Prisma P1000 Authentication Failed with Docker PostgreSQL - Complete Troubleshooting Guide

I'm encountering a persistent P1000 Authentication Failed error when trying to connect Prisma to a PostgreSQL database running in Docker. Despite having correct credentials and a running container, Prisma migrations fail with authentication errors.

File Structure

ecomm/
├── prisma/
│   └── schema.prisma
├── src/
│   ├── generated/           # (if using custom Prisma output)
│   ├── bin.ts
│   ├── index.ts
│   └── db.ts
├── dist/                    # (generated after build)
│   ├── bin.js
│   ├── index.js
│   └── db.js
├── node_modules/
├── .env
├── .gitignore
├── package.json
├── package-lock.json
├── tsconfig.json
└── README.md

package.json:

{
  "name": "ecomm",
  "version": "1.0.0",
  "scripts": {
    "build": "prisma generate && tsc",
    "start": "node dist/bin.js",
    "dev": "ts-node src/bin.ts"
  },
  "type": "commonjs",
  "dependencies": {
    "@prisma/client": "^6.16.1",
    "express": "^5.1.0"
  },
  "devDependencies": {
    "@types/express": "^5.0.3",
    "@types/node": "^20.0.0",
    "prisma": "^6.16.1",
    "typescript": "^5.0.0",
    "ts-node": "^10.9.0"
  }
}

prisma schema

generator client {
  provider = "prisma-client-js"
  output   = "../src/generated/prisma"
}

datasource db {
  provider = "postgresql"
  url      = env("DATABASE_URL")
}
model Request{
  id Int @id @default(autoincrement())
  a  Int
  b  Int
  answer Int
  type Type
}

enum Type{
  ADD
  MUL
}

.env:

DATABASE_URL="postgresql://postgres:mysecretpassword@localhost:5432/postgres"

Error Details Command that fails:

npx prisma migrate dev --name init

Error output:

Environment variables loaded from .env
Prisma schema loaded from prisma\schema.prisma
Datasource "db": PostgreSQL database "postgres", schema "public" at "localhost:5432"
Error: P1000: Authentication failed against database server, the provided database credentials for `postgres` are not valid.
Please make sure to provide valid database credentials for the database server at the configured address.

Docker commands I've used:

# Start PostgreSQL container
docker run -p 5432:5432 -e POSTGRES_PASSWORD=mysecretpassword -d postgres

# Verify container is running
docker ps
CONTAINER ID   IMAGE      COMMAND                  CREATED          STATUS          PORTS                    NAMES
f1e171459a61   postgres   "docker-entrypoint.s…"   26 minutes ago   Up 26 minutes   0.0.0.0:5432->5432/tcp   sweet_chaplygin

What I've Tried

1. Verified container is running - docker ps shows the container is up

2. Double-checked credentials - Password matches in both Docker command and DATABASE_URL

3. Tested different connection strings - Tried various formats with same result

4. Restarted containers multiple times - Same error persists

5. Checked for port conflicts - Port 5432 appears to be free