diff --git a/apps/api/src/main.py b/apps/api/src/main.py
index 043f656..1ebb411 100644
--- a/apps/api/src/main.py
+++ b/apps/api/src/main.py
@@ -123,8 +123,9 @@ async def on_startup():
     # Initialize database (run migrations)
     db_ready = await init_database()
     if not db_ready:
-        logger.error("Database initialization failed. API may not function correctly.")
-        # Continue anyway so the health endpoint remains available
+        logger.error("Database initialization failed. Shutting down.")
+        import sys
+        sys.exit(1)
 
     # Seed built-in data
     await seed_builtin_tool_types()
@@ -132,7 +133,14 @@ async def on_startup():
 
 @app.get("/health")
 async def health_check():
-    return {"status": "healthy"}
+    try:
+        from sqlalchemy import text
+        async with SessionLocal() as session:
+            await session.execute(text("SELECT 1"))
+        return {"status": "healthy", "database": "connected"}
+    except Exception as exc:
+        logger.error("Health check failed: %s", exc)
+        return {"status": "unhealthy", "database": "disconnected", "error": str(exc)}
 
 app.include_router(auth_router)
 app.include_router(projects_router)