How to create a Rails Project with SQL Server Adapter

gem install rails -v 4.2.7.1
rails _4.2.7.1_ new MYAPP --database=sqlserver

Database.yml

adapter: sqlserver mode: dblib host: 127.0.0.1 port: "1433" username: sa password: Password1337 database: test timeout: 20

SQL Server Rails Database.Yml

The corresponding /config/database.yml file should be as follows

development:
  adapter: sqlserver
  host: 127.0.0.1 # used when dataserver is blank
  port: 1433
  database: database_name
  username: sa
  password: billgates

Note: you are supposed to create the database in SQL Server