diff --git a/database/init.sql b/database/init.sql
new file mode 100644
index 0000000..1219589
--- /dev/null
+++ b/database/init.sql
@@ -0,0 +1,35 @@
+-- PriceGhost Database Schema
+
+-- Users table
+CREATE TABLE IF NOT EXISTS users (
+  id SERIAL PRIMARY KEY,
+  email VARCHAR(255) UNIQUE NOT NULL,
+  password_hash VARCHAR(255) NOT NULL,
+  created_at TIMESTAMP DEFAULT CURRENT_TIMESTAMP
+);
+
+-- Products table
+CREATE TABLE IF NOT EXISTS products (
+  id SERIAL PRIMARY KEY,
+  user_id INTEGER REFERENCES users(id) ON DELETE CASCADE,
+  url TEXT NOT NULL,
+  name VARCHAR(255),
+  image_url TEXT,
+  refresh_interval INTEGER DEFAULT 3600,
+  last_checked TIMESTAMP,
+  created_at TIMESTAMP DEFAULT CURRENT_TIMESTAMP,
+  UNIQUE(user_id, url)
+);
+
+-- Price history table
+CREATE TABLE IF NOT EXISTS price_history (
+  id SERIAL PRIMARY KEY,
+  product_id INTEGER REFERENCES products(id) ON DELETE CASCADE,
+  price DECIMAL(10,2) NOT NULL,
+  currency VARCHAR(10) DEFAULT 'USD',
+  recorded_at TIMESTAMP DEFAULT CURRENT_TIMESTAMP
+);
+
+-- Index for faster price history queries
+CREATE INDEX IF NOT EXISTS idx_price_history_product_date
+ON price_history(product_id, recorded_at);
diff --git a/docker-compose.yml b/docker-compose.yml
index e20d74f..e9802a3 100644
--- a/docker-compose.yml
+++ b/docker-compose.yml
@@ -11,6 +11,7 @@ services:
       POSTGRES_DB: priceghost
     volumes:
       - postgres_data:/var/lib/postgresql/data
+      - ./database/init.sql:/docker-entrypoint-initdb.d/init.sql:ro
     ports:
       - "5432:5432"
     healthcheck: