diff --git a/Dockerfile b/Dockerfile
index 8c776f33..fc5ad676 100644
--- a/Dockerfile
+++ b/Dockerfile
@@ -28,7 +28,8 @@ RUN pip install --no-cache-dir --upgrade pip && \
 COPY . .
 
 # Create necessary directories with proper permissions
-RUN mkdir -p /app/config /app/database /app/logs /app/downloads /app/Transfer && \
+# NOTE: /app/data is for database FILES, /app/database is the Python package
+RUN mkdir -p /app/config /app/data /app/logs /app/downloads /app/Transfer && \
     chown -R soulsync:soulsync /app
 
 # Create defaults directory and copy template files
@@ -39,7 +40,8 @@ RUN mkdir -p /defaults && \
     chmod 644 /defaults/config.json /defaults/settings.py
 
 # Create volume mount points
-VOLUME ["/app/config", "/app/database", "/app/logs", "/app/downloads", "/app/Transfer"]
+# NOTE: Changed /app/database to /app/data to avoid overwriting Python package
+VOLUME ["/app/config", "/app/data", "/app/logs", "/app/downloads", "/app/Transfer"]
 
 # Copy and set up entrypoint script
 COPY entrypoint.sh /entrypoint.sh
@@ -59,6 +61,7 @@ HEALTHCHECK --interval=30s --timeout=10s --start-period=60s --retries=3 \
 ENV PYTHONPATH=/app
 ENV FLASK_APP=web_server.py
 ENV FLASK_ENV=production
+ENV DATABASE_PATH=/app/data/music_library.db
 ENV PUID=1000
 ENV PGID=1000
 ENV UMASK=022
diff --git a/config/settings.py b/config/settings.py
index 8d9786b4..c37cd439 100644
--- a/config/settings.py
+++ b/config/settings.py
@@ -10,7 +10,10 @@ class ConfigManager:
         self.config_path = Path(config_path)
         self.config_data: Dict[str, Any] = {}
         self.encryption_key: Optional[bytes] = None
-        self.database_path = Path("database/music_library.db")  # Hardcoded - same as MusicDatabase
+        # Use DATABASE_PATH env var, fallback to database/music_library.db
+        import os
+        db_path = os.environ.get('DATABASE_PATH', 'database/music_library.db')
+        self.database_path = Path(db_path)
         self._load_config()
 
     def _get_encryption_key(self) -> bytes:
@@ -150,7 +153,7 @@ class ConfigManager:
                 "level": "INFO"
             },
             "database": {
-                "path": "database/music_library.db",
+                "path": os.environ.get('DATABASE_PATH', 'database/music_library.db'),
                 "max_workers": 5
             },
             "metadata_enhancement": {
diff --git a/database/music_database.py b/database/music_database.py
index 4642fb0b..adb11fae 100644
--- a/database/music_database.py
+++ b/database/music_database.py
@@ -134,7 +134,12 @@ class RecentRelease:
 class MusicDatabase:
     """SQLite database manager for SoulSync music library data"""
     
-    def __init__(self, database_path: str = "database/music_library.db"):
+    def __init__(self, database_path: str = None):
+        import os
+        # Use env var if path is None OR if it's the default path
+        # This ensures Docker containers use the correct mounted volume location
+        if database_path is None or database_path == "database/music_library.db":
+            database_path = os.environ.get('DATABASE_PATH', 'database/music_library.db')
         self.database_path = Path(database_path)
         self.database_path.parent.mkdir(parents=True, exist_ok=True)
         
@@ -3572,10 +3577,21 @@ class MusicDatabase:
 _database_instances: Dict[int, MusicDatabase] = {}  # Thread ID -> Database instance
 _database_lock = threading.Lock()
 
-def get_database(database_path: str = "database/music_library.db") -> MusicDatabase:
-    """Get thread-local database instance"""
+def get_database(database_path: str = None) -> MusicDatabase:
+    """Get thread-local database instance
+
+    Args:
+        database_path: Path to database file. If None or default path, uses DATABASE_PATH env var
+                      or defaults to "database/music_library.db". Custom paths are used as-is.
+    """
+    import os
+    # Use env var if path is None OR if it's the default path
+    # This ensures Docker containers use the correct mounted volume location
+    if database_path is None or database_path == "database/music_library.db":
+        database_path = os.environ.get('DATABASE_PATH', 'database/music_library.db')
+
     thread_id = threading.get_ident()
-    
+
     with _database_lock:
         if thread_id not in _database_instances:
             _database_instances[thread_id] = MusicDatabase(database_path)
diff --git a/entrypoint.sh b/entrypoint.sh
index 904bcfc2..e3c985bc 100644
--- a/entrypoint.sh
+++ b/entrypoint.sh
@@ -37,7 +37,7 @@ if [ "$CURRENT_UID" != "$PUID" ] || [ "$CURRENT_GID" != "$PGID" ]; then
 
     # Fix ownership of app directories
     echo "🔒 Fixing permissions on app directories..."
-    chown -R soulsync:soulsync /app/config /app/database /app/logs /app/downloads /app/Transfer 2>/dev/null || true
+    chown -R soulsync:soulsync /app/config /app/data /app/logs /app/downloads /app/Transfer 2>/dev/null || true
 else
     echo "✅ User/Group IDs already correct"
 fi
@@ -66,8 +66,8 @@ else
 fi
 
 # Ensure all directories exist and have proper permissions
-mkdir -p /app/config /app/database /app/logs /app/downloads /app/Transfer
-chown -R soulsync:soulsync /app/config /app/database /app/logs /app/downloads /app/Transfer
+mkdir -p /app/config /app/data /app/logs /app/downloads /app/Transfer
+chown -R soulsync:soulsync /app/config /app/data /app/logs /app/downloads /app/Transfer
 
 echo "✅ Configuration initialized successfully"