diff --git a/README.md b/README.md
index 7f39470..d58ec21 100644
--- a/README.md
+++ b/README.md
@@ -78,6 +78,14 @@ The application uses the following environment variables:
 
 - `SECRET_KEY`: Secret key for encryption (defaults to "development_secret_key" in development)
 
+### Environment Detection
+
+The application automatically detects the environment it's running in:
+
+- In local development, it uses the project directory for database storage
+- In container deployment, it uses the `/app/storage/db` directory
+- Database permissions are automatically set to ensure write access
+
 ### Installation
 
 1. Clone the repository
@@ -99,6 +107,8 @@ Run Alembic migrations to set up the database:
 alembic upgrade head
 ```
 
+The SQLite database will be created automatically in the `storage/db` directory with the proper permissions. The application will ensure that both the directory and the database file have appropriate write permissions.
+
 ### Running the Application
 
 Start the application with uvicorn:
diff --git a/app/core/config.py b/app/core/config.py
index a6d7c3a..0194fd1 100644
--- a/app/core/config.py
+++ b/app/core/config.py
@@ -12,7 +12,8 @@ class Settings(BaseModel):
     API_V1_STR: str = "/api/v1"
     
     # Database
-    DB_DIR: Path = Path("/projects/onetimesecretsharingservice-i7if8q") / "storage" / "db"
+    # Check if /app directory exists (container) or use local path
+    DB_DIR: Path = Path("/app" if os.path.exists("/app/storage") else ROOT_DIR) / "storage" / "db"
     SQLALCHEMY_DATABASE_URL: str = f"sqlite:///{DB_DIR}/db.sqlite"
     
     # Secret settings
@@ -25,6 +26,12 @@ class Settings(BaseModel):
     @field_validator("DB_DIR")
     def create_db_dir(cls, db_dir: Path) -> Path:
         db_dir.mkdir(parents=True, exist_ok=True)
+        # Ensure directory is writable
+        if not os.access(db_dir, os.W_OK):
+            try:
+                os.chmod(db_dir, 0o777)
+            except Exception:
+                print(f"Warning: Could not set permissions on {db_dir}")
         return db_dir
 
     model_config = {
diff --git a/app/db/session.py b/app/db/session.py
index c592685..3b38a17 100644
--- a/app/db/session.py
+++ b/app/db/session.py
@@ -1,3 +1,4 @@
+import os
 from sqlalchemy import create_engine
 from sqlalchemy.orm import sessionmaker
 
@@ -7,8 +8,20 @@ from app.core.config import settings
 DB_DIR = settings.DB_DIR
 DB_DIR.mkdir(parents=True, exist_ok=True)
 
-# Note: We're not using chmod here since /app/storage/db is already
-# owned by appuser and has the appropriate permissions
+# Ensure the directory has appropriate permissions
+try:
+    os.chmod(DB_DIR, 0o777)
+except Exception:
+    print(f"Warning: Could not set permissions on {DB_DIR}")
+
+# Create the database file if it doesn't exist
+DB_FILE = DB_DIR / "db.sqlite"
+if not DB_FILE.exists():
+    DB_FILE.touch()
+    try:
+        os.chmod(DB_FILE, 0o666)  # Read-write permissions for everyone
+    except Exception:
+        print(f"Warning: Could not set permissions on {DB_FILE}")
 
 SQLALCHEMY_DATABASE_URL = settings.SQLALCHEMY_DATABASE_URL
 
diff --git a/migrations/env.py b/migrations/env.py
index 260fa9b..477a758 100644
--- a/migrations/env.py
+++ b/migrations/env.py
@@ -1,3 +1,4 @@
+import os
 from logging.config import fileConfig
 from sqlalchemy import engine_from_config
 from sqlalchemy import pool
@@ -69,8 +70,20 @@ def run_migrations_online() -> None:
     db_dir = Path(settings.DB_DIR)
     db_dir.mkdir(parents=True, exist_ok=True)
     
-    # Note: We're not using chmod here since /app/storage/db is already
-    # owned by appuser and has the appropriate permissions
+    # Ensure directory has write permissions
+    try:
+        os.chmod(db_dir, 0o777)
+    except Exception:
+        print(f"Warning: Could not set permissions on {db_dir}")
+    
+    # Create database file if it doesn't exist and set permissions
+    db_file = db_dir / "db.sqlite"
+    if not db_file.exists():
+        db_file.touch()
+        try:
+            os.chmod(db_file, 0o666)  # Read-write permissions for everyone
+        except Exception:
+            print(f"Warning: Could not set permissions on {db_file}")
     
     connectable = engine_from_config(
         config.get_section(config.config_ini_section, {}),