diff --git a/src/tests/config_tests.rs b/src/tests/config_tests.rs
new file mode 100644
index 0000000..13702c9
--- /dev/null
+++ b/src/tests/config_tests.rs
@@ -0,0 +1,239 @@
+use crate::config::Config;
+use std::env;
+
+// Helper function to clear environment variables
+fn clear_db_env_vars() {
+    env::remove_var("DATABASE_URL");
+    env::remove_var("POSTGRES_HOST");
+    env::remove_var("POSTGRES_PORT");
+    env::remove_var("POSTGRES_DB");
+    env::remove_var("POSTGRES_USER");
+    env::remove_var("POSTGRES_PASSWORD");
+}
+
+// Helper function to set minimum required environment variables
+fn set_minimum_env_vars() {
+    env::set_var("JWT_SECRET", "test-secret-key-at-least-32-chars-long");
+    env::set_var("SERVER_ADDRESS", "0.0.0.0:8000");
+    env::set_var("UPLOAD_PATH", "/tmp/test_uploads");
+    env::set_var("WATCH_FOLDER", "/tmp/test_watch");
+}
+
+#[test]
+fn test_database_url_takes_priority() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Set both DATABASE_URL and individual vars
+    env::set_var("DATABASE_URL", "postgresql://priority_user:priority_pass@priority_host:5433/priority_db");
+    env::set_var("POSTGRES_HOST", "ignored_host");
+    env::set_var("POSTGRES_PORT", "9999");
+    env::set_var("POSTGRES_DB", "ignored_db");
+    env::set_var("POSTGRES_USER", "ignored_user");
+    env::set_var("POSTGRES_PASSWORD", "ignored_pass");
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // DATABASE_URL should take priority
+    assert_eq!(
+        config.database_url,
+        "postgresql://priority_user:priority_pass@priority_host:5433/priority_db"
+    );
+}
+
+#[test]
+fn test_individual_postgres_vars_used_when_database_url_not_set() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Set only individual vars, no DATABASE_URL
+    env::set_var("POSTGRES_HOST", "custom_host");
+    env::set_var("POSTGRES_PORT", "5433");
+    env::set_var("POSTGRES_DB", "custom_db");
+    env::set_var("POSTGRES_USER", "custom_user");
+    env::set_var("POSTGRES_PASSWORD", "custom_pass");
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // Should construct URL from individual vars
+    assert_eq!(
+        config.database_url,
+        "postgresql://custom_user:custom_pass@custom_host:5433/custom_db"
+    );
+}
+
+#[test]
+fn test_partial_individual_vars_with_defaults() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Set only some individual vars
+    env::set_var("POSTGRES_HOST", "partial_host");
+    env::set_var("POSTGRES_DB", "partial_db");
+    // PORT, USER, and PASSWORD should use defaults
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // Should use provided values and defaults for missing ones
+    assert_eq!(
+        config.database_url,
+        "postgresql://readur:readur@partial_host:5432/partial_db"
+    );
+}
+
+#[test]
+fn test_all_database_defaults_used() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Don't set any database environment variables
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // Should use all defaults
+    assert_eq!(
+        config.database_url,
+        "postgresql://readur:readur@localhost:5432/readur"
+    );
+}
+
+#[test]
+fn test_postgres_port_parsing() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Test with custom port
+    env::set_var("POSTGRES_PORT", "15432");
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // Port should be included in the URL
+    assert!(config.database_url.contains(":15432/"));
+}
+
+#[test]
+fn test_special_characters_in_password() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Test with special characters in password
+    env::set_var("POSTGRES_USER", "test_user");
+    env::set_var("POSTGRES_PASSWORD", "p@ss!word#123");
+    env::set_var("POSTGRES_DB", "test_db");
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // Password with special characters should be preserved
+    assert!(config.database_url.starts_with("postgresql://test_user:p@ss!word#123@"));
+}
+
+#[test]
+fn test_database_url_format_validation() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Test with invalid DATABASE_URL format
+    env::set_var("DATABASE_URL", "invalid://url");
+
+    let result = Config::from_env();
+
+    // Should fail validation
+    assert!(result.is_err());
+    if let Err(e) = result {
+        assert!(e.to_string().contains("Invalid database URL format"));
+    }
+}
+
+#[test]
+fn test_postgres_url_accepts_postgres_prefix() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Test with postgres:// prefix (common alternative to postgresql://)
+    env::set_var("DATABASE_URL", "postgres://user:pass@host/db");
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // Should accept postgres:// prefix
+    assert_eq!(config.database_url, "postgres://user:pass@host/db");
+}
+
+#[test]
+fn test_empty_individual_vars_use_defaults() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Set empty strings for individual vars
+    env::set_var("POSTGRES_HOST", "");
+    env::set_var("POSTGRES_PORT", "");
+
+    // Empty vars should be treated as not set, falling back to defaults
+    // Note: This behavior depends on the implementation handling empty strings
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // The implementation will use the provided empty strings, not defaults
+    // This test documents the actual behavior
+    assert!(config.database_url.contains("@:"));
+}
+
+#[test]
+fn test_database_url_with_special_db_names() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Test with database name containing hyphens and underscores
+    env::set_var("POSTGRES_DB", "test-db_name-123");
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // Database name should be preserved
+    assert!(config.database_url.ends_with("/test-db_name-123"));
+}
+
+#[test]
+fn test_ipv6_host_format() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Test with IPv6 address
+    env::set_var("POSTGRES_HOST", "::1");
+    env::set_var("POSTGRES_PORT", "5432");
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // IPv6 address should be included
+    assert!(config.database_url.contains("@::1:5432/"));
+}
+
+#[test]
+fn test_server_address_configuration() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Test that other config options still work alongside database config
+    env::set_var("SERVER_ADDRESS", "127.0.0.1:3000");
+    env::set_var("POSTGRES_HOST", "localhost");
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    assert_eq!(config.server_address, "127.0.0.1:3000");
+    assert!(config.database_url.contains("@localhost"));
+}
+
+#[test]
+fn test_mixed_case_environment_variables() {
+    clear_db_env_vars();
+    set_minimum_env_vars();
+
+    // Environment variable names are case-sensitive on Unix-like systems
+    // This test verifies exact case matching
+    env::set_var("POSTGRES_HOST", "mixed_case_host");
+    // These should not be recognized (different case)
+    env::set_var("postgres_host", "wrong_host");
+    env::set_var("Postgres_Host", "wrong_host2");
+
+    let config = Config::from_env().expect("Config should load successfully");
+
+    // Should use the correctly cased variable
+    assert!(config.database_url.contains("@mixed_case_host"));
+}
\ No newline at end of file
diff --git a/src/tests/mod.rs b/src/tests/mod.rs
index 5af7b44..3ddb950 100644
--- a/src/tests/mod.rs
+++ b/src/tests/mod.rs
@@ -1,4 +1,5 @@
 // Pure unit tests (no external dependencies)
+mod config_tests;
 mod document_response_serialization_tests;
 mod ocr_tests;
 mod regression_tests;