How to manage Rails database.yml

What's the best way to handle the Rails database.yml if multiple people are working on the project and database locations are different (the socket in particular).

First, move database.yml to a template file.

If you're on Git:

git mv config/database.yml config/database.yml.example
git commit -m "moved database.yml to an example file"

Or, if you're on Subversion:

svn move config/database.yml config/database.yml.example
svn ci -m "moved database.yml to an example file"

Second, ignore the .yml version.

If you're on Git:

cat > .gitignore
config/database.yml

git add .gitignore
git commit -m "ignored database.yml"

If you're on Subversion:

svn propset svn:ignore config "database.yml"

Third, install Where's your database.yml, dude?:

script/plugin install git://github.com/technicalpickles/wheres-your-database-yml-dude

That plugin alerts developers before any Rake tasks are run if they haven't created their own local version of config/database.yml.

Fourth, set up a Capistrano deploy task:

# in RAILS_ROOT/config/deploy.rb:
after 'deploy:update_code', 'deploy:symlink_db'

namespace :deploy do
  desc "Symlinks the database.yml"
  task :symlink_db, :roles => :app do
    run "ln -nfs #{deploy_to}/shared/config/database.yml #{release_path}/config/database.yml"
  end
end

Fifth, upload the server's version of database.yml:

scp config/database.yml user@my_server.com:/path_to_rails_app/shared/config/database.yml

In Capistrano 3, instead of adding the new task, you can just do:

set :linked_files, %w{config/database.yml}

You can use the svn:ignore property to prevent that file from being versioned.

Instructions here.

Yet another method that uses capistrano an ERb to prompt for the credentials during deployment.

http://www.simonecarletti.com/blog/2009/06/capistrano-and-database-yml/

In addition to above answers, I wrote a rake task similar to "Where's your database.yml, dude?", but allowing to keep template examples of any configuration file. Check it out: https://github.com/Velid/exemplify

As an alternative to writing separate production configs and linking them via Capistrano, I would also suggest using environment variables for your credentials:

password: <%= ENV['PROD_DATABASE_PASSWORD'] %>

There are a lot of handy tools and ways to do this available around.