diff --git a/backend/.env.example b/backend/.env.example
index 489d0f7..98bfe34 100644
--- a/backend/.env.example
+++ b/backend/.env.example
@@ -8,6 +8,12 @@ HOST=0.0.0.0
 PORT=8000
 DEBUG=true
 
+# Database
+DATABASE_URL=postgresql://grimlock:grimlock@localhost:5432/grimlock
+
+# Security
+SECRET_KEY=your-secret-key-change-in-production-use-openssl-rand-hex-32
+
 # Context Configuration
 CONTEXT_PATH=/app/context
 REPOS_PATH=/app/repos
diff --git a/backend/api/auth.py b/backend/api/auth.py
new file mode 100644
index 0000000..5a06473
--- /dev/null
+++ b/backend/api/auth.py
@@ -0,0 +1,154 @@
+"""
+Authentication API Endpoints
+"""
+
+from fastapi import APIRouter, Depends, HTTPException, status
+from fastapi.security import HTTPBearer, HTTPAuthorizationCredentials
+from sqlalchemy.orm import Session
+from pydantic import BaseModel, EmailStr
+from typing import Optional
+
+from core.database import get_db
+from core.models import User, UserRole
+from core.auth import verify_password, get_password_hash, create_access_token, decode_token
+
+router = APIRouter()
+security = HTTPBearer()
+
+# Pydantic models
+class UserRegister(BaseModel):
+    email: EmailStr
+    name: str
+    password: str
+    role: UserRole = UserRole.ENGINEER
+
+class UserLogin(BaseModel):
+    email: EmailStr
+    password: str
+
+class Token(BaseModel):
+    access_token: str
+    token_type: str = "bearer"
+
+class UserResponse(BaseModel):
+    id: int
+    email: str
+    name: str
+    role: UserRole
+    is_active: bool
+    is_online: bool
+    
+    class Config:
+        from_attributes = True
+
+# Dependency to get current user from token
+async def get_current_user(
+    credentials: HTTPAuthorizationCredentials = Depends(security),
+    db: Session = Depends(get_db)
+) -> User:
+    """Get current authenticated user"""
+    token = credentials.credentials
+    payload = decode_token(token)
+    
+    if payload is None:
+        raise HTTPException(
+            status_code=status.HTTP_401_UNAUTHORIZED,
+            detail="Invalid authentication credentials"
+        )
+    
+    user_id = payload.get("sub")
+    if user_id is None:
+        raise HTTPException(
+            status_code=status.HTTP_401_UNAUTHORIZED,
+            detail="Invalid authentication credentials"
+        )
+    
+    user = db.query(User).filter(User.id == int(user_id)).first()
+    if user is None:
+        raise HTTPException(
+            status_code=status.HTTP_401_UNAUTHORIZED,
+            detail="User not found"
+        )
+    
+    if not user.is_active:
+        raise HTTPException(
+            status_code=status.HTTP_403_FORBIDDEN,
+            detail="User account is disabled"
+        )
+    
+    return user
+
+@router.post("/register", response_model=UserResponse)
+async def register(user_data: UserRegister, db: Session = Depends(get_db)):
+    """Register a new user"""
+    
+    # Check if user exists
+    existing_user = db.query(User).filter(User.email == user_data.email).first()
+    if existing_user:
+        raise HTTPException(
+            status_code=status.HTTP_400_BAD_REQUEST,
+            detail="Email already registered"
+        )
+    
+    # Create new user
+    user = User(
+        email=user_data.email,
+        name=user_data.name,
+        password_hash=get_password_hash(user_data.password),
+        role=user_data.role
+    )
+    
+    db.add(user)
+    db.commit()
+    db.refresh(user)
+    
+    return user
+
+@router.post("/login", response_model=Token)
+async def login(credentials: UserLogin, db: Session = Depends(get_db)):
+    """Login and get access token"""
+    
+    # Find user
+    user = db.query(User).filter(User.email == credentials.email).first()
+    if not user:
+        raise HTTPException(
+            status_code=status.HTTP_401_UNAUTHORIZED,
+            detail="Incorrect email or password"
+        )
+    
+    # Verify password
+    if not verify_password(credentials.password, user.password_hash):
+        raise HTTPException(
+            status_code=status.HTTP_401_UNAUTHORIZED,
+            detail="Incorrect email or password"
+        )
+    
+    if not user.is_active:
+        raise HTTPException(
+            status_code=status.HTTP_403_FORBIDDEN,
+            detail="User account is disabled"
+        )
+    
+    # Create access token
+    access_token = create_access_token(data={"sub": str(user.id)})
+    
+    # Update user online status
+    user.is_online = True
+    db.commit()
+    
+    return {"access_token": access_token}
+
+@router.get("/me", response_model=UserResponse)
+async def get_me(current_user: User = Depends(get_current_user)):
+    """Get current user info"""
+    return current_user
+
+@router.post("/logout")
+async def logout(
+    current_user: User = Depends(get_current_user),
+    db: Session = Depends(get_db)
+):
+    """Logout user"""
+    current_user.is_online = False
+    db.commit()
+    return {"message": "Logged out successfully"}
diff --git a/backend/api/channels.py b/backend/api/channels.py
new file mode 100644
index 0000000..9338265
--- /dev/null
+++ b/backend/api/channels.py
@@ -0,0 +1,188 @@
+"""
+Channels API - Channel management and operations
+"""
+
+from fastapi import APIRouter, Depends, HTTPException, status
+from sqlalchemy.orm import Session
+from pydantic import BaseModel
+from typing import List, Optional
+
+from core.database import get_db
+from core.models import Channel, User, ChannelType
+from api.auth import get_current_user
+
+router = APIRouter()
+
+# Pydantic models
+class ChannelCreate(BaseModel):
+    name: str
+    description: Optional[str] = None
+    type: ChannelType = ChannelType.PUBLIC
+
+class ChannelResponse(BaseModel):
+    id: int
+    name: str
+    description: Optional[str]
+    type: ChannelType
+    member_count: int
+    created_at: str
+    
+    class Config:
+        from_attributes = True
+
+class ChannelListResponse(BaseModel):
+    id: int
+    name: str
+    description: Optional[str]
+    type: ChannelType
+    unread_count: int = 0  # TODO: Implement actual unread counting
+    
+    class Config:
+        from_attributes = True
+
+@router.post("/", response_model=ChannelResponse)
+async def create_channel(
+    channel_data: ChannelCreate,
+    current_user: User = Depends(get_current_user),
+    db: Session = Depends(get_db)
+):
+    """Create a new channel"""
+    
+    # Check if channel name already exists
+    existing = db.query(Channel).filter(Channel.name == channel_data.name).first()
+    if existing:
+        raise HTTPException(
+            status_code=status.HTTP_400_BAD_REQUEST,
+            detail="Channel name already exists"
+        )
+    
+    # Create channel
+    channel = Channel(
+        name=channel_data.name,
+        description=channel_data.description,
+        type=channel_data.type,
+        created_by=current_user.id
+    )
+    
+    db.add(channel)
+    db.commit()
+    db.refresh(channel)
+    
+    # Add creator as member
+    channel.members.append(current_user)
+    db.commit()
+    
+    return {
+        **channel.__dict__,
+        "member_count": len(channel.members),
+        "created_at": channel.created_at.isoformat()
+    }
+
+@router.get("/", response_model=List[ChannelListResponse])
+async def list_channels(
+    current_user: User = Depends(get_current_user),
+    db: Session = Depends(get_db)
+):
+    """List all channels user is a member of"""
+    
+    channels = current_user.channels
+    
+    return [
+        {
+            "id": c.id,
+            "name": c.name,
+            "description": c.description,
+            "type": c.type,
+            "unread_count": 0  # TODO: Implement
+        }
+        for c in channels
+    ]
+
+@router.get("/{channel_id}", response_model=ChannelResponse)
+async def get_channel(
+    channel_id: int,
+    current_user: User = Depends(get_current_user),
+    db: Session = Depends(get_db)
+):
+    """Get channel details"""
+    
+    channel = db.query(Channel).filter(Channel.id == channel_id).first()
+    if not channel:
+        raise HTTPException(
+            status_code=status.HTTP_404_NOT_FOUND,
+            detail="Channel not found"
+        )
+    
+    # Check if user is member (for private channels)
+    if channel.type == ChannelType.PRIVATE:
+        if current_user not in channel.members:
+            raise HTTPException(
+                status_code=status.HTTP_403_FORBIDDEN,
+                detail="Not a member of this channel"
+            )
+    
+    return {
+        **channel.__dict__,
+        "member_count": len(channel.members),
+        "created_at": channel.created_at.isoformat()
+    }
+
+@router.post("/{channel_id}/join")
+async def join_channel(
+    channel_id: int,
+    current_user: User = Depends(get_current_user),
+    db: Session = Depends(get_db)
+):
+    """Join a channel"""
+    
+    channel = db.query(Channel).filter(Channel.id == channel_id).first()
+    if not channel:
+        raise HTTPException(
+            status_code=status.HTTP_404_NOT_FOUND,
+            detail="Channel not found"
+        )
+    
+    # Can't join private channels (must be invited)
+    if channel.type == ChannelType.PRIVATE:
+        raise HTTPException(
+            status_code=status.HTTP_403_FORBIDDEN,
+            detail="Cannot join private channel"
+        )
+    
+    # Check if already a member
+    if current_user in channel.members:
+        raise HTTPException(
+            status_code=status.HTTP_400_BAD_REQUEST,
+            detail="Already a member"
+        )
+    
+    channel.members.append(current_user)
+    db.commit()
+    
+    return {"message": f"Joined channel #{channel.name}"}
+
+@router.post("/{channel_id}/leave")
+async def leave_channel(
+    channel_id: int,
+    current_user: User = Depends(get_current_user),
+    db: Session = Depends(get_db)
+):
+    """Leave a channel"""
+    
+    channel = db.query(Channel).filter(Channel.id == channel_id).first()
+    if not channel:
+        raise HTTPException(
+            status_code=status.HTTP_404_NOT_FOUND,
+            detail="Channel not found"
+        )
+    
+    if current_user not in channel.members:
+        raise HTTPException(
+            status_code=status.HTTP_400_BAD_REQUEST,
+            detail="Not a member of this channel"
+        )
+    
+    channel.members.remove(current_user)
+    db.commit()
+    
+    return {"message": f"Left channel #{channel.name}"}
diff --git a/backend/api/messages.py b/backend/api/messages.py
new file mode 100644
index 0000000..dee11d1
--- /dev/null
+++ b/backend/api/messages.py
@@ -0,0 +1,262 @@
+"""
+Messages API - Send and receive messages with @mention support
+"""
+
+from fastapi import APIRouter, Depends, HTTPException, status, BackgroundTasks
+from sqlalchemy.orm import Session
+from pydantic import BaseModel
+from typing import List, Optional
+import re
+from datetime import datetime
+
+from core.database import get_db
+from core.models import Message, Channel, User, ChannelType
+from core.ai_client import AIClient
+from core.context_manager import ContextManager
+from api.auth import get_current_user
+import main
+
+router = APIRouter()
+
+# Pydantic models
+class MessageCreate(BaseModel):
+    content: str
+    reply_to: Optional[int] = None
+
+class UserInfo(BaseModel):
+    id: int
+    name: str
+    email: str
+    role: str
+    is_online: bool
+    
+    class Config:
+        from_attributes = True
+
+class MessageResponse(BaseModel):
+    id: int
+    content: str
+    is_ai_message: bool
+    user: Optional[UserInfo]
+    reply_to_message_id: Optional[int]
+    created_at: str
+    edited_at: Optional[str]
+    
+    class Config:
+        from_attributes = True
+
+def detect_grimlock_mention(content: str) -> bool:
+    """Detect if @grimlock is mentioned in message"""
+    return bool(re.search(r'@grimlock\b', content, re.IGNORECASE))
+
+def extract_mention_query(content: str) -> str:
+    """Extract the query after @grimlock mention"""
+    # Remove @grimlock and return the rest
+    return re.sub(r'@grimlock\s*', '', content, flags=re.IGNORECASE).strip()
+
+async def handle_grimlock_mention(
+    message: Message,
+    channel: Channel,
+    db: Session,
+    context_manager: ContextManager,
+    ai_client: AIClient
+):
+    """Handle @grimlock mention - respond with AI"""
+    
+    try:
+        # Extract query
+        query = extract_mention_query(message.content)
+        
+        # Get channel history for context (last 10 messages)
+        recent_messages = db.query(Message)\
+            .filter(Message.channel_id == channel.id)\
+            .filter(Message.id < message.id)\
+            .order_by(Message.id.desc())\
+            .limit(10)\
+            .all()
+        
+        # Build conversation history
+        conversation = []
+        for msg in reversed(recent_messages):
+            if msg.user:
+                conversation.append({
+                    "role": "user",
+                    "content": f"{msg.user.name}: {msg.content}"
+                })
+            elif msg.is_ai_message:
+                conversation.append({
+                    "role": "assistant",
+                    "content": msg.content
+                })
+        
+        # Add current message
+        if message.user:
+            conversation.append({
+                "role": "user",
+                "content": f"{message.user.name}: {query}"
+            })
+        
+        # Get context from context manager
+        context = context_manager.get_context_for_query(query)
+        system_prompt = context_manager.get_system_prompt()
+        
+        # Add channel context
+        system_prompt += f"\n\nYou are responding in channel #{channel.name}."
+        if context:
+            system_prompt += f"\n\n# Company Context\n{context}"
+        
+        # Get AI response
+        response = await ai_client.chat(
+            messages=conversation,
+            system_prompt=system_prompt
+        )
+        
+        # Create AI message
+        ai_message = Message(
+            channel_id=channel.id,
+            user_id=None,
+            content=response,
+            is_ai_message=True,
+            reply_to_message_id=message.id
+        )
+        
+        db.add(ai_message)
+        db.commit()
+        db.refresh(ai_message)
+        
+        return ai_message
+        
+    except Exception as e:
+        # Create error message
+        error_message = Message(
+            channel_id=channel.id,
+            user_id=None,
+            content=f"Sorry, I encountered an error: {str(e)}",
+            is_ai_message=True,
+            reply_to_message_id=message.id
+        )
+        db.add(error_message)
+        db.commit()
+        return error_message
+
+@router.post("/{channel_id}/messages", response_model=MessageResponse)
+async def send_message(
+    channel_id: int,
+    message_data: MessageCreate,
+    background_tasks: BackgroundTasks,
+    current_user: User = Depends(get_current_user),
+    db: Session = Depends(get_db),
+    context_manager: ContextManager = Depends(main.get_context_manager),
+    ai_client: AIClient = Depends(main.get_ai_client)
+):
+    """Send a message to a channel"""
+    
+    # Get channel
+    channel = db.query(Channel).filter(Channel.id == channel_id).first()
+    if not channel:
+        raise HTTPException(
+            status_code=status.HTTP_404_NOT_FOUND,
+            detail="Channel not found"
+        )
+    
+    # Check if user is member
+    if current_user not in channel.members:
+        raise HTTPException(
+            status_code=status.HTTP_403_FORBIDDEN,
+            detail="Not a member of this channel"
+        )
+    
+    # Create message
+    message = Message(
+        channel_id=channel_id,
+        user_id=current_user.id,
+        content=message_data.content,
+        reply_to_message_id=message_data.reply_to
+    )
+    
+    db.add(message)
+    db.commit()
+    db.refresh(message)
+    
+    # Check for @grimlock mention
+    if detect_grimlock_mention(message_data.content):
+        # Handle in background to not block response
+        background_tasks.add_task(
+            handle_grimlock_mention,
+            message,
+            channel,
+            db,
+            context_manager,
+            ai_client
+        )
+    
+    return {
+        "id": message.id,
+        "content": message.content,
+        "is_ai_message": message.is_ai_message,
+        "user": {
+            "id": current_user.id,
+            "name": current_user.name,
+            "email": current_user.email,
+            "role": current_user.role.value,
+            "is_online": current_user.is_online
+        } if message.user else None,
+        "reply_to_message_id": message.reply_to_message_id,
+        "created_at": message.created_at.isoformat(),
+        "edited_at": message.edited_at.isoformat() if message.edited_at else None
+    }
+
+@router.get("/{channel_id}/messages", response_model=List[MessageResponse])
+async def get_messages(
+    channel_id: int,
+    limit: int = 50,
+    before: Optional[int] = None,
+    current_user: User = Depends(get_current_user),
+    db: Session = Depends(get_db)
+):
+    """Get messages from a channel"""
+    
+    # Get channel
+    channel = db.query(Channel).filter(Channel.id == channel_id).first()
+    if not channel:
+        raise HTTPException(
+            status_code=status.HTTP_404_NOT_FOUND,
+            detail="Channel not found"
+        )
+    
+    # Check if user is member
+    if current_user not in channel.members:
+        raise HTTPException(
+            status_code=status.HTTP_403_FORBIDDEN,
+            detail="Not a member of this channel"
+        )
+    
+    # Query messages
+    query = db.query(Message).filter(Message.channel_id == channel_id)
+    
+    if before:
+        query = query.filter(Message.id < before)
+    
+    messages = query.order_by(Message.id.desc()).limit(limit).all()
+    messages.reverse()  # Return in chronological order
+    
+    # Format response
+    result = []
+    for msg in messages:
+        result.append({
+            "id": msg.id,
+            "content": msg.content,
+            "is_ai_message": msg.is_ai_message,
+            "user": {
+                "id": msg.user.id,
+                "name": msg.user.name,
+                "email": msg.user.email,
+                "role": msg.user.role.value,
+                "is_online": msg.user.is_online
+            } if msg.user else None,
+            "reply_to_message_id": msg.reply_to_message_id,
+            "created_at": msg.created_at.isoformat(),
+            "edited_at": msg.edited_at.isoformat() if msg.edited_at else None
+        })
+    
+    return result
diff --git a/backend/core/auth.py b/backend/core/auth.py
new file mode 100644
index 0000000..68ab79a
--- /dev/null
+++ b/backend/core/auth.py
@@ -0,0 +1,46 @@
+"""
+Authentication Utilities
+"""
+
+from datetime import datetime, timedelta
+from typing import Optional
+from jose import JWTError, jwt
+from passlib.context import CryptContext
+import os
+
+# Security configuration
+SECRET_KEY = os.getenv("SECRET_KEY", "your-secret-key-change-in-production")
+ALGORITHM = "HS256"
+ACCESS_TOKEN_EXPIRE_MINUTES = 60 * 24 * 7  # 7 days
+
+# Password hashing
+pwd_context = CryptContext(schemes=["bcrypt"], deprecated="auto")
+
+def verify_password(plain_password: str, hashed_password: str) -> bool:
+    """Verify a password against a hash"""
+    return pwd_context.verify(plain_password, hashed_password)
+
+def get_password_hash(password: str) -> str:
+    """Hash a password"""
+    return pwd_context.hash(password)
+
+def create_access_token(data: dict, expires_delta: Optional[timedelta] = None) -> str:
+    """Create a JWT access token"""
+    to_encode = data.copy()
+    
+    if expires_delta:
+        expire = datetime.utcnow() + expires_delta
+    else:
+        expire = datetime.utcnow() + timedelta(minutes=ACCESS_TOKEN_EXPIRE_MINUTES)
+    
+    to_encode.update({"exp": expire})
+    encoded_jwt = jwt.encode(to_encode, SECRET_KEY, algorithm=ALGORITHM)
+    return encoded_jwt
+
+def decode_token(token: str) -> Optional[dict]:
+    """Decode and verify a JWT token"""
+    try:
+        payload = jwt.decode(token, SECRET_KEY, algorithms=[ALGORITHM])
+        return payload
+    except JWTError:
+        return None
diff --git a/backend/core/database.py b/backend/core/database.py
new file mode 100644
index 0000000..85cfc4c
--- /dev/null
+++ b/backend/core/database.py
@@ -0,0 +1,35 @@
+"""
+Database Configuration
+"""
+
+from sqlalchemy import create_engine
+from sqlalchemy.orm import sessionmaker
+from sqlalchemy.pool import StaticPool
+import os
+
+# Database URL from environment
+DATABASE_URL = os.getenv(
+    "DATABASE_URL",
+    "postgresql://grimlock:grimlock@localhost:5432/grimlock"
+)
+
+# Create engine
+engine = create_engine(
+    DATABASE_URL,
+    echo=os.getenv("DEBUG", "false").lower() == "true",
+    pool_pre_ping=True,
+    pool_size=10,
+    max_overflow=20
+)
+
+# Session factory
+SessionLocal = sessionmaker(autocommit=False, autoflush=False, bind=engine)
+
+# Dependency to get DB session
+def get_db():
+    """FastAPI dependency for database sessions"""
+    db = SessionLocal()
+    try:
+        yield db
+    finally:
+        db.close()
diff --git a/backend/core/models.py b/backend/core/models.py
new file mode 100644
index 0000000..5f4a508
--- /dev/null
+++ b/backend/core/models.py
@@ -0,0 +1,146 @@
+"""
+Database Models - SQLAlchemy ORM
+"""
+
+from sqlalchemy import Column, Integer, String, Text, Boolean, DateTime, ForeignKey, Enum, Table
+from sqlalchemy.orm import relationship, declarative_base
+from sqlalchemy.sql import func
+from datetime import datetime
+import enum
+
+Base = declarative_base()
+
+# Association tables for many-to-many relationships
+channel_members = Table(
+    'channel_members',
+    Base.metadata,
+    Column('channel_id', Integer, ForeignKey('channels.id', ondelete='CASCADE'), primary_key=True),
+    Column('user_id', Integer, ForeignKey('users.id', ondelete='CASCADE'), primary_key=True),
+    Column('joined_at', DateTime, default=func.now())
+)
+
+class UserRole(str, enum.Enum):
+    ENGINEER = "engineer"
+    BD = "bd"
+    ADMIN = "admin"
+    EXEC = "exec"
+
+class ChannelType(str, enum.Enum):
+    PUBLIC = "public"
+    PRIVATE = "private"
+
+class User(Base):
+    __tablename__ = "users"
+    
+    id = Column(Integer, primary_key=True, index=True)
+    email = Column(String(255), unique=True, index=True, nullable=False)
+    name = Column(String(255), nullable=False)
+    password_hash = Column(String(255), nullable=False)
+    role = Column(Enum(UserRole), default=UserRole.ENGINEER, nullable=False)
+    is_active = Column(Boolean, default=True, nullable=False)
+    is_online = Column(Boolean, default=False, nullable=False)
+    last_seen = Column(DateTime, default=func.now())
+    created_at = Column(DateTime, default=func.now())
+    updated_at = Column(DateTime, default=func.now(), onupdate=func.now())
+    
+    # Relationships
+    messages = relationship("Message", back_populates="user", cascade="all, delete-orphan")
+    sent_dms = relationship("DirectMessage", foreign_keys="DirectMessage.sender_id", back_populates="sender")
+    received_dms = relationship("DirectMessage", foreign_keys="DirectMessage.recipient_id", back_populates="recipient")
+    channels = relationship("Channel", secondary=channel_members, back_populates="members")
+    files = relationship("File", back_populates="uploaded_by_user")
+    
+    def __repr__(self):
+        return f"<User {self.email}>"
+
+class Channel(Base):
+    __tablename__ = "channels"
+    
+    id = Column(Integer, primary_key=True, index=True)
+    name = Column(String(100), unique=True, index=True, nullable=False)
+    description = Column(Text)
+    type = Column(Enum(ChannelType), default=ChannelType.PUBLIC, nullable=False)
+    created_by = Column(Integer, ForeignKey('users.id', ondelete='SET NULL'))
+    created_at = Column(DateTime, default=func.now())
+    
+    # Relationships
+    messages = relationship("Message", back_populates="channel", cascade="all, delete-orphan")
+    members = relationship("User", secondary=channel_members, back_populates="channels")
+    
+    def __repr__(self):
+        return f"<Channel #{self.name}>"
+
+class Message(Base):
+    __tablename__ = "messages"
+    
+    id = Column(Integer, primary_key=True, index=True)
+    channel_id = Column(Integer, ForeignKey('channels.id', ondelete='CASCADE'), nullable=False)
+    user_id = Column(Integer, ForeignKey('users.id', ondelete='SET NULL'), nullable=True)  # NULL if AI
+    content = Column(Text, nullable=False)
+    is_ai_message = Column(Boolean, default=False, nullable=False)
+    reply_to_message_id = Column(Integer, ForeignKey('messages.id', ondelete='SET NULL'), nullable=True)
+    created_at = Column(DateTime, default=func.now())
+    edited_at = Column(DateTime, nullable=True)
+    
+    # Relationships
+    channel = relationship("Channel", back_populates="messages")
+    user = relationship("User", back_populates="messages")
+    replies = relationship("Message", remote_side=[id], backref="parent_message")
+    artifacts = relationship("Artifact", back_populates="message", cascade="all, delete-orphan")
+    
+    def __repr__(self):
+        return f"<Message {self.id} in #{self.channel.name if self.channel else 'Unknown'}>"
+
+class DirectMessage(Base):
+    __tablename__ = "direct_messages"
+    
+    id = Column(Integer, primary_key=True, index=True)
+    sender_id = Column(Integer, ForeignKey('users.id', ondelete='CASCADE'), nullable=False)
+    recipient_id = Column(Integer, ForeignKey('users.id', ondelete='CASCADE'), nullable=False)
+    content = Column(Text, nullable=False)
+    is_ai_message = Column(Boolean, default=False, nullable=False)
+    read_at = Column(DateTime, nullable=True)
+    created_at = Column(DateTime, default=func.now())
+    edited_at = Column(DateTime, nullable=True)
+    
+    # Relationships
+    sender = relationship("User", foreign_keys=[sender_id], back_populates="sent_dms")
+    recipient = relationship("User", foreign_keys=[recipient_id], back_populates="received_dms")
+    
+    def __repr__(self):
+        return f"<DM from {self.sender_id} to {self.recipient_id}>"
+
+class File(Base):
+    __tablename__ = "files"
+    
+    id = Column(Integer, primary_key=True, index=True)
+    filename = Column(String(255), nullable=False)
+    original_filename = Column(String(255), nullable=False)
+    file_path = Column(String(500), nullable=False)
+    file_size = Column(Integer, nullable=False)  # bytes
+    mime_type = Column(String(100), nullable=False)
+    uploaded_by = Column(Integer, ForeignKey('users.id', ondelete='SET NULL'))
+    channel_id = Column(Integer, ForeignKey('channels.id', ondelete='CASCADE'), nullable=True)
+    created_at = Column(DateTime, default=func.now())
+    
+    # Relationships
+    uploaded_by_user = relationship("User", back_populates="files")
+    
+    def __repr__(self):
+        return f"<File {self.original_filename}>"
+
+class Artifact(Base):
+    __tablename__ = "artifacts"
+    
+    id = Column(Integer, primary_key=True, index=True)
+    message_id = Column(Integer, ForeignKey('messages.id', ondelete='CASCADE'), nullable=False)
+    filename = Column(String(255), nullable=False)
+    file_path = Column(String(500), nullable=False)
+    file_type = Column(String(50), nullable=False)  # pdf, csv, docx, etc.
+    created_at = Column(DateTime, default=func.now())
+    
+    # Relationships
+    message = relationship("Message", back_populates="artifacts")
+    
+    def __repr__(self):
+        return f"<Artifact {self.filename}>"
diff --git a/backend/main.py b/backend/main.py
index cc34609..26b7cc9 100644
--- a/backend/main.py
+++ b/backend/main.py
@@ -11,8 +11,13 @@ from dotenv import load_dotenv
 import os
 
 from api.chat import router as chat_router
+from api.auth import router as auth_router
+from api.channels import router as channels_router
+from api.messages import router as messages_router
 from core.context_manager import ContextManager
 from core.ai_client import AIClient
+from core.database import engine
+from core.models import Base
 
 # Load environment variables
 load_dotenv()
@@ -35,6 +40,10 @@ async def lifespan(app: FastAPI):
     
     logger.info("Starting Grimlock backend...")
     
+    # Create database tables
+    Base.metadata.create_all(bind=engine)
+    logger.info("Database tables created/verified")
+    
     # Initialize context manager
     context_path = os.getenv("CONTEXT_PATH", "./context")
     context_manager = ContextManager(context_path)
@@ -59,7 +68,7 @@ async def lifespan(app: FastAPI):
 app = FastAPI(
     title="Grimlock",
     description="AI-Native Company Operating System",
-    version="0.1.0",
+    version="0.2.0",
     lifespan=lifespan
 )
 
@@ -73,6 +82,9 @@ app.add_middleware(
 )
 
 # Include routers
+app.include_router(auth_router, prefix="/api/auth", tags=["auth"])
+app.include_router(channels_router, prefix="/api/channels", tags=["channels"])
+app.include_router(messages_router, prefix="/api/channels", tags=["messages"])
 app.include_router(chat_router, prefix="/api/chat", tags=["chat"])
 
 @app.get("/")
@@ -81,7 +93,8 @@ async def root():
     return {
         "status": "online",
         "service": "Grimlock",
-        "version": "0.1.0"
+        "version": "0.2.0",
+        "features": ["auth", "channels", "messages", "ai"]
     }
 
 @app.get("/api/health")
@@ -90,7 +103,8 @@ async def health():
     return {
         "status": "healthy",
         "context_loaded": context_manager is not None and context_manager.is_loaded(),
-        "ai_client_ready": ai_client is not None
+        "ai_client_ready": ai_client is not None,
+        "database": "connected"
     }
 
 def get_context_manager() -> ContextManager:
diff --git a/backend/requirements.txt b/backend/requirements.txt
index e7f25d8..83490c2 100644
--- a/backend/requirements.txt
+++ b/backend/requirements.txt
@@ -11,3 +11,21 @@ PyYAML==6.0.1
 markdown==3.5.2
 weasyprint==60.2
 pandas==2.2.0
+
+# Database
+sqlalchemy==2.0.25
+alembic==1.13.1
+psycopg2-binary==2.9.9
+
+# Real-time & Caching
+redis==5.0.1
+python-socketio==5.10.0
+websockets==12.0
+
+# Storage
+minio==7.2.3
+
+# Security
+python-jose[cryptography]==3.3.0
+passlib[bcrypt]==1.7.4
+bcrypt==4.1.2
diff --git a/docker-compose.yml b/docker-compose.yml
index 5cc15e3..f96d8a3 100644
--- a/docker-compose.yml
+++ b/docker-compose.yml
@@ -1,15 +1,50 @@
 version: '3.8'
 
 services:
+  postgres:
+    image: postgres:15-alpine
+    container_name: grimlock-postgres
+    environment:
+      POSTGRES_DB: grimlock
+      POSTGRES_USER: grimlock
+      POSTGRES_PASSWORD: grimlock
+    volumes:
+      - postgres_data:/var/lib/postgresql/data
+    ports:
+      - "5432:5432"
+    healthcheck:
+      test: ["CMD-SHELL", "pg_isready -U grimlock"]
+      interval: 10s
+      timeout: 5s
+      retries: 5
+
+  redis:
+    image: redis:7-alpine
+    container_name: grimlock-redis
+    ports:
+      - "6379:6379"
+    healthcheck:
+      test: ["CMD", "redis-cli", "ping"]
+      interval: 10s
+      timeout: 5s
+      retries: 5
+
   grimlock-backend:
     build:
-      context: ./backend
-      dockerfile: ../docker/Dockerfile.backend
+      context: .
+      dockerfile: docker/Dockerfile.backend
     container_name: grimlock-backend
+    depends_on:
+      postgres:
+        condition: service_healthy
+      redis:
+        condition: service_healthy
     ports:
       - "8000:8000"
     environment:
       - ANTHROPIC_API_KEY=${ANTHROPIC_API_KEY}
+      - DATABASE_URL=postgresql://grimlock:grimlock@postgres:5432/grimlock
+      - SECRET_KEY=${SECRET_KEY:-change-this-in-production}
       - HOST=0.0.0.0
       - PORT=8000
       - DEBUG=true
@@ -22,6 +57,9 @@ services:
     restart: unless-stopped
     command: uvicorn main:app --host 0.0.0.0 --port 8000 --reload
 
+volumes:
+  postgres_data:
+
 networks:
   default:
     name: grimlock-network