diff --git a/charts/gateway/Chart.yaml b/charts/gateway/Chart.yaml
index a8567e7b..5b652614 100644
--- a/charts/gateway/Chart.yaml
+++ b/charts/gateway/Chart.yaml
@@ -2,7 +2,7 @@ apiVersion: v2
 appVersion: "11.2.2"
 description: This Helm Chart deploys the Layer7 Gateway in Kubernetes.
 name: gateway
-version: 3.1.3
+version: 3.1.4
 type: application
 home: https://github.com/CAAPIM/apim-charts
 maintainers:
diff --git a/charts/gateway/README.md b/charts/gateway/README.md
index 8e208a2e..04b22207 100644
--- a/charts/gateway/README.md
+++ b/charts/gateway/README.md
@@ -8,7 +8,7 @@ The Bitnami subCharts have now been fully removed from the Gateway Helm Chart. P
 The included MySQL Statefulset is enabled by default to make trying this chart out easier. ***It is not supported or recommended for production.*** Layer7 assumes that you are deploying a Gateway solution to a Kubernetes environment with an external MySQL database.
 
 ## Release notes
-- Current Chart Version 3.1.2
+- Current Chart Version 3.1.4
 
   - Please review release notes [here](./release-notes.md)
 
@@ -184,6 +184,7 @@ The following table lists the configurable parameters of the Gateway chart and t
 | `database.password`          | Database Password | `mypassword` |
 | `database.liquibaseLogLevel`          | Liquibase log level | `off`  |
 | `database.name`          | Database name | `ssg`  |
+| `database.type`          | Embedded database type (`h2` or empty for Derby). Only used when `database.enabled: false`. | `""`  |
 | `tls.useSignedCertificates`          | Enable/Disable use of your own TLS Certificate, this ovverides the Gateway's defaultSSLKey | `false` |
 | `tls.existingSecretName`          | Existing Secret that contains TLS p12 container and pass, see values.yaml for what must be included | `commented out` |
 | `tls.key`          | p12 container - this can be set with --set-file tls.key=/path/to/tls.p12 | `nil`  |
@@ -1916,6 +1917,21 @@ admin.pass=mypassword
 node.db.type=derby
 node.db.config.main.user=gateway
 ```
+
+##### H2 Embedded Database (Alternative to Derby)
+When running in ephemeral mode (`database.enabled: false`), you can use H2 as the embedded database instead of Derby by setting `database.type: "h2"` in your values file.
+
+The chart automatically sets `node.db.type=h2` in node.properties and the `SSG_DATABASE_TYPE` environment variable (when `disklessConfig.enabled: true`).
+
+Example values.yaml configuration:
+```yaml
+database:
+  enabled: false
+  create: false
+  type: "h2"
+```
+
+> **Note:** `database.type` cannot be set when `database.enabled: true`. Using an embedded database alongside an external MySQL database is not supported and will cause `helm install`/`helm upgrade` to fail at render time.
 Unlike interactive password changes in Policy Manager, the container startup scripts validate the following username and password against a restricted character set (for parsing/scripting safety):
 ```
 admin.user, admin.pass, node.db.config.main.user, node.db.config.main.pass
diff --git a/charts/gateway/production-values.yaml b/charts/gateway/production-values.yaml
index 3feaba0a..e3353baf 100644
--- a/charts/gateway/production-values.yaml
+++ b/charts/gateway/production-values.yaml
@@ -652,7 +652,7 @@ database:
   # This pre-upgrade job executes any pending database schema updates and exits. The job executes before the rollout of new Gateways.
   # Ensure the requirements are met before enabling.
   # Requirement: The Gateway must be 11.2.2 or newer which supports applying db schema changes and exiting without starting Gateway.
-  # Warning, if this job fails, it may leave the DATABASECHANGELOGLOCK locked in which case  
+  # Warning, if this job fails, it may leave the DATABASECHANGELOGLOCK locked in which case
   # the lock must be manually removed before a retry can be attempted.
   migrationJob:
     # Opt-in: set to true only when running helm upgrade against a Gateway 11.2.2+ image.
@@ -667,6 +667,10 @@ database:
     clearLocks: false
     # The maximum duration (in seconds) the job is allowed to run before being terminated.
     activeDeadlineSeconds: 300
+  # Embedded database type selection. Leave empty to use the default (derby).
+  # Set to "h2" to use the H2 embedded database. Requires database.enabled: false.
+  # type: "h2"
+  type: ""
 
 ## If loading a TLS Key/Pair
 # This key will become the default ssl key. Can only have one.
diff --git a/charts/gateway/release-notes.md b/charts/gateway/release-notes.md
index 106bfa53..334aeb45 100644
--- a/charts/gateway/release-notes.md
+++ b/charts/gateway/release-notes.md
@@ -7,6 +7,12 @@ The Layer7 API Gateway is now running with Java 21 with the release of v11.2.0.
 
 If you use Policy Manager, you will need to update to v11.2.0.
 
+## 3.1.4 H2 Embedded Database Support
+- Added support for the H2 embedded database as an alternative to the default Derby embedded database.
+  - Set `database.type: "h2"` in your values file to enable H2. Requires `database.enabled: false`.
+  - Leave `database.type` empty (default) to continue using Derby.
+  - The `SSG_DATABASE_TYPE` environment variable is set automatically when `database.type` is configured.
+
 ## 3.1.3 Database Migration Job (Pre-Upgrade Schema Updates)
 
 Requires Gateway image **11.2.2 or newer**.
diff --git a/charts/gateway/templates/configmap.yaml b/charts/gateway/templates/configmap.yaml
index 6914ed22..3174c35e 100644
--- a/charts/gateway/templates/configmap.yaml
+++ b/charts/gateway/templates/configmap.yaml
@@ -1,3 +1,7 @@
+# Copyright (c) 2026 Broadcom Inc. and its subsidiaries. All Rights Reserved.
+{{- if and .Values.database.type .Values.database.enabled }}
+  {{ fail "database.type requires database.enabled: false — an embedded database cannot be used alongside an external database" }}
+{{- end }}
 apiVersion: v1
 kind: ConfigMap
 metadata:
@@ -34,6 +38,9 @@ data:
   SSG_DATABASE_JDBC_URL: {{ .Values.database.jdbcURL }}
     {{- end }}
   {{- end }}
+  {{- if .Values.database.type }}
+  SSG_DATABASE_TYPE: {{ .Values.database.type | lower | quote }}
+  {{- end }}
 {{- end }}
 {{- if or (.Values.hazelcast.enabled) (.Values.hazelcast.external) }}
   EXTRA_JAVA_ARGS: {{ template "gateway.javaArgs" . }} -Dcom.l7tech.server.extension.sharedCounterProvider=externalhazelcast -Dcom.l7tech.server.extension.sharedKeyValueStoreProvider=externalhazelcast -Dcom.l7tech.server.extension.sharedClusterInfoProvider=externalhazelcast
diff --git a/charts/gateway/templates/node-properties-secret.yaml b/charts/gateway/templates/node-properties-secret.yaml
index ae183c83..e1388824 100644
--- a/charts/gateway/templates/node-properties-secret.yaml
+++ b/charts/gateway/templates/node-properties-secret.yaml
@@ -33,7 +33,11 @@ stringData:
     node.db.config.main.user={{ .Values.database.username }}
     node.db.config.main.pass={{ .Values.database.password }}
     {{- else }}
+    {{- if and .Values.database.type (eq (.Values.database.type | lower) "h2") }}
+    node.db.type=h2
+    {{- else }}
     node.db.type=derby
+    {{- end }}
     node.db.config.main.user={{ default "gateway" .Values.database.username }}
     {{- end }}
-{{- end }}
\ No newline at end of file
+{{- end }}
diff --git a/charts/gateway/values.yaml b/charts/gateway/values.yaml
index 1e908034..00677c7f 100644
--- a/charts/gateway/values.yaml
+++ b/charts/gateway/values.yaml
@@ -664,6 +664,10 @@ database:
     clearLocks: false
     # The maximum duration (in seconds) the job is allowed to run before being terminated.
     activeDeadlineSeconds: 300
+  # Embedded database type selection. Leave empty to use the default (derby).
+  # Set to "h2" to use the H2 embedded database. Requires database.enabled: false.
+  # type: "h2"
+  type: ""
 
 ## If loading a TLS Key/Pair
 # This key will become the default ssl key. Can only have one.