diff --git a/lib/embedded_ansible/docker_embedded_ansible.rb b/lib/embedded_ansible/docker_embedded_ansible.rb
index 7b589387ead..80b51aa6983 100644
--- a/lib/embedded_ansible/docker_embedded_ansible.rb
+++ b/lib/embedded_ansible/docker_embedded_ansible.rb
@@ -162,16 +162,13 @@ def awx_env
     database_auth = find_or_create_database_authentication
     rabbitmq_auth = find_or_create_rabbitmq_authentication
 
-    db_host = database_configuration["host"] || docker_bridge_gateway
-    db_host = docker_bridge_gateway if db_host == "localhost"
-
     [
       "SECRET_KEY=#{find_or_create_secret_key}",
       "DATABASE_NAME=awx",
       "DATABASE_USER=#{database_auth.userid}",
       "DATABASE_PASSWORD=#{database_auth.password}",
       "DATABASE_PORT=#{database_configuration["port"] || 5432}",
-      "DATABASE_HOST=#{db_host}",
+      "DATABASE_HOST=#{database_host}",
       "RABBITMQ_USER=#{rabbitmq_auth.userid}",
       "RABBITMQ_PASSWORD=#{rabbitmq_auth.password}",
       "RABBITMQ_HOST=#{rabbitmq_container_name}",
@@ -184,6 +181,13 @@ def awx_env
     ]
   end
 
+  def database_host
+    db_host = database_configuration["host"]
+    return db_host if db_host.presence && db_host != "localhost"
+
+    MiqServer.my_server.ipaddress || docker_bridge_gateway
+  end
+
   def docker_bridge_gateway
     br = Docker::Network.get("bridge")
     br.info["IPAM"]["Config"].first["Gateway"]
diff --git a/spec/lib/embedded_ansible/docker_embedded_ansible_spec.rb b/spec/lib/embedded_ansible/docker_embedded_ansible_spec.rb
index 6afb20d3adb..6151924ac0b 100644
--- a/spec/lib/embedded_ansible/docker_embedded_ansible_spec.rb
+++ b/spec/lib/embedded_ansible/docker_embedded_ansible_spec.rb
@@ -32,4 +32,55 @@
       expect(subject.alive?).to be false
     end
   end
+
+  describe "#database_host (private)" do
+    let(:my_server) { EvmSpecHelper.local_miq_server }
+    let(:docker_network_settings) do
+      settings = { "IPAM" => {"Config" => [{"Gateway" => "192.0.2.1"}]}}
+      double("Docker::Network settings", :info => settings)
+    end
+
+    it "returns the active record database host when valid" do
+      expect(subject).to receive(:database_configuration).and_return("host" => "db.example.com")
+      expect(subject.send(:database_host)).to eq("db.example.com")
+    end
+
+    context "the database config doesn't list a host" do
+      before do
+        expect(subject).to receive(:database_configuration).and_return("dbname" => "testdatabase")
+      end
+
+      it "returns the server ip when set" do
+        my_server.update_attributes(:ipaddress => "192.0.2.123")
+
+        expect(subject.send(:database_host)).to eq("192.0.2.123")
+      end
+
+      it "returns the docker bridge gateway address when there is no server ip set" do
+        my_server.update_attributes(:ipaddress => nil)
+
+        expect(Docker::Network).to receive(:get).with("bridge").and_return(docker_network_settings)
+        expect(subject.send(:database_host)).to eq("192.0.2.1")
+      end
+    end
+
+    context "the datbase config containes 'host' => 'localhost'" do
+      before do
+        expect(subject).to receive(:database_configuration).and_return("host" => "localhost")
+      end
+
+      it "returns the server ip when set" do
+        my_server.update_attributes(:ipaddress => "192.0.2.123")
+
+        expect(subject.send(:database_host)).to eq("192.0.2.123")
+      end
+
+      it "returns the docker bridge gateway address when there is no server ip set" do
+        my_server.update_attributes(:ipaddress => nil)
+
+        expect(Docker::Network).to receive(:get).with("bridge").and_return(docker_network_settings)
+        expect(subject.send(:database_host)).to eq("192.0.2.1")
+      end
+    end
+  end
 end