diff --git a/development.ini b/development.ini
--- a/development.ini
+++ b/development.ini
@@ -137,7 +137,8 @@ logview.pylons.util = #eee
 #########################################################
 ### DB CONFIGS - EACH DB WILL HAVE IT'S OWN CONFIG    ###
 #########################################################
-sqlalchemy.db1.url = sqlite:///%(here)s/rhodecode.db
+#sqlalchemy.db1.url = sqlite:///%(here)s/rhodecode.db
+sqlalchemy.db1.url = postgresql://postgres:qwe@localhost/rhodecode
 #sqlalchemy.db1.echo = False
 #sqlalchemy.db1.pool_recycle = 3600
 sqlalchemy.convert_unicode = true
diff --git a/rhodecode/lib/db_manage.py b/rhodecode/lib/db_manage.py
--- a/rhodecode/lib/db_manage.py
+++ b/rhodecode/lib/db_manage.py
@@ -69,12 +69,17 @@ class DbManage(object):
                 self.db_exists = True
                 if not override:
                     raise Exception('database already exists')
+            return 'sqlite'
+        if self.dburi.startswith('postgresql'):
+            self.db_exists = True
+            return 'postgresql'
+
 
     def create_tables(self, override=False):
         """Create a auth database
         """
 
-        self.check_for_db(override)
+        db_type = self.check_for_db(override)
         if self.db_exists:
             log.info("database exist and it's going to be destroyed")
             if self.tests:
@@ -84,7 +89,11 @@ class DbManage(object):
             if not destroy:
                 sys.exit()
             if self.db_exists and destroy:
-                os.remove(jn(self.root, self.dbname))
+                if db_type == 'sqlite':
+                    os.remove(jn(self.root, self.dbname))
+                if db_type == 'postgresql':
+                    meta.Base.metadata.drop_all()
+
         checkfirst = not override
         meta.Base.metadata.create_all(checkfirst=checkfirst)
         log.info('Created tables for %s', self.dbname)
diff --git a/test.ini b/test.ini
--- a/test.ini
+++ b/test.ini
@@ -137,7 +137,8 @@ logview.pylons.util = #eee
 #########################################################
 ### DB CONFIGS - EACH DB WILL HAVE IT'S OWN CONFIG    ###
 #########################################################
-sqlalchemy.db1.url = sqlite:///%(here)s/test.db
+#sqlalchemy.db1.url = sqlite:///%(here)s/test.db
+sqlalchemy.db1.url = postgresql://postgres:qwe@localhost/rhodecode_tests
 #sqlalchemy.db1.echo = False
 #sqlalchemy.db1.pool_recycle = 3600
 sqlalchemy.convert_unicode = true