diff --git a/internal/storage/database.go b/internal/storage/database.go
index dc2d930..88d140d 100644
--- a/internal/storage/database.go
+++ b/internal/storage/database.go
@@ -3,6 +3,7 @@ package storage
 import (
 	"context"
 	"database/sql"
+	_ "embed"
 	"fmt"
 	"time"
 
@@ -12,12 +13,15 @@ import (
 	_ "github.com/lib/pq"
 )
 
+//go:embed migrations/001_initial.sql
+var migrationSQL string
+
 // Database handles all database operations
 type Database struct {
 	db *sql.DB
 }
 
-// NewDatabase creates a new database connection
+// NewDatabase creates a new database connection and runs migrations
 func NewDatabase(cfg *config.DatabaseConfig) (*Database, error) {
 	dsn := fmt.Sprintf("host=%s port=%d user=%s password=%s dbname=%s sslmode=%s",
 		cfg.Host, cfg.Port, cfg.User, cfg.Password, cfg.DBName, cfg.SSLMode)
@@ -31,7 +35,20 @@ func NewDatabase(cfg *config.DatabaseConfig) (*Database, error) {
 		return nil, fmt.Errorf("failed to ping database: %w", err)
 	}
 
-	return &Database{db: db}, nil
+	d := &Database{db: db}
+
+	// Run migrations
+	if err := d.runMigrations(); err != nil {
+		return nil, fmt.Errorf("failed to run migrations: %w", err)
+	}
+
+	return d, nil
+}
+
+// runMigrations executes the embedded SQL migrations
+func (d *Database) runMigrations() error {
+	_, err := d.db.Exec(migrationSQL)
+	return err
 }
 
 // Close closes the database connection
diff --git a/internal/storage/migrations/001_initial.sql b/internal/storage/migrations/001_initial.sql
new file mode 100644
index 0000000..1505a4f
--- /dev/null
+++ b/internal/storage/migrations/001_initial.sql
@@ -0,0 +1,160 @@
+-- Orchard Database Schema
+-- Content-Addressable Storage System
+
+-- Groves (Projects)
+CREATE TABLE IF NOT EXISTS groves (
+    id UUID PRIMARY KEY,
+    name VARCHAR(255) UNIQUE NOT NULL,
+    description TEXT,
+    is_public BOOLEAN DEFAULT true,
+    created_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    updated_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    created_by VARCHAR(255) NOT NULL
+);
+
+CREATE INDEX idx_groves_name ON groves(name);
+CREATE INDEX idx_groves_created_by ON groves(created_by);
+
+-- Trees (Packages)
+CREATE TABLE IF NOT EXISTS trees (
+    id UUID PRIMARY KEY,
+    grove_id UUID NOT NULL REFERENCES groves(id) ON DELETE CASCADE,
+    name VARCHAR(255) NOT NULL,
+    description TEXT,
+    created_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    updated_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    UNIQUE(grove_id, name)
+);
+
+CREATE INDEX idx_trees_grove_id ON trees(grove_id);
+CREATE INDEX idx_trees_name ON trees(name);
+
+-- Fruits (Content-Addressable Artifacts)
+CREATE TABLE IF NOT EXISTS fruits (
+    id VARCHAR(64) PRIMARY KEY,  -- SHA256 hash
+    size BIGINT NOT NULL,
+    content_type VARCHAR(255),
+    original_name VARCHAR(1024),
+    created_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    created_by VARCHAR(255) NOT NULL,
+    ref_count INTEGER DEFAULT 1,
+    s3_key VARCHAR(1024) NOT NULL
+);
+
+CREATE INDEX idx_fruits_created_at ON fruits(created_at);
+CREATE INDEX idx_fruits_created_by ON fruits(created_by);
+
+-- Grafts (Aliases/Tags)
+CREATE TABLE IF NOT EXISTS grafts (
+    id UUID PRIMARY KEY,
+    tree_id UUID NOT NULL REFERENCES trees(id) ON DELETE CASCADE,
+    name VARCHAR(255) NOT NULL,
+    fruit_id VARCHAR(64) NOT NULL REFERENCES fruits(id),
+    created_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    created_by VARCHAR(255) NOT NULL,
+    UNIQUE(tree_id, name)
+);
+
+CREATE INDEX idx_grafts_tree_id ON grafts(tree_id);
+CREATE INDEX idx_grafts_fruit_id ON grafts(fruit_id);
+
+-- Graft History (for rollback capability)
+CREATE TABLE IF NOT EXISTS graft_history (
+    id UUID PRIMARY KEY,
+    graft_id UUID NOT NULL REFERENCES grafts(id) ON DELETE CASCADE,
+    old_fruit_id VARCHAR(64) REFERENCES fruits(id),
+    new_fruit_id VARCHAR(64) NOT NULL REFERENCES fruits(id),
+    changed_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    changed_by VARCHAR(255) NOT NULL
+);
+
+CREATE INDEX idx_graft_history_graft_id ON graft_history(graft_id);
+
+-- Harvests (Upload events)
+CREATE TABLE IF NOT EXISTS harvests (
+    id UUID PRIMARY KEY,
+    fruit_id VARCHAR(64) NOT NULL REFERENCES fruits(id),
+    tree_id UUID NOT NULL REFERENCES trees(id),
+    original_name VARCHAR(1024),
+    harvested_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    harvested_by VARCHAR(255) NOT NULL,
+    source_ip VARCHAR(45)
+);
+
+CREATE INDEX idx_harvests_fruit_id ON harvests(fruit_id);
+CREATE INDEX idx_harvests_tree_id ON harvests(tree_id);
+CREATE INDEX idx_harvests_harvested_at ON harvests(harvested_at);
+
+-- Consumers (Dependency tracking)
+CREATE TABLE IF NOT EXISTS consumers (
+    id UUID PRIMARY KEY,
+    tree_id UUID NOT NULL REFERENCES trees(id) ON DELETE CASCADE,
+    project_url VARCHAR(2048) NOT NULL,
+    last_access TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    created_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    UNIQUE(tree_id, project_url)
+);
+
+CREATE INDEX idx_consumers_tree_id ON consumers(tree_id);
+CREATE INDEX idx_consumers_last_access ON consumers(last_access);
+
+-- Access Permissions
+CREATE TABLE IF NOT EXISTS access_permissions (
+    id UUID PRIMARY KEY,
+    grove_id UUID NOT NULL REFERENCES groves(id) ON DELETE CASCADE,
+    user_id VARCHAR(255) NOT NULL,
+    level VARCHAR(20) NOT NULL CHECK (level IN ('read', 'write', 'admin')),
+    created_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    expires_at TIMESTAMP WITH TIME ZONE,
+    UNIQUE(grove_id, user_id)
+);
+
+CREATE INDEX idx_access_permissions_grove_id ON access_permissions(grove_id);
+CREATE INDEX idx_access_permissions_user_id ON access_permissions(user_id);
+
+-- API Keys
+CREATE TABLE IF NOT EXISTS api_keys (
+    id UUID PRIMARY KEY,
+    key_hash VARCHAR(64) NOT NULL UNIQUE,
+    name VARCHAR(255) NOT NULL,
+    user_id VARCHAR(255) NOT NULL,
+    created_at TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    expires_at TIMESTAMP WITH TIME ZONE,
+    last_used TIMESTAMP WITH TIME ZONE
+);
+
+CREATE INDEX idx_api_keys_user_id ON api_keys(user_id);
+CREATE INDEX idx_api_keys_key_hash ON api_keys(key_hash);
+
+-- Audit Logs (Immutable)
+CREATE TABLE IF NOT EXISTS audit_logs (
+    id UUID PRIMARY KEY,
+    action VARCHAR(100) NOT NULL,
+    resource VARCHAR(1024) NOT NULL,
+    user_id VARCHAR(255) NOT NULL,
+    details JSONB,
+    timestamp TIMESTAMP WITH TIME ZONE DEFAULT NOW(),
+    source_ip VARCHAR(45)
+);
+
+CREATE INDEX idx_audit_logs_action ON audit_logs(action);
+CREATE INDEX idx_audit_logs_resource ON audit_logs(resource);
+CREATE INDEX idx_audit_logs_user_id ON audit_logs(user_id);
+CREATE INDEX idx_audit_logs_timestamp ON audit_logs(timestamp);
+
+-- Trigger to update graft history on changes
+CREATE OR REPLACE FUNCTION track_graft_changes()
+RETURNS TRIGGER AS $$
+BEGIN
+    IF TG_OP = 'UPDATE' AND OLD.fruit_id != NEW.fruit_id THEN
+        INSERT INTO graft_history (id, graft_id, old_fruit_id, new_fruit_id, changed_at, changed_by)
+        VALUES (gen_random_uuid(), NEW.id, OLD.fruit_id, NEW.fruit_id, NOW(), NEW.created_by);
+    END IF;
+    RETURN NEW;
+END;
+$$ LANGUAGE plpgsql;
+
+CREATE TRIGGER graft_changes_trigger
+    AFTER UPDATE ON grafts
+    FOR EACH ROW
+    EXECUTE FUNCTION track_graft_changes();
diff --git a/orchard-server b/orchard-server
new file mode 100755
index 0000000..748d750
Binary files /dev/null and b/orchard-server differ