diff --git a/apps/api-server/internal/database/database.go b/apps/api-server/internal/database/database.go
new file mode 100644
index 0000000..0728d69
--- /dev/null
+++ b/apps/api-server/internal/database/database.go
@@ -0,0 +1,198 @@
+package database
+
+import (
+	"context"
+	"fmt"
+	"log"
+	"time"
+
+	"gorm.io/driver/postgres"
+	"gorm.io/gorm"
+	"gorm.io/gorm/logger"
+
+	"github.com/nutcas3/telecom-platform/apps/api-server/internal/config"
+	"github.com/nutcas3/telecom-platform/apps/api-server/internal/models"
+)
+
+type Database struct {
+	DB *gorm.DB
+}
+
+type IMSIAllocation struct {
+	ID        uint   `gorm:"primaryKey"`
+	LastIMSI  uint64 `gorm:"not null"`
+	MinIMSI   uint64 `gorm:"not null"`
+	MaxIMSI   uint64 `gorm:"not null"`
+	CreatedAt time.Time
+	UpdatedAt time.Time
+}
+
+func NewDatabase(cfg *config.DatabaseConfig) (*Database, error) {
+	dsn := fmt.Sprintf("host=%s user=%s password=%s dbname=%s port=%s sslmode=%s",
+		cfg.Host, cfg.Username, cfg.Password, cfg.Database, cfg.Port, cfg.SSLMode)
+
+	// Configure GORM logger
+	gormLogger := logger.Default.LogMode(logger.Info)
+
+	db, err := gorm.Open(postgres.Open(dsn), &gorm.Config{
+		Logger: gormLogger,
+	})
+	if err != nil {
+		return nil, fmt.Errorf("failed to connect to database: %w", err)
+	}
+
+	// Get underlying SQL DB to configure connection pool
+	sqlDB, err := db.DB()
+	if err != nil {
+		return nil, fmt.Errorf("failed to get underlying sql.DB: %w", err)
+	}
+
+	// Configure connection pool
+	sqlDB.SetMaxIdleConns(10)
+	sqlDB.SetMaxOpenConns(100)
+	sqlDB.SetConnMaxLifetime(time.Hour)
+
+	database := &Database{DB: db}
+
+	// Auto-migrate schemas
+	if err := database.AutoMigrate(); err != nil {
+		return nil, fmt.Errorf("failed to auto-migrate: %w", err)
+	}
+
+	// Initialize IMSI allocation
+	if err := database.InitializeIMSIAllocation(); err != nil {
+		return nil, fmt.Errorf("failed to initialize IMSI allocation: %w", err)
+	}
+
+	return database, nil
+}
+
+func (d *Database) AutoMigrate() error {
+	return d.DB.AutoMigrate(
+		&models.Subscriber{},
+		&models.ServicePlan{},
+		&models.Session{},
+		&models.UsageRecord{},
+		&IMSIAllocation{},
+	)
+}
+
+func (d *Database) InitializeIMSIAllocation() error {
+	var allocation IMSIAllocation
+	result := d.DB.First(&allocation)
+
+	if result.Error == gorm.ErrRecordNotFound {
+		// Create initial allocation record
+		allocation = IMSIAllocation{
+			LastIMSI: 0,
+			MinIMSI:  1,
+			MaxIMSI:  999999999, // 9-digit subscriber numbers
+		}
+
+		if err := d.DB.Create(&allocation).Error; err != nil {
+			return fmt.Errorf("failed to create IMSI allocation: %w", err)
+		}
+
+		log.Printf("Created IMSI allocation record")
+	} else if result.Error != nil {
+		return fmt.Errorf("failed to query IMSI allocation: %w", result.Error)
+	}
+
+	return nil
+}
+
+func (d *Database) Close() error {
+	sqlDB, err := d.DB.DB()
+	if err != nil {
+		return err
+	}
+	return sqlDB.Close()
+}
+
+func (d *Database) CreateSubscriber(ctx context.Context, subscriber *models.Subscriber) error {
+	return d.DB.WithContext(ctx).Create(subscriber).Error
+}
+
+func (d *Database) GetSubscriber(ctx context.Context, id uint) (*models.Subscriber, error) {
+	var subscriber models.Subscriber
+	err := d.DB.WithContext(ctx).Preload("Plan").First(&subscriber, id).Error
+	if err != nil {
+		return nil, err
+	}
+	return &subscriber, nil
+}
+
+func (d *Database) GetSubscriberByIMSI(ctx context.Context, imsi models.IMSI) (*models.Subscriber, error) {
+	var subscriber models.Subscriber
+	err := d.DB.WithContext(ctx).Preload("Plan").Where("imsi = ?", imsi).First(&subscriber).Error
+	if err != nil {
+		return nil, err
+	}
+	return &subscriber, nil
+}
+
+func (d *Database) UpdateSubscriber(ctx context.Context, subscriber *models.Subscriber) error {
+	return d.DB.WithContext(ctx).Save(subscriber).Error
+}
+
+func (d *Database) ListSubscribers(ctx context.Context, req *ListSubscribersRequest) ([]models.Subscriber, int64, error) {
+	var subscribers []models.Subscriber
+	var total int64
+
+	query := d.DB.WithContext(ctx).Model(&models.Subscriber{})
+
+	// Apply filters
+	if req.Status != "" {
+		query = query.Where("status = ?", req.Status)
+	}
+	if req.OrganizationID != "" {
+		query = query.Where("organization_id = ?", req.OrganizationID)
+	}
+	if req.Search != "" {
+		query = query.Where("first_name ILIKE ? OR last_name ILIKE ? OR email ILIKE ? OR msisdn ILIKE ?",
+			"%"+req.Search+"%", "%"+req.Search+"%", "%"+req.Search+"%", "%"+req.Search+"%")
+	}
+
+	// Count total records
+	if err := query.Count(&total).Error; err != nil {
+		return nil, 0, err
+	}
+
+	// Apply pagination and ordering
+	offset := (req.Page - 1) * req.PageSize
+	err := query.Preload("Plan").Offset(offset).Limit(req.PageSize).Order("created_at DESC").Find(&subscribers).Error
+
+	return subscribers, total, err
+}
+
+func (d *Database) GetIMSIAllocation(ctx context.Context) (*IMSIAllocation, error) {
+	var allocation IMSIAllocation
+	err := d.DB.WithContext(ctx).First(&allocation).Error
+	if err != nil {
+		return nil, err
+	}
+	return &allocation, nil
+}
+
+func (d *Database) UpdateIMSIAllocation(ctx context.Context, allocation *IMSIAllocation) error {
+	return d.DB.WithContext(ctx).Save(allocation).Error
+}
+
+func (d *Database) GetActiveSessionsByIMSI(ctx context.Context, imsi models.IMSI) ([]models.Session, error) {
+	var sessions []models.Session
+	err := d.DB.WithContext(ctx).Where("subscriber_id = ? AND status = ?", imsi, "active").Find(&sessions).Error
+	return sessions, err
+}
+
+func (d *Database) UpdateSession(ctx context.Context, session *models.Session) error {
+	return d.DB.WithContext(ctx).Save(session).Error
+}
+
+// Request types for database operations
+type ListSubscribersRequest struct {
+	Page           int                    `json:"page"`
+	PageSize       int                    `json:"page_size"`
+	Status         models.SubscriberStatus `json:"status"`
+	OrganizationID string                 `json:"organization_id"`
+	Search         string                 `json:"search"`
+}