diff --git a/Dockerfile b/Dockerfile
index 49bb29445..9e4f83d56 100644
--- a/Dockerfile
+++ b/Dockerfile
@@ -34,10 +34,6 @@ COPY README.md pyproject.toml uv.lock entrypoint.sh ./
 RUN --mount=type=cache,target=/root/.cache/uv \
     uv sync --extra debug --extra api --extra postgres --extra neo4j --extra llama-index --extra ollama --extra mistral --extra groq --extra anthropic --extra chromadb --frozen --no-install-project --no-dev --no-editable
 
-# Copy Alembic configuration
-COPY alembic.ini /app/alembic.ini
-COPY alembic/ /app/alembic
-
 # Then, add the rest of the project source code and install it
 # Installing separately from its dependencies allows optimal layer caching
 COPY ./cognee /app/cognee
diff --git a/cognee-mcp/Dockerfile b/cognee-mcp/Dockerfile
index 6608102c8..cf30466df 100644
--- a/cognee-mcp/Dockerfile
+++ b/cognee-mcp/Dockerfile
@@ -34,8 +34,8 @@ RUN --mount=type=cache,target=/root/.cache/uv \
     uv sync --frozen --no-install-project --no-dev --no-editable
 
 # Copy Alembic configuration
-COPY alembic.ini /app/alembic.ini
-COPY alembic/ /app/alembic
+COPY cognee/alembic.ini /app/cognee/alembic.ini
+COPY cognee/alembic/ /app/cognee/alembic
 
 # Then, add the rest of the project source code and install it
 # Installing separately from its dependencies allows optimal layer caching
diff --git a/cognee-mcp/entrypoint.sh b/cognee-mcp/entrypoint.sh
index b4df5ba00..60b6ad459 100644
--- a/cognee-mcp/entrypoint.sh
+++ b/cognee-mcp/entrypoint.sh
@@ -56,24 +56,22 @@ if [ -n "$API_URL" ]; then
     echo "Skipping database migrations (API server handles its own database)"
 else
     echo "Direct mode: Using local cognee instance"
-    # Run Alembic migrations with proper error handling.
-    # Note on UserAlreadyExists error handling:
-    # During database migrations, we attempt to create a default user. If this user
-    # already exists (e.g., from a previous deployment or migration), it's not a
-    # critical error and shouldn't prevent the application from starting. This is
-    # different from other migration errors which could indicate database schema
-    # inconsistencies and should cause the startup to fail. This check allows for
-    # smooth redeployments and container restarts while maintaining data integrity.
     echo "Running database migrations..."
 
-    MIGRATION_OUTPUT=$(alembic upgrade head)
+    set +e # Disable exit on error to handle specific migration errors
+    MIGRATION_OUTPUT=$(cd cognee && alembic upgrade head)
     MIGRATION_EXIT_CODE=$?
+    set -e
 
     if [[ $MIGRATION_EXIT_CODE -ne 0 ]]; then
-        if [[ "$MIGRATION_OUTPUT" == *"UserAlreadyExists"* ]] || [[ "$MIGRATION_OUTPUT" == *"User default_user@example.com already exists"* ]]; then
-            echo "Warning: Default user already exists, continuing startup..."
-        else
-            echo "Migration failed with unexpected error."
+
+        echo "Migration failed with unexpected error. Trying to run Cognee without migrations."
+        echo "Initializing database tables..."
+        python /app/src/run_cognee_database_setup.py
+        INIT_EXIT_CODE=$?
+
+        if [[ $INIT_EXIT_CODE -ne 0 ]]; then
+            echo "Database initialization failed!"
             exit 1
         fi
     fi
diff --git a/cognee-mcp/pyproject.toml b/cognee-mcp/pyproject.toml
index 27b80e72e..03b8c448e 100644
--- a/cognee-mcp/pyproject.toml
+++ b/cognee-mcp/pyproject.toml
@@ -8,7 +8,6 @@ requires-python = ">=3.10"
 dependencies = [
     # For local cognee repo usage remove comment bellow and add absolute path to cognee. Then run `uv sync --reinstall` in the mcp folder on local cognee changes.
     #"cognee[postgres,codegraph,gemini,huggingface,docs,neo4j] @ file:/Users/igorilic/Desktop/cognee",
-    # TODO: Remove gemini from optional dependecnies for new Cognee version after 0.3.4
     "cognee[postgres,docs,neo4j]==0.5.0",
     "fastmcp>=2.10.0,<3.0.0",
     "mcp>=1.12.0,<2.0.0",
diff --git a/cognee-mcp/src/run_cognee_database_setup.py b/cognee-mcp/src/run_cognee_database_setup.py
new file mode 100644
index 000000000..e0ac91ec4
--- /dev/null
+++ b/cognee-mcp/src/run_cognee_database_setup.py
@@ -0,0 +1,5 @@
+from cognee.modules.engine.operations.setup import setup
+import asyncio
+
+if __name__ == "__main__":
+    asyncio.run(setup())
diff --git a/cognee-mcp/src/server.py b/cognee-mcp/src/server.py
index 5a0515436..fc745b24b 100755
--- a/cognee-mcp/src/server.py
+++ b/cognee-mcp/src/server.py
@@ -892,26 +892,11 @@ async def main():
 
         await setup()
 
-        # Run Alembic migrations from the main cognee directory where alembic.ini is located
+        # Run Cognee migrations
         logger.info("Running database migrations...")
-        migration_result = subprocess.run(
-            ["python", "-m", "alembic", "upgrade", "head"],
-            capture_output=True,
-            text=True,
-            cwd=Path(__file__).resolve().parent.parent.parent,
-        )
+        from cognee.run_migrations import run_migrations
 
-        if migration_result.returncode != 0:
-            migration_output = migration_result.stderr + migration_result.stdout
-            # Check for the expected UserAlreadyExists error (which is not critical)
-            if (
-                "UserAlreadyExists" in migration_output
-                or "User default_user@example.com already exists" in migration_output
-            ):
-                logger.warning("Warning: Default user already exists, continuing startup...")
-            else:
-                logger.error(f"Migration failed with unexpected error: {migration_output}")
-                sys.exit(1)
+        await run_migrations()
 
         logger.info("Database migrations done.")
     elif args.api_url:
diff --git a/cognee/__init__.py b/cognee/__init__.py
index 4d150ce4e..cea55e031 100644
--- a/cognee/__init__.py
+++ b/cognee/__init__.py
@@ -33,3 +33,5 @@ from .api.v1.ui import start_ui
 
 # Pipelines
 from .modules import pipelines
+
+from cognee.run_migrations import run_migrations
diff --git a/alembic.ini b/cognee/alembic.ini
similarity index 100%
rename from alembic.ini
rename to cognee/alembic.ini
diff --git a/alembic/README b/cognee/alembic/README
similarity index 100%
rename from alembic/README
rename to cognee/alembic/README
diff --git a/alembic/env.py b/cognee/alembic/env.py
similarity index 100%
rename from alembic/env.py
rename to cognee/alembic/env.py
diff --git a/alembic/script.py.mako b/cognee/alembic/script.py.mako
similarity index 100%
rename from alembic/script.py.mako
rename to cognee/alembic/script.py.mako
diff --git a/alembic/versions/1a58b986e6e1_enable_delete_for_old_tutorial_notebooks.py b/cognee/alembic/versions/1a58b986e6e1_enable_delete_for_old_tutorial_notebooks.py
similarity index 100%
rename from alembic/versions/1a58b986e6e1_enable_delete_for_old_tutorial_notebooks.py
rename to cognee/alembic/versions/1a58b986e6e1_enable_delete_for_old_tutorial_notebooks.py
diff --git a/alembic/versions/1d0bb7fede17_add_pipeline_run_status.py b/cognee/alembic/versions/1d0bb7fede17_add_pipeline_run_status.py
similarity index 100%
rename from alembic/versions/1d0bb7fede17_add_pipeline_run_status.py
rename to cognee/alembic/versions/1d0bb7fede17_add_pipeline_run_status.py
diff --git a/alembic/versions/1daae0df1866_incremental_loading.py b/cognee/alembic/versions/1daae0df1866_incremental_loading.py
similarity index 100%
rename from alembic/versions/1daae0df1866_incremental_loading.py
rename to cognee/alembic/versions/1daae0df1866_incremental_loading.py
diff --git a/alembic/versions/211ab850ef3d_add_sync_operations_table.py b/cognee/alembic/versions/211ab850ef3d_add_sync_operations_table.py
similarity index 100%
rename from alembic/versions/211ab850ef3d_add_sync_operations_table.py
rename to cognee/alembic/versions/211ab850ef3d_add_sync_operations_table.py
diff --git a/alembic/versions/45957f0a9849_add_notebook_table.py b/cognee/alembic/versions/45957f0a9849_add_notebook_table.py
similarity index 100%
rename from alembic/versions/45957f0a9849_add_notebook_table.py
rename to cognee/alembic/versions/45957f0a9849_add_notebook_table.py
diff --git a/alembic/versions/46a6ce2bd2b2_expand_dataset_database_with_json_.py b/cognee/alembic/versions/46a6ce2bd2b2_expand_dataset_database_with_json_.py
similarity index 100%
rename from alembic/versions/46a6ce2bd2b2_expand_dataset_database_with_json_.py
rename to cognee/alembic/versions/46a6ce2bd2b2_expand_dataset_database_with_json_.py
diff --git a/alembic/versions/482cd6517ce4_add_default_user.py b/cognee/alembic/versions/482cd6517ce4_add_default_user.py
similarity index 100%
rename from alembic/versions/482cd6517ce4_add_default_user.py
rename to cognee/alembic/versions/482cd6517ce4_add_default_user.py
diff --git a/alembic/versions/76625596c5c3_expand_dataset_database_for_multi_user.py b/cognee/alembic/versions/76625596c5c3_expand_dataset_database_for_multi_user.py
similarity index 100%
rename from alembic/versions/76625596c5c3_expand_dataset_database_for_multi_user.py
rename to cognee/alembic/versions/76625596c5c3_expand_dataset_database_for_multi_user.py
diff --git a/alembic/versions/8057ae7329c2_initial_migration.py b/cognee/alembic/versions/8057ae7329c2_initial_migration.py
similarity index 100%
rename from alembic/versions/8057ae7329c2_initial_migration.py
rename to cognee/alembic/versions/8057ae7329c2_initial_migration.py
diff --git a/alembic/versions/9e7a3cb85175_loader_separation.py b/cognee/alembic/versions/9e7a3cb85175_loader_separation.py
similarity index 100%
rename from alembic/versions/9e7a3cb85175_loader_separation.py
rename to cognee/alembic/versions/9e7a3cb85175_loader_separation.py
diff --git a/alembic/versions/a1b2c3d4e5f6_add_label_column_to_data.py b/cognee/alembic/versions/a1b2c3d4e5f6_add_label_column_to_data.py
similarity index 100%
rename from alembic/versions/a1b2c3d4e5f6_add_label_column_to_data.py
rename to cognee/alembic/versions/a1b2c3d4e5f6_add_label_column_to_data.py
diff --git a/alembic/versions/ab7e313804ae_permission_system_rework.py b/cognee/alembic/versions/ab7e313804ae_permission_system_rework.py
similarity index 100%
rename from alembic/versions/ab7e313804ae_permission_system_rework.py
rename to cognee/alembic/versions/ab7e313804ae_permission_system_rework.py
diff --git a/alembic/versions/b9274c27a25a_kuzu_11_migration.py b/cognee/alembic/versions/b9274c27a25a_kuzu_11_migration.py
similarity index 100%
rename from alembic/versions/b9274c27a25a_kuzu_11_migration.py
rename to cognee/alembic/versions/b9274c27a25a_kuzu_11_migration.py
diff --git a/alembic/versions/c946955da633_multi_tenant_support.py b/cognee/alembic/versions/c946955da633_multi_tenant_support.py
similarity index 100%
rename from alembic/versions/c946955da633_multi_tenant_support.py
rename to cognee/alembic/versions/c946955da633_multi_tenant_support.py
diff --git a/alembic/versions/e1ec1dcb50b6_add_last_accessed_to_data.py b/cognee/alembic/versions/e1ec1dcb50b6_add_last_accessed_to_data.py
similarity index 100%
rename from alembic/versions/e1ec1dcb50b6_add_last_accessed_to_data.py
rename to cognee/alembic/versions/e1ec1dcb50b6_add_last_accessed_to_data.py
diff --git a/alembic/versions/e4ebee1091e7_expand_data_model_info.py b/cognee/alembic/versions/e4ebee1091e7_expand_data_model_info.py
similarity index 100%
rename from alembic/versions/e4ebee1091e7_expand_data_model_info.py
rename to cognee/alembic/versions/e4ebee1091e7_expand_data_model_info.py
diff --git a/cognee/run_migrations.py b/cognee/run_migrations.py
new file mode 100644
index 000000000..e501456dd
--- /dev/null
+++ b/cognee/run_migrations.py
@@ -0,0 +1,48 @@
+import os
+import sys
+import subprocess
+from pathlib import Path
+import importlib.resources as pkg_resources
+
+# Assuming your package is named 'cognee' and the migrations are under 'cognee/alembic'
+# This is a placeholder for the path logic.
+MIGRATIONS_PACKAGE = "cognee"
+MIGRATIONS_DIR_NAME = "alembic"
+
+
+async def run_migrations():
+    """
+    Finds the Alembic configuration within the installed package and
+    programmatically executes 'alembic upgrade head'.
+    """
+    # 1. Locate the base path of the installed package.
+    # This reliably finds the root directory of the installed 'cognee' package.
+    # We look for the parent of the 'migrations' directory.
+    package_root = str(pkg_resources.files(MIGRATIONS_PACKAGE))
+
+    # 2. Define the paths for config and scripts
+    alembic_ini_path = os.path.join(package_root, "alembic.ini")
+    script_location_path = os.path.join(package_root, MIGRATIONS_DIR_NAME)
+
+    if not os.path.exists(alembic_ini_path):
+        raise FileNotFoundError(
+            f"Error: alembic.ini not found at expected locations for package '{MIGRATIONS_PACKAGE}'."
+        )
+    if not os.path.exists(script_location_path):
+        raise FileNotFoundError(
+            f"Error: Migrations directory not found at expected locations for package '{MIGRATIONS_PACKAGE}'."
+        )
+
+    migration_result = subprocess.run(
+        ["python", "-m", "alembic", "upgrade", "head"],
+        capture_output=True,
+        text=True,
+        cwd=Path(package_root),
+    )
+
+    if migration_result.returncode != 0:
+        migration_output = migration_result.stderr + migration_result.stdout
+        print(f"Migration failed with unexpected error: {migration_output}")
+        sys.exit(1)
+
+    print("Migration completed successfully.")
diff --git a/entrypoint.sh b/entrypoint.sh
index 82c4a2fea..ed7e6b15d 100755
--- a/entrypoint.sh
+++ b/entrypoint.sh
@@ -11,34 +11,24 @@ echo "Debug port: $DEBUG_PORT"
 echo "HTTP port: $HTTP_PORT"
 
 # Run Alembic migrations with proper error handling.
-# Note on UserAlreadyExists error handling:
-# During database migrations, we attempt to create a default user. If this user
-# already exists (e.g., from a previous deployment or migration), it's not a
-# critical error and shouldn't prevent the application from starting. This is
-# different from other migration errors which could indicate database schema
-# inconsistencies and should cause the startup to fail. This check allows for
-# smooth redeployments and container restarts while maintaining data integrity.
 echo "Running database migrations..."
 
+# Move to the cognee directory to run alembic migrations from there
 set +e # Disable exit on error to handle specific migration errors
-MIGRATION_OUTPUT=$(alembic upgrade head)
+MIGRATION_OUTPUT=$(cd cognee && alembic upgrade head)
 MIGRATION_EXIT_CODE=$?
 set -e
 
 if [[ $MIGRATION_EXIT_CODE -ne 0 ]]; then
-    if [[ "$MIGRATION_OUTPUT" == *"UserAlreadyExists"* ]] || [[ "$MIGRATION_OUTPUT" == *"User default_user@example.com already exists"* ]]; then
-        echo "Warning: Default user already exists, continuing startup..."
-    else
-        echo "Migration failed with unexpected error. Trying to run Cognee without migrations."
+    echo "Migration failed with unexpected error. Trying to run Cognee without migrations."
 
-        echo "Initializing database tables..."
-        python /app/cognee/modules/engine/operations/setup.py
-        INIT_EXIT_CODE=$?
+    echo "Initializing database tables..."
+    python /app/cognee/modules/engine/operations/setup.py
+    INIT_EXIT_CODE=$?
 
-        if [[ $INIT_EXIT_CODE -ne 0 ]]; then
-            echo "Database initialization failed!"
-            exit 1
-        fi
+    if [[ $INIT_EXIT_CODE -ne 0 ]]; then
+        echo "Database initialization failed!"
+        exit 1
     fi
 else
     echo "Database migrations done."