If you look in your config/database.yml file, you are probably specifying localhost as the database host name, and you are probably not supplying a password.

Using localhost automatically switches the connection to a TCP connection, and by default in postgres, TCP connection auth method is md5 (password required).

Here are two ways to solve:

Switch to UNIX Socket connection - If you’re just running the postgres db in the same VM as Rails, you can switch from TCP to UNIX Socket connection by removing localhost from the host parameter in config/database.yml:

from:

development:
  adapter: postgresql
  ...
  host: localhost
  ...

to:

development:
  adapter: postgresql
  ...
  host: ''
  ...

Specify a Password: - If you need to connect over TCP, make sure the username you are using in config/database.yml is configured in postgres and set a password by connecting to the postgres db from the command line and running:

ALTER USER postgres PASSWORD 'myPassword';

and then specify the same password in your config/database.yml file:

development:
  adapter: postgresql
  ...
  host: localhost
  password: 'myPassword'
  ...