diff --git a/server/models/index.js b/server/models/index.js
index a219859..13338c7 100644
--- a/server/models/index.js
+++ b/server/models/index.js
@@ -1,23 +1,35 @@
 const { Sequelize } = require('sequelize');
 require('dotenv').config();
 
-const sequelize = new Sequelize(
-  process.env.DB_NAME || 'drone_detection',
-  process.env.DB_USER || 'postgres',
-  process.env.DB_PASSWORD || 'password',
-  {
-    host: process.env.DB_HOST || 'localhost',
-    port: process.env.DB_PORT || 5432,
-    dialect: 'postgres',
-    logging: process.env.NODE_ENV === 'development' ? console.log : false,
-    pool: {
-      max: 5,
-      min: 0,
-      acquire: 30000,
-      idle: 10000
+// Configure database based on environment
+let sequelize;
+if (process.env.NODE_ENV === 'test') {
+  // Use SQLite in-memory database for testing
+  sequelize = new Sequelize({
+    dialect: 'sqlite',
+    storage: ':memory:',
+    logging: false
+  });
+} else {
+  // Use PostgreSQL for production/development
+  sequelize = new Sequelize(
+    process.env.DB_NAME || 'drone_detection',
+    process.env.DB_USER || 'postgres',
+    process.env.DB_PASSWORD || 'password',
+    {
+      host: process.env.DB_HOST || 'localhost',
+      port: process.env.DB_PORT || 5432,
+      dialect: 'postgres',
+      logging: process.env.NODE_ENV === 'development' ? console.log : false,
+      pool: {
+        max: 5,
+        min: 0,
+        acquire: 30000,
+        idle: 10000
+      }
     }
-  }
-);
+  );
+}
 
 // Import models
 const Device = require('./Device')(sequelize);
diff --git a/server/tests/setup.js b/server/tests/setup.js
index 6a1bf26..c877ad9 100644
--- a/server/tests/setup.js
+++ b/server/tests/setup.js
@@ -1,6 +1,14 @@
 const { Sequelize } = require('sequelize');
 const path = require('path');
 
+// Set test environment variables
+process.env.NODE_ENV = 'test';
+process.env.JWT_SECRET = 'test-jwt-secret-key-for-testing-only';
+process.env.DATABASE_URL = ':memory:';
+process.env.DB_DIALECT = 'sqlite';
+process.env.DB_STORAGE = ':memory:';
+process.env.DB_LOGGING = 'false';
+
 // Test database configuration
 const testDatabase = {
   dialect: 'sqlite',