diff --git a/README.md b/README.md
index 4ec67d2bae..258baa6db1 100644
--- a/README.md
+++ b/README.md
@@ -142,6 +142,58 @@ to `latest`:
 ORT_SERVER_IMAGE_PREFIX= ORT_SERVER_IMAGE_TAG=latest docker compose up
 ```
 
+#### Handling major version upgrades of PostgreSQL
+
+PostgreSQL does not support reading the data directory of previous major versions.
+When upgrading the PostgreSQL version in the Docker Compose setup, the database data directory must be manually
+migrated by following these steps:
+
+- Stop the Docker Compose setup:
+
+  ```shell
+  docker compose stop
+  ```
+
+- Start only the PostgreSQL service:
+
+  ```shell
+  docker compose up -d postgres
+  ```
+
+- Make a backup of the ORT Server and Keycloak databases:
+
+  ```shell
+  docker compose exec postgres pg_dump -Fc -U postgres -d ort_server -n public > keycloak.dump
+  docker compose exec postgres pg_dump -Fc -U postgres -d ort_server -n ort_server > ort-server.dump
+  ```
+
+- Stop compose and delete the volumes:
+
+  ```shell
+  docker compose down -v
+  ```
+
+- Update the PostgreSQL version in `docker-compose.yml`.
+
+- Start the PostgreSQL service again:
+
+  ```shell
+  docker compose up -d postgres
+  ```
+
+- Import the database backups:
+
+  ```shell
+  cat keycloak.dump | docker compose exec -T postgres pg_restore -U postgres -d ort_server -n public
+  cat ort-server.dump | docker compose exec -T postgres pg_restore -U postgres -d ort_server -n ort_server
+  ```
+
+- Start all services:
+
+  ```shell
+  docker compose up -d
+  ```
+
 ### Accessing the services
 
 | Service        | URL                              | Credentials                                             |