diff --git a/.changeset/thirty-tomatoes-hug.md b/.changeset/thirty-tomatoes-hug.md
new file mode 100644
index 0000000000..83b74d199e
--- /dev/null
+++ b/.changeset/thirty-tomatoes-hug.md
@@ -0,0 +1,6 @@
+---
+"@medusajs/medusa-cli": patch
+"@medusajs/medusa": patch
+---
+
+chore(medusa,medusa-cli): Clean up new command + fix CI
diff --git a/.github/workflows/test-cli-with-database.yml b/.github/workflows/test-cli-with-database.yml
index a6279de5a2..cb3d2c07bb 100644
--- a/.github/workflows/test-cli-with-database.yml
+++ b/.github/workflows/test-cli-with-database.yml
@@ -8,11 +8,6 @@ jobs:
       NODE_ENV: CI
       REDIS_URL: redis://localhost:6379
       DATABASE_URL: "postgres://postgres:postgres@localhost/cli-test"
-
-    strategy:
-      matrix:
-        db: [postgres]
-
     services:
       redis:
         image: redis
@@ -56,7 +51,7 @@ jobs:
 
       - name: Create Medusa project
         run: |
-          medusa new cli-test 'https://github.com/medusajs/medusa-starter-default/tree/ci-test'
+          medusa new cli-test --skip-db
         working-directory: ..
 
       - name: run medusa dev
@@ -64,28 +59,20 @@ jobs:
         working-directory: ../cli-test
 
       - name: Run migrations
-        env:
-          DATABASE_TYPE: ${{ matrix.db }}
         run: medusa migrations run
         working-directory: ../cli-test
 
       - name: Seed db
-        env:  
-          DATABASE_TYPE: ${{ matrix.db }}
         run: yarn seed
         working-directory: ../cli-test
 
       - name: Create admin user
-        env:  
-          DATABASE_TYPE: ${{ matrix.db }}
         run: medusa user -e test@test.com -p password -i admin_123
         working-directory: ../cli-test
 
       ##########################  Test medusa develop  ###############################
 
       - name: Run development server
-        env:  
-          DATABASE_TYPE: ${{ matrix.db }}
         run: medusa develop &
         working-directory: ../cli-test
 
@@ -95,8 +82,6 @@ jobs:
       ###########################  Test medusa start  ################################
 
       - name: Starting medusa
-        env:  
-          DATABASE_TYPE: ${{ matrix.db }}
         run: medusa start &
         working-directory: ../cli-test
 
diff --git a/packages/medusa-cli/src/commands/new.js b/packages/medusa-cli/src/commands/new.js
index 7632f58e00..ef49aae877 100644
--- a/packages/medusa-cli/src/commands/new.js
+++ b/packages/medusa-cli/src/commands/new.js
@@ -300,7 +300,9 @@ const verifyPgCreds = async (creds) => {
 
 const interactiveDbCreds = async (dbName, dbCreds = {}) => {
   const credentials = Object.assign({}, defaultDBCreds, dbCreds)
-  let collecting = true
+
+  const collecting = true
+
   while (collecting) {
     const result = await inquirer
       .prompt([
@@ -309,10 +311,9 @@ const interactiveDbCreds = async (dbName, dbCreds = {}) => {
           name: "continueWithDefault",
           message: `
 
-Will attempt to setup database "${dbName}" with credentials:
+Will attempt to setup Postgres database "${dbName}" with credentials:
   user: ${credentials.user}
   password: ***
-  database: ${credentials.database}
   port: ${credentials.port}
   host: ${credentials.host}
 Do you wish to continue with these credentials?
@@ -352,14 +353,6 @@ Do you wish to continue with these credentials?
           default: credentials.host,
           message: `DB host`,
         },
-        {
-          type: "input",
-          when: ({ continueWithDefault }) =>
-            continueWithDefault === `Change credentials`,
-          name: "database",
-          default: credentials.database,
-          message: `DB database`,
-        },
       ])
       .then(async (answers) => {
         const collectedCreds = Object.assign({}, credentials, {
@@ -367,7 +360,6 @@ Do you wish to continue with these credentials?
           password: answers.password,
           host: answers.host,
           port: answers.port,
-          database: answers.database,
         })
 
         switch (answers.continueWithDefault) {
@@ -428,32 +420,25 @@ const setupDB = async (dbName, dbCreds = {}) => {
     })
 }
 
-const setupEnvVars = async (
-  rootPath,
-  dbName,
-  dbCreds = {},
-  isPostgres = true
-) => {
+const setupEnvVars = async (rootPath, dbName, dbCreds = {}) => {
   const templatePath = sysPath.join(rootPath, ".env.template")
   const destination = sysPath.join(rootPath, ".env")
   if (existsSync(templatePath)) {
     fs.renameSync(templatePath, destination)
   }
 
-  if (isPostgres) {
-    const credentials = Object.assign({}, defaultDBCreds, dbCreds)
-    let dbUrl = ""
-    if (
-      credentials.user !== defaultDBCreds.user ||
-      credentials.password !== defaultDBCreds.password
-    ) {
-      dbUrl = `postgres://${credentials.user}:${credentials.password}@${credentials.host}:${credentials.port}/${dbName}`
-    } else {
-      dbUrl = `postgres://${credentials.host}:${credentials.port}/${dbName}`
-    }
-
-    fs.appendFileSync(destination, `DATABASE_URL=${dbUrl}\n`)
+  const credentials = Object.assign({}, defaultDBCreds, dbCreds)
+  let dbUrl = ""
+  if (
+    credentials.user !== defaultDBCreds.user ||
+    credentials.password !== defaultDBCreds.password
+  ) {
+    dbUrl = `postgres://${credentials.user}:${credentials.password}@${credentials.host}:${credentials.port}/${dbName}`
+  } else {
+    dbUrl = `postgres://${credentials.host}:${credentials.port}/${dbName}`
   }
+
+  fs.appendFileSync(destination, `DATABASE_URL=${dbUrl}\n`)
 }
 
 const runMigrations = async (rootPath) => {
@@ -611,29 +596,29 @@ medusa new ${rootPath} [url-to-starter]
     await copy(starterPath, rootPath)
   }
 
-  const medusaConfig = getMedusaConfig(rootPath)
-
-  let isPostgres = false
-
   track("CLI_NEW_LAYOUT_COMPLETED")
 
   let creds = dbCredentials
 
+  const dbName = `medusa-db-${Math.random().toString(36).substring(2, 7)}` // generate random 5 character string
+
   if (!useDefaults && !skipDb && !skipEnv) {
-    creds = await interactiveDbCreds(rootPath, dbCredentials)
+    creds = await interactiveDbCreds(dbName, dbCredentials)
   }
 
   if (creds === null) {
-    reporter.info("Skipping automatic database setup")
+    reporter.info(
+      "Skipping automatic database setup. Please note that you need to create a database and run migrations before you can run your Medusa backend"
+    )
   } else {
     if (!skipDb) {
       track("CLI_NEW_SETUP_DB")
-      await setupDB(rootPath, creds)
+      await setupDB(dbName, creds)
     }
 
     if (!skipEnv) {
       track("CLI_NEW_SETUP_ENV")
-      await setupEnvVars(rootPath, rootPath, creds)
+      await setupEnvVars(rootPath, dbName, creds)
     }
 
     if (!skipMigrations) {