diff --git a/mcp_server/src/graphiti_mcp_server.py b/mcp_server/src/graphiti_mcp_server.py
index c611a2ae..9568f96a 100644
--- a/mcp_server/src/graphiti_mcp_server.py
+++ b/mcp_server/src/graphiti_mcp_server.py
@@ -13,6 +13,7 @@ from typing import Any, Optional
 
 from dotenv import load_dotenv
 from graphiti_core import Graphiti
+from graphiti_core.driver.neo4j_driver import Neo4jDriver
 from graphiti_core.edges import EntityEdge
 from graphiti_core.nodes import EpisodeType, EpisodicNode
 from graphiti_core.search.search_filters import SearchFilters
@@ -229,11 +230,16 @@ class GraphitiService:
                         max_coroutines=self.semaphore_limit,
                     )
                 else:
-                    # For Neo4j (default), use the original approach
-                    self.client = Graphiti(
+                    # For Neo4j (default), create a Neo4jDriver instance with database parameter
+                    neo4j_driver = Neo4jDriver(
                         uri=db_config['uri'],
                         user=db_config['user'],
                         password=db_config['password'],
+                        database=db_config.get('database', 'neo4j'),
+                    )
+
+                    self.client = Graphiti(
+                        graph_driver=neo4j_driver,
                         llm_client=llm_client,
                         embedder=embedder_client,
                         max_coroutines=self.semaphore_limit,
diff --git a/mcp_server/src/services/factories.py b/mcp_server/src/services/factories.py
index 65f710b7..af1d3f17 100644
--- a/mcp_server/src/services/factories.py
+++ b/mcp_server/src/services/factories.py
@@ -389,13 +389,13 @@ class DatabaseDriverFactory:
                 uri = os.environ.get('NEO4J_URI', neo4j_config.uri)
                 username = os.environ.get('NEO4J_USER', neo4j_config.username)
                 password = os.environ.get('NEO4J_PASSWORD', neo4j_config.password)
+                database = os.environ.get('NEO4J_DATABASE', neo4j_config.database)
 
                 return {
                     'uri': uri,
                     'user': username,
                     'password': password,
-                    # Note: database and use_parallel_runtime would need to be passed
-                    # to the driver after initialization if supported
+                    'database': database,
                 }
 
             case 'falkordb':
diff --git a/mcp_server/tests/test_database_param.py b/mcp_server/tests/test_database_param.py
new file mode 100644
index 00000000..971a5d5f
--- /dev/null
+++ b/mcp_server/tests/test_database_param.py
@@ -0,0 +1,74 @@
+#!/usr/bin/env python3
+"""Test Neo4j database parameter configuration."""
+
+import os
+import sys
+from pathlib import Path
+
+# Setup path for imports
+sys.path.insert(0, str(Path(__file__).parent.parent))
+
+def test_neo4j_database_parameter():
+    """Test that Neo4j database parameter is included in configuration."""
+    from src.config.schema import GraphitiConfig
+    from src.services.factories import DatabaseDriverFactory
+
+    print('\n' + '='*70)
+    print('Testing Neo4j Database Parameter Configuration')
+    print('='*70 + '\n')
+
+    # Test 1: Default database value
+    print('Test 1: Default database value')
+    config = GraphitiConfig()
+    db_config = DatabaseDriverFactory.create_config(config.database)
+
+    assert 'database' in db_config, 'Database parameter missing from config!'
+    print(f'  ✓ Database parameter present in config')
+    print(f'  ✓ Default database value: {db_config["database"]}')
+    assert db_config['database'] == 'neo4j', f'Expected default "neo4j", got {db_config["database"]}'
+    print(f'  ✓ Default value matches expected: neo4j\n')
+
+    # Test 2: Environment variable override
+    print('Test 2: Environment variable override')
+    os.environ['NEO4J_DATABASE'] = 'graphiti'
+    config2 = GraphitiConfig()
+    db_config2 = DatabaseDriverFactory.create_config(config2.database)
+
+    assert 'database' in db_config2, 'Database parameter missing from config!'
+    print(f'  ✓ Database parameter present in config')
+    print(f'  ✓ Overridden database value: {db_config2["database"]}')
+    assert db_config2['database'] == 'graphiti', f'Expected "graphiti", got {db_config2["database"]}'
+    print(f'  ✓ Environment override works correctly\n')
+
+    # Clean up
+    del os.environ['NEO4J_DATABASE']
+
+    # Test 3: Verify all required parameters are present
+    print('Test 3: Verify all required Neo4j parameters')
+    required_params = ['uri', 'user', 'password', 'database']
+    for param in required_params:
+        assert param in db_config, f'Required parameter "{param}" missing!'
+        print(f'  ✓ {param}: present')
+
+    print('\n' + '='*70)
+    print('✅ All database parameter tests passed!')
+    print('='*70)
+    print('\nSummary:')
+    print('  - database parameter is included in Neo4j config')
+    print('  - Default value is "neo4j"')
+    print('  - Environment variable NEO4J_DATABASE override works')
+    print('  - All required parameters (uri, user, password, database) present')
+    print()
+
+
+if __name__ == '__main__':
+    try:
+        test_neo4j_database_parameter()
+    except AssertionError as e:
+        print(f'\n❌ Test failed: {e}\n')
+        sys.exit(1)
+    except Exception as e:
+        print(f'\n❌ Unexpected error: {e}\n')
+        import traceback
+        traceback.print_exc()
+        sys.exit(1)