diff --git a/README.md b/README.md
index 448a4af..89b19d6 100644
--- a/README.md
+++ b/README.md
@@ -71,6 +71,7 @@ If you would like to contribute, please read [CONTRIBUTING.md](docs/CONTRIBUTING
 - **Theme Management:** next-themes for system preference detection
 
 ## Documentation
+
 - [Changelog](docs/CHANGELOG.md) - Project changelog and release notes
 - [Standards & Guidelines](docs/CLAUDE.md) - Development standards and project guidelines
-- [Test Documentation](test/README.md) - Testing principles and structure
+- [Database Setup](docs/DATABASE_SETUP.md) - How to set up the local database for development
diff --git a/docs/DATABASE_SETUP.md b/docs/DATABASE_SETUP.md
new file mode 100644
index 0000000..75c9187
--- /dev/null
+++ b/docs/DATABASE_SETUP.md
@@ -0,0 +1,122 @@
+# Database Setup Guide for Local Development
+
+This guide explains how to set up a local PostgreSQL database for development using the provided `setup-db.sh` script. The script handles the installation of PostgreSQL (if needed), database creation, schema setup, and data seeding to provide you with a fully functional test environment.
+
+## Prerequisites
+
+Before running the setup script, ensure you have:
+
+1. **MacOS** - The script is designed for MacOS with Homebrew
+2. **Homebrew** - The script uses Homebrew to install PostgreSQL if needed
+   - Install from [brew.sh](https://brew.sh) if not already installed
+3. **Node.js** - Version 18 or higher is recommended
+   - The project uses Next.js and Prisma which require Node.js
+
+## Quick Start
+
+For developers who want to get started quickly:
+
+```bash
+# Clone the repository (if you haven't already)
+git clone https://github.com/yourusername/yapli.git
+cd yapli
+
+# Make the setup script executable
+chmod +x setup-db.sh
+
+# Run the setup script
+./setup-db.sh
+```
+
+The script will guide you through the setup process with clear prompts and colorful status messages.
+
+## What the Setup Script Does
+
+The `setup-db.sh` script performs the following tasks:
+
+1. **Checks for PostgreSQL** - Verifies if PostgreSQL is installed and installs it via Homebrew if needed
+2. **Ensures PostgreSQL is running** - Starts the PostgreSQL service if it's not already running
+3. **Creates a database user** - Sets up the required Postgres superuser if needed
+4. **Creates a database** - Creates the `yapli-local` database (or offers to recreate it if it exists)
+5. **Sets up environment variables** - Creates or updates the `.env` file with the database connection string
+6. **Applies database schema** - Runs Prisma migrations and ensures all tables are created
+7. **Seeds the database** - Populates the database with test data for development
+
+## Test Data
+
+After running the setup script, your database will be populated with:
+
+- **Test User**:
+  - Email: `testuser@example.com`
+  - Password: `password123`
+
+- **Chat Rooms**:
+  - General (`roomUrl`: `696fcd`)
+  - Technology (`roomUrl`: `2zjbmc`)
+
+- **Sample Messages**:
+  - Messages from users "Alice", "Bob", "Charlie", and "Dana"
+  - One message with a link preview
+
+## Using the Database in Your Application
+
+After setup, you can start the application with:
+
+```bash
+npm run dev
+```
+
+The application will connect to the local database using the connection string:
+
+```
+postgresql://postgres@localhost:5432/yapli-local
+```
+
+This connection string is automatically added to your `.env` file during setup.
+
+## Common Issues and Troubleshooting
+
+### PostgreSQL Not in PATH
+
+If you see a warning about PostgreSQL not being in your PATH, consider adding it permanently:
+
+```bash
+echo 'export PATH="/opt/homebrew/opt/postgresql@16/bin:$PATH"' >> ~/.zshrc
+source ~/.zshrc
+```
+
+### Database In Use Error
+
+If you encounter "database removal failed: ERROR: database is being accessed by other users" when trying to recreate the database, the script will automatically attempt to terminate connections. If this fails:
+
+1. Close any applications that might be using the database (pgAdmin, other terminal sessions, etc.)
+2. Run the setup script again
+
+### Schema Changes
+
+If you've made changes to the Prisma schema (`prisma/schema.prisma`), you may need to update the database schema:
+
+```bash
+npx prisma generate  # Update the Prisma client
+npx prisma db push   # Push schema changes to the database
+```
+
+## Manually Viewing the Database
+
+To view the database tables after setup:
+
+```bash
+psql -d yapli-local -c '\dt'        # List all tables
+psql -d yapli-local -c 'SELECT * FROM chatrooms;'  # View chat rooms
+```
+
+## Resetting the Database
+
+If you want to completely reset the database to a clean state:
+
+```bash
+npx prisma db push --force-reset    # Reset the database and apply schema
+npm run db:seed                     # Re-seed with test data
+```
+
+Or simply run the setup script again and choose 'y' when asked if you want to recreate the database.
\ No newline at end of file
diff --git a/package.json b/package.json
index 684a790..eed59e8 100644
--- a/package.json
+++ b/package.json
@@ -8,8 +8,7 @@
     "build": "next build",
     "start": "node -r dotenv/config server.js dotenv_config_path=.env.production",
     "lint": "next lint",
-    "test": "jest",
-    "test:watch": "jest --watch"
+    "db:seed": "tsx prisma/seed.ts"
   },
   "dependencies": {
     "@auth/prisma-adapter": "^2.9.1",
@@ -33,20 +32,14 @@
   "devDependencies": {
     "@eslint/eslintrc": "^3",
     "@tailwindcss/postcss": "^4",
-    "@testing-library/jest-dom": "^6.6.3",
-    "@testing-library/react": "^16.3.0",
-    "@types/jest": "^30.0.0",
     "@types/node": "^20",
     "@types/react": "^19",
     "@types/react-dom": "^19",
     "eslint": "^9",
     "eslint-config-next": "15.3.2",
-    "jest": "^30.0.4",
-    "jest-environment-jsdom": "^30.0.4",
     "prisma": "^6.8.2",
     "tailwind-merge": "^3.3.0",
     "tailwindcss": "^4",
-    "ts-node": "^10.9.2",
     "tsx": "^4.19.4",
     "typescript": "^5"
   }
diff --git a/prisma/seed.ts b/prisma/seed.ts
new file mode 100644
index 0000000..95b0c21
--- /dev/null
+++ b/prisma/seed.ts
@@ -0,0 +1,91 @@
+import { PrismaClient } from '@prisma/client';
+import { randomUUID } from 'crypto';
+
+const prisma = new PrismaClient();
+
+async function main() {
+  // Create a test user
+  const user = await prisma.user.create({
+    data: {
+      name: 'Test User',
+      email: 'testuser@example.com',
+      password: 'password123', // In a real app, this would be hashed
+      createdAt: new Date(),
+      updatedAt: new Date(),
+    }
+  });
+
+  // Create test chatrooms
+  const generalRoom = await prisma.chatroom.create({
+    data: {
+      title: 'General',
+      roomUrl: '696fcd',
+      userId: user.id,
+    },
+  });
+
+  const techRoom = await prisma.chatroom.create({
+    data: {
+      title: 'Technology',
+      roomUrl: '2zjbmc',
+      userId: user.id,
+    },
+  });
+
+  // Create some test messages
+  // Create messages with link previews
+  await prisma.message.create({
+    data: {
+      alias: 'Alice',
+      message: 'Hello everyone! Welcome to the General chat.',
+      chatroomId: generalRoom.id,
+    },
+  });
+
+  const bobMessage = await prisma.message.create({
+    data: {
+      alias: 'Bob',
+      message: 'Hey Alice! Check out this link https://yapli.chat',
+      chatroomId: generalRoom.id,
+    },
+  });
+  
+  // Add a link preview to Bob's message
+  await prisma.linkPreview.create({
+    data: {
+      messageId: bobMessage.id,
+      url: 'https://yapli.chat',
+      title: 'Yapli Chat',
+      description: 'A low-friction chat application built with Next.js and Prisma',
+      domain: 'yapli.chat',
+      siteName: 'Yapli',
+    },
+  });
+
+  await prisma.message.create({
+    data: {
+      alias: 'Charlie',
+      message: 'Did you see the latest developments in AI?',
+      chatroomId: techRoom.id,
+    },
+  });
+
+  await prisma.message.create({
+    data: {
+      alias: 'Dana',
+      message: 'Yes! The new models are impressive.',
+      chatroomId: techRoom.id,
+    },
+  });
+
+  console.log('Database seeded with test data');
+}
+
+main()
+  .catch((e) => {
+    console.error(e);
+    process.exit(1);
+  })
+  .finally(async () => {
+    await prisma.$disconnect();
+  });
\ No newline at end of file
diff --git a/setup-db.sh b/setup-db.sh
new file mode 100755
index 0000000..e031556
--- /dev/null
+++ b/setup-db.sh
@@ -0,0 +1,241 @@
+#!/bin/bash
+
+# Colors for output
+GREEN='\033[0;32m'
+RED='\033[0;31m'
+YELLOW='\033[0;33m'
+BLUE='\033[0;34m'
+NC='\033[0m' # No Color
+
+# Database name and user
+DB_NAME="yapli-local"
+DB_USER="postgres"
+
+echo -e "${BLUE}============================================${NC}"
+echo -e "${BLUE}       Yapli Database Setup Script          ${NC}"
+echo -e "${BLUE}============================================${NC}"
+
+# Function to check if command exists
+command_exists() {
+  command -v "$1" >/dev/null 2>&1
+}
+
+echo -e "\n${BLUE}Step 1:${NC} Checking if PostgreSQL is installed..."
+
+# Check for Homebrew
+if ! command_exists brew; then
+  echo -e "${RED}Homebrew is not installed. Please install Homebrew first.${NC}"
+  echo "Visit https://brew.sh for installation instructions."
+  exit 1
+fi
+
+# Check for PostgreSQL client
+if ! command_exists psql; then
+  echo -e "${YELLOW}PostgreSQL client not found in PATH. Checking Homebrew installation...${NC}"
+  
+  # Check if PostgreSQL is installed via Homebrew
+  if brew list postgresql@16 &>/dev/null || brew list postgresql &>/dev/null; then
+    echo -e "${YELLOW}PostgreSQL is installed via Homebrew but not in PATH.${NC}"
+    
+    # Check which version is installed
+    if brew list postgresql@16 &>/dev/null; then
+      PG_PATH="/opt/homebrew/opt/postgresql@16/bin"
+    else
+      PG_PATH="/opt/homebrew/opt/postgresql/bin"
+    fi
+    
+    echo -e "${YELLOW}Adding PostgreSQL to PATH for this session...${NC}"
+    export PATH="$PG_PATH:$PATH"
+    
+    echo -e "${YELLOW}Consider adding this to your shell profile:${NC}"
+    echo -e "  echo 'export PATH=\"$PG_PATH:\$PATH\"' >> ~/.zshrc"
+  else
+    echo -e "${YELLOW}PostgreSQL not found. Installing PostgreSQL 16...${NC}"
+    brew install postgresql@16
+    
+    if [ $? -ne 0 ]; then
+      echo -e "${RED}Failed to install PostgreSQL.${NC}"
+      exit 1
+    fi
+    
+    export PATH="/opt/homebrew/opt/postgresql@16/bin:$PATH"
+    
+    echo -e "${YELLOW}Consider adding PostgreSQL to your PATH:${NC}"
+    echo -e "  echo 'export PATH=\"/opt/homebrew/opt/postgresql@16/bin:\$PATH\"' >> ~/.zshrc"
+  fi
+fi
+
+# Start PostgreSQL service
+echo -e "\n${BLUE}Step 2:${NC} Ensuring PostgreSQL service is running..."
+if brew services list | grep postgresql | grep started &>/dev/null; then
+  echo -e "${GREEN}PostgreSQL service is already running.${NC}"
+else
+  echo "Starting PostgreSQL service..."
+  if brew list postgresql@16 &>/dev/null; then
+    brew services start postgresql@16
+  else
+    brew services start postgresql
+  fi
+  
+  if [ $? -ne 0 ]; then
+    echo -e "${RED}Failed to start PostgreSQL service.${NC}"
+    exit 1
+  else
+    echo -e "${GREEN}PostgreSQL service started successfully.${NC}"
+  fi
+  
+  # Give PostgreSQL a moment to start up
+  echo "Waiting for PostgreSQL to start..."
+  sleep 3
+fi
+
+echo -e "\n${BLUE}Step 3:${NC} Setting up database user..."
+
+# Create postgres superuser if it doesn't exist
+psql -c "\du" postgres | grep postgres &>/dev/null
+if [ $? -ne 0 ]; then
+  echo "Creating postgres superuser..."
+  createuser -s postgres
+  
+  if [ $? -ne 0 ]; then
+    echo -e "${RED}Failed to create postgres user.${NC}"
+    exit 1
+  else
+    echo -e "${GREEN}Created postgres superuser.${NC}"
+  fi
+else
+  echo -e "${GREEN}Postgres superuser already exists.${NC}"
+fi
+
+echo -e "\n${BLUE}Step 4:${NC} Creating database..."
+
+# Check if database already exists
+psql -lqt | cut -d \| -f 1 | grep -qw "$DB_NAME"
+if [ $? -eq 0 ]; then
+  echo -e "${YELLOW}Database '$DB_NAME' already exists.${NC}"
+  read -p "Do you want to drop and recreate it? (y/N): " CONFIRM
+  if [[ $CONFIRM =~ ^[Yy]$ ]]; then
+    echo "Dropping database '$DB_NAME'..."
+    # Try to drop normally first
+    if ! dropdb "$DB_NAME" 2>/dev/null; then
+      echo -e "${YELLOW}Database is currently in use. Attempting to terminate connections...${NC}"
+      # Terminate all connections to the database
+      psql -c "SELECT pg_terminate_backend(pg_stat_activity.pid) FROM pg_stat_activity WHERE pg_stat_activity.datname = '$DB_NAME' AND pid <> pg_backend_pid();" postgres
+      sleep 1
+      # Try dropping again after terminating connections
+      if ! dropdb "$DB_NAME" 2>/dev/null; then
+        echo -e "${RED}Failed to drop database. Please manually stop applications that might be using the database and try again.${NC}"
+        exit 1
+      fi
+    fi
+    
+    echo "Creating database '$DB_NAME'..."
+    createdb "$DB_NAME"
+    
+    if [ $? -ne 0 ]; then
+      echo -e "${RED}Failed to recreate database.${NC}"
+      exit 1
+    else
+      echo -e "${GREEN}Database recreated successfully.${NC}"
+    fi
+  else
+    echo "Keeping existing database."
+  fi
+else
+  echo "Creating database '$DB_NAME'..."
+  createdb "$DB_NAME"
+  
+  if [ $? -ne 0 ]; then
+    echo -e "${RED}Failed to create database.${NC}"
+    exit 1
+  else
+    echo -e "${GREEN}Database created successfully.${NC}"
+  fi
+fi
+
+echo -e "\n${BLUE}Step 5:${NC} Creating .env file with database connection string..."
+
+# Check if .env exists and if not, create it based on .env.example
+if [ ! -f .env ]; then
+  if [ -f .env.example ]; then
+    echo "Creating .env file from .env.example template..."
+    cp .env.example .env
+    sed -i '' "s|DATABASE_URL=.*|DATABASE_URL=\"postgresql://$DB_USER@localhost:5432/$DB_NAME\"|g" .env
+    echo -e "${GREEN}.env file created.${NC}"
+  else
+    echo "Creating new .env file..."
+    cat > .env << EOF
+EOF
+    echo -e "${GREEN}.env file created.${NC}"
+  fi
+else
+  echo -e "${YELLOW}.env file already exists.${NC}"
+  read -p "Do you want to update the DATABASE_URL in .env? (y/N): " UPDATE_ENV
+  if [[ $UPDATE_ENV =~ ^[Yy]$ ]]; then
+    sed -i '' "s|DATABASE_URL=.*|DATABASE_URL=\"postgresql://$DB_USER@localhost:5432/$DB_NAME\"|g" .env
+    echo -e "${GREEN}DATABASE_URL updated in .env file.${NC}"
+  fi
+fi
+
+echo -e "\n${BLUE}Step 6:${NC} Running database migrations..."
+
+# Check if node_modules exists
+if [ ! -d "node_modules" ]; then
+  echo -e "${YELLOW}Installing dependencies...${NC}"
+  npm install
+  if [ $? -ne 0 ]; then
+    echo -e "${RED}Failed to install dependencies.${NC}"
+    exit 1
+  else
+    echo -e "${GREEN}Dependencies installed successfully.${NC}"
+  fi
+fi
+
+# Run migrations
+echo "Running Prisma migrations..."
+
+# First, try normal migrations
+npx prisma migrate deploy
+
+# Additionally, ensure schema is fully applied (creates all tables from schema)
+echo "Pushing complete schema to database..."
+npx prisma db push --accept-data-loss
+
+if [ $? -ne 0 ]; then
+  echo -e "${RED}Failed to apply schema.${NC}"
+  exit 1
+else
+  echo -e "${GREEN}Schema applied successfully.${NC}"
+fi
+
+echo -e "\n${BLUE}Step 7:${NC} Seeding database with test data..."
+
+# Check if the seed script exists
+if [ -f "prisma/seed.ts" ]; then
+  # Add db:seed script to package.json if it doesn't exist
+  if ! grep -q '"db:seed"' package.json; then
+    echo "Adding db:seed script to package.json..."
+    sed -i '' 's/"scripts": {/"scripts": {\n    "db:seed": "tsx prisma\/seed.ts",/g' package.json
+  fi
+  
+  # Run seed script
+  echo "Running seed script..."
+  npm run db:seed
+  
+  if [ $? -ne 0 ]; then
+    echo -e "${RED}Failed to seed database.${NC}"
+    exit 1
+  else
+    echo -e "${GREEN}Database seeded successfully.${NC}"
+  fi
+else
+  echo -e "${YELLOW}No seed script found at prisma/seed.ts.${NC}"
+  echo "To add test data, create a seed script at prisma/seed.ts."
+fi
+
+echo -e "\n${GREEN}==============================================${NC}"
+echo -e "${GREEN}  Database setup completed successfully!      ${NC}"
+echo -e "${GREEN}==============================================${NC}"
+echo -e "\nYou can now start your application with: ${BLUE}npm run dev${NC}"
+echo -e "Database connection: ${BLUE}postgresql://$DB_USER@localhost:5432/$DB_NAME${NC}"
+echo -e "\nTo view database tables: ${BLUE}psql -d $DB_NAME -c '\\dt'${NC}"
\ No newline at end of file