=300 -- echo "PostgreSQL is up"
+else
+  PG_HOST=$(echo "$DATABASE_URL" | awk -F'[/:@?]' '{print $6}')
+  PG_PORT=$(echo "$DATABASE_URL" | awk -F'[/:@?]' '{print $7}')
+  ./server/scripts/wait-for-it.sh "$PG_HOST:$PG_PORT" --strict --timeout=300 -- echo "PostgreSQL is up"
+fi
+
+# Create databases if they don't exist
+echo "Ensuring required databases exist..."
+
+# Create main application database (tooljet_production)
+echo "Checking for database: ${PG_DB}"
+if ! PGPASSWORD=${PG_PASS} psql -h ${PG_HOST:-postgres} -U ${PG_USER:-postgres} -lqt | cut -d \| -f 1 | grep -qw ${PG_DB}; then
+  echo "Creating database ${PG_DB}..."
+  PGPASSWORD=${PG_PASS} psql -h ${PG_HOST:-postgres} -U ${PG_USER:-postgres} -c "CREATE DATABASE ${PG_DB}"
+  echo "Database ${PG_DB} created successfully"
+else
+  echo "Database ${PG_DB} already exists"
+fi
+
+# Create ToolJet internal database (tooljet_db)
+echo "Checking for database: ${TOOLJET_DB}"
+if ! PGPASSWORD=${TOOLJET_DB_PASS} psql -h ${TOOLJET_DB_HOST:-postgres} -U ${TOOLJET_DB_USER:-postgres} -lqt | cut -d \| -f 1 | grep -qw ${TOOLJET_DB}; then
+  echo "Creating database ${TOOLJET_DB}..."
+  PGPASSWORD=${TOOLJET_DB_PASS} psql -h ${TOOLJET_DB_HOST:-postgres} -U ${TOOLJET_DB_USER:-postgres} -c "CREATE DATABASE ${TOOLJET_DB}"
+  echo "Database ${TOOLJET_DB} created successfully"
+else
+  echo "Database ${TOOLJET_DB} already exists"
+fi
+
+echo "All required databases are ready"
+
+# Wait for Redis (external service)
+echo "Waiting for Redis..."
+REDIS_HOST=${REDIS_HOST:-redis}
+REDIS_PORT=${REDIS_PORT:-6379}
+./server/scripts/wait-for-it.sh ${REDIS_HOST}:${REDIS_PORT} --strict --timeout=300 -- echo "Redis is up"
+
+# Wait for PostgREST (external service)
+echo "Waiting for PostgREST..."
+PGRST_HOST=${PGRST_HOST:-postgrest}
+PGRST_PORT=${PGRST_SERVER_PORT:-3000}
+./server/scripts/wait-for-it.sh ${PGRST_HOST}:${PGRST_PORT} --strict --timeout=300 -- echo "PostgREST is up"
+
+# Run database setup (development mode)
+if [ -d "./server/dist" ]; then
+  echo "Running database setup (production mode)..."
+  npm run db:setup:prod
+else
+  echo "Running database setup (development mode)..."
+  npm run db:setup
+fi
+
+echo "Starting server..."
+exec "$@"
\ No newline at end of file