diff --git a/.changeset/large-lizards-write.md b/.changeset/large-lizards-write.md
new file mode 100644
index 0000000..de02972
--- /dev/null
+++ b/.changeset/large-lizards-write.md
@@ -0,0 +1,5 @@
+---
+"create-better-t-stack": patch
+---
+
+Add support for Neon database in db-setup
diff --git a/apps/cli/src/constants.ts b/apps/cli/src/constants.ts
index 616277f..a960922 100644
--- a/apps/cli/src/constants.ts
+++ b/apps/cli/src/constants.ts
@@ -34,6 +34,7 @@ export const dependencyVersionMap = {
 	"drizzle-kit": "^0.31.2",
 
 	"@libsql/client": "^0.15.9",
+	"@neondatabase/serverless": "^1.0.1",
 	pg: "^8.14.1",
 	"@types/pg": "^8.11.11",
 
diff --git a/apps/cli/src/helpers/setup/db-setup.ts b/apps/cli/src/helpers/setup/db-setup.ts
index fc10608..4d38fd0 100644
--- a/apps/cli/src/helpers/setup/db-setup.ts
+++ b/apps/cli/src/helpers/setup/db-setup.ts
@@ -48,11 +48,19 @@ export async function setupDatabase(config: ProjectConfig): Promise<void> {
 					projectDir: serverDir,
 				});
 			} else if (database === "postgres") {
-				await addPackageDependency({
-					dependencies: ["drizzle-orm", "pg"],
-					devDependencies: ["drizzle-kit", "@types/pg"],
-					projectDir: serverDir,
-				});
+				if (dbSetup === "neon") {
+					await addPackageDependency({
+						dependencies: ["drizzle-orm", "@neondatabase/serverless"],
+						devDependencies: ["drizzle-kit"],
+						projectDir: serverDir,
+					});
+				} else {
+					await addPackageDependency({
+						dependencies: ["drizzle-orm", "pg"],
+						devDependencies: ["drizzle-kit", "@types/pg"],
+						projectDir: serverDir,
+					});
+				}
 			} else if (database === "mysql") {
 				await addPackageDependency({
 					dependencies: ["drizzle-orm", "mysql2"],
diff --git a/apps/cli/templates/db/drizzle/postgres/src/db/index.ts.hbs b/apps/cli/templates/db/drizzle/postgres/src/db/index.ts.hbs
index 3873607..732bdd7 100644
--- a/apps/cli/templates/db/drizzle/postgres/src/db/index.ts.hbs
+++ b/apps/cli/templates/db/drizzle/postgres/src/db/index.ts.hbs
@@ -1,12 +1,29 @@
 {{#if (or (eq runtime "bun") (eq runtime "node"))}}
+{{#if (eq dbSetup "neon")}}
+import { neon } from '@neondatabase/serverless';
+import { drizzle } from 'drizzle-orm/neon-http';
+
+const sql = neon(process.env.DATABASE_URL || "");
+export const db = drizzle(sql);
+{{else}}
 import { drizzle } from "drizzle-orm/node-postgres";
 
 export const db = drizzle(process.env.DATABASE_URL || "");
 {{/if}}
+{{/if}}
 
 {{#if (eq runtime "workers")}}
+{{#if (eq dbSetup "neon")}}
+import { neon } from '@neondatabase/serverless';
+import { drizzle } from 'drizzle-orm/neon-http';
+import { env } from "cloudflare:workers";
+
+const sql = neon(env.DATABASE_URL || "");
+export const db = drizzle(sql);
+{{else}}
 import { drizzle } from "drizzle-orm/node-postgres";
 import { env } from "cloudflare:workers";
 
 export const db = drizzle(env.DATABASE_URL || "");
 {{/if}}
+{{/if}}