diff --git a/crates/storage/Cargo.toml b/crates/storage/Cargo.toml
index a94ed0a..500ff79 100644
--- a/crates/storage/Cargo.toml
+++ b/crates/storage/Cargo.toml
@@ -6,3 +6,15 @@ description = "SQLite persistence, BM25 search, and file storage for Kon"
 
 [dependencies]
 kon-core = { path = "../core" }
+
+# SQLite with compile-time checked queries
+sqlx = { version = "0.8", features = ["sqlite", "runtime-tokio"] }
+
+# Async runtime
+tokio = { version = "1", features = ["rt", "sync", "macros"] }
+
+# UUIDs for record IDs
+uuid = { version = "1", features = ["v4"] }
+
+# Timestamps
+chrono = { version = "0.4", features = ["serde"] }
diff --git a/crates/storage/src/database.rs b/crates/storage/src/database.rs
new file mode 100644
index 0000000..c077138
--- /dev/null
+++ b/crates/storage/src/database.rs
@@ -0,0 +1,364 @@
+use std::path::Path;
+
+use sqlx::sqlite::{SqliteConnectOptions, SqlitePoolOptions};
+use sqlx::{Row, SqlitePool};
+
+use kon_core::error::{KonError, Result};
+
+/// Initialise the SQLite database with connection pool and run migrations.
+pub async fn init(db_path: &Path) -> Result<SqlitePool> {
+    if let Some(parent) = db_path.parent() {
+        std::fs::create_dir_all(parent)?;
+    }
+
+    let options = SqliteConnectOptions::new()
+        .filename(db_path)
+        .create_if_missing(true);
+
+    let pool = SqlitePoolOptions::new()
+        .max_connections(5)
+        .connect_with(options)
+        .await
+        .map_err(|e| KonError::StorageError(format!("Database connect failed: {e}")))?;
+
+    run_migrations(&pool).await?;
+
+    Ok(pool)
+}
+
+/// Run schema migrations.
+async fn run_migrations(pool: &SqlitePool) -> Result<()> {
+    sqlx::query(
+        "CREATE TABLE IF NOT EXISTS transcripts (
+            id TEXT PRIMARY KEY,
+            text TEXT NOT NULL DEFAULT '',
+            source TEXT NOT NULL DEFAULT 'microphone',
+            title TEXT,
+            audio_path TEXT,
+            duration REAL NOT NULL DEFAULT 0.0,
+            created_at TEXT NOT NULL DEFAULT (datetime('now'))
+        )",
+    )
+    .execute(pool)
+    .await
+    .map_err(|e| KonError::StorageError(format!("Migration failed: {e}")))?;
+
+    sqlx::query(
+        "CREATE TABLE IF NOT EXISTS segments (
+            id INTEGER PRIMARY KEY AUTOINCREMENT,
+            transcript_id TEXT NOT NULL REFERENCES transcripts(id) ON DELETE CASCADE,
+            start_time REAL NOT NULL,
+            end_time REAL NOT NULL,
+            text TEXT NOT NULL DEFAULT ''
+        )",
+    )
+    .execute(pool)
+    .await
+    .map_err(|e| KonError::StorageError(format!("Migration failed: {e}")))?;
+
+    sqlx::query(
+        "CREATE TABLE IF NOT EXISTS tasks (
+            id TEXT PRIMARY KEY,
+            text TEXT NOT NULL,
+            bucket TEXT NOT NULL DEFAULT 'inbox',
+            list_id TEXT,
+            effort TEXT,
+            done INTEGER NOT NULL DEFAULT 0,
+            done_at TEXT,
+            created_at TEXT NOT NULL DEFAULT (datetime('now')),
+            source_transcript_id TEXT
+        )",
+    )
+    .execute(pool)
+    .await
+    .map_err(|e| KonError::StorageError(format!("Migration failed: {e}")))?;
+
+    sqlx::query(
+        "CREATE TABLE IF NOT EXISTS task_lists (
+            id TEXT PRIMARY KEY,
+            name TEXT NOT NULL,
+            built_in INTEGER NOT NULL DEFAULT 0,
+            profile_id TEXT,
+            created_at TEXT NOT NULL DEFAULT (datetime('now'))
+        )",
+    )
+    .execute(pool)
+    .await
+    .map_err(|e| KonError::StorageError(format!("Migration failed: {e}")))?;
+
+    sqlx::query(
+        "CREATE TABLE IF NOT EXISTS settings (
+            key TEXT PRIMARY KEY,
+            value TEXT NOT NULL
+        )",
+    )
+    .execute(pool)
+    .await
+    .map_err(|e| KonError::StorageError(format!("Migration failed: {e}")))?;
+
+    Ok(())
+}
+
+// --- Transcript CRUD ---
+
+pub async fn insert_transcript(
+    pool: &SqlitePool,
+    id: &str,
+    text: &str,
+    source: &str,
+    title: Option<&str>,
+    audio_path: Option<&str>,
+    duration: f64,
+) -> Result<()> {
+    sqlx::query(
+        "INSERT INTO transcripts (id, text, source, title, audio_path, duration) VALUES (?, ?, ?, ?, ?, ?)",
+    )
+    .bind(id)
+    .bind(text)
+    .bind(source)
+    .bind(title)
+    .bind(audio_path)
+    .bind(duration)
+    .execute(pool)
+    .await
+    .map_err(|e| KonError::StorageError(format!("Insert transcript failed: {e}")))?;
+    Ok(())
+}
+
+pub async fn get_transcript(
+    pool: &SqlitePool,
+    id: &str,
+) -> Result<Option<TranscriptRow>> {
+    let row = sqlx::query(
+        "SELECT id, text, source, title, audio_path, duration, created_at FROM transcripts WHERE id = ?",
+    )
+    .bind(id)
+    .fetch_optional(pool)
+    .await
+    .map_err(|e| KonError::StorageError(format!("Get transcript failed: {e}")))?;
+
+    Ok(row.map(|r| TranscriptRow {
+        id: r.get("id"),
+        text: r.get("text"),
+        source: r.get("source"),
+        title: r.get("title"),
+        audio_path: r.get("audio_path"),
+        duration: r.get("duration"),
+        created_at: r.get("created_at"),
+    }))
+}
+
+pub async fn list_transcripts(pool: &SqlitePool, limit: i64) -> Result<Vec<TranscriptRow>> {
+    let rows = sqlx::query(
+        "SELECT id, text, source, title, audio_path, duration, created_at FROM transcripts ORDER BY created_at DESC LIMIT ?",
+    )
+    .bind(limit)
+    .fetch_all(pool)
+    .await
+    .map_err(|e| KonError::StorageError(format!("List transcripts failed: {e}")))?;
+
+    Ok(rows
+        .into_iter()
+        .map(|r| TranscriptRow {
+            id: r.get("id"),
+            text: r.get("text"),
+            source: r.get("source"),
+            title: r.get("title"),
+            audio_path: r.get("audio_path"),
+            duration: r.get("duration"),
+            created_at: r.get("created_at"),
+        })
+        .collect())
+}
+
+pub async fn delete_transcript(pool: &SqlitePool, id: &str) -> Result<()> {
+    sqlx::query("DELETE FROM transcripts WHERE id = ?")
+        .bind(id)
+        .execute(pool)
+        .await
+        .map_err(|e| KonError::StorageError(format!("Delete transcript failed: {e}")))?;
+    Ok(())
+}
+
+// --- Task CRUD ---
+
+pub async fn insert_task(
+    pool: &SqlitePool,
+    id: &str,
+    text: &str,
+    bucket: &str,
+    source_transcript_id: Option<&str>,
+) -> Result<()> {
+    sqlx::query(
+        "INSERT INTO tasks (id, text, bucket, source_transcript_id) VALUES (?, ?, ?, ?)",
+    )
+    .bind(id)
+    .bind(text)
+    .bind(bucket)
+    .bind(source_transcript_id)
+    .execute(pool)
+    .await
+    .map_err(|e| KonError::StorageError(format!("Insert task failed: {e}")))?;
+    Ok(())
+}
+
+pub async fn list_tasks(pool: &SqlitePool) -> Result<Vec<TaskRow>> {
+    let rows =
+        sqlx::query("SELECT id, text, bucket, list_id, effort, done, done_at, created_at, source_transcript_id FROM tasks ORDER BY created_at DESC")
+            .fetch_all(pool)
+            .await
+            .map_err(|e| KonError::StorageError(format!("List tasks failed: {e}")))?;
+
+    Ok(rows
+        .into_iter()
+        .map(|r| TaskRow {
+            id: r.get("id"),
+            text: r.get("text"),
+            bucket: r.get("bucket"),
+            list_id: r.get("list_id"),
+            effort: r.get("effort"),
+            done: r.get("done"),
+            done_at: r.get("done_at"),
+            created_at: r.get("created_at"),
+            source_transcript_id: r.get("source_transcript_id"),
+        })
+        .collect())
+}
+
+pub async fn complete_task(pool: &SqlitePool, id: &str) -> Result<()> {
+    sqlx::query("UPDATE tasks SET done = 1, done_at = datetime('now') WHERE id = ?")
+        .bind(id)
+        .execute(pool)
+        .await
+        .map_err(|e| KonError::StorageError(format!("Complete task failed: {e}")))?;
+    Ok(())
+}
+
+pub async fn delete_task(pool: &SqlitePool, id: &str) -> Result<()> {
+    sqlx::query("DELETE FROM tasks WHERE id = ?")
+        .bind(id)
+        .execute(pool)
+        .await
+        .map_err(|e| KonError::StorageError(format!("Delete task failed: {e}")))?;
+    Ok(())
+}
+
+// --- Settings CRUD ---
+
+pub async fn set_setting(pool: &SqlitePool, key: &str, value: &str) -> Result<()> {
+    sqlx::query("INSERT OR REPLACE INTO settings (key, value) VALUES (?, ?)")
+        .bind(key)
+        .bind(value)
+        .execute(pool)
+        .await
+        .map_err(|e| KonError::StorageError(format!("Set setting failed: {e}")))?;
+    Ok(())
+}
+
+pub async fn get_setting(pool: &SqlitePool, key: &str) -> Result<Option<String>> {
+    let row = sqlx::query("SELECT value FROM settings WHERE key = ?")
+        .bind(key)
+        .fetch_optional(pool)
+        .await
+        .map_err(|e| KonError::StorageError(format!("Get setting failed: {e}")))?;
+    Ok(row.map(|r| r.get("value")))
+}
+
+// --- Row types ---
+
+#[derive(Debug, Clone)]
+pub struct TranscriptRow {
+    pub id: String,
+    pub text: String,
+    pub source: String,
+    pub title: Option<String>,
+    pub audio_path: Option<String>,
+    pub duration: f64,
+    pub created_at: String,
+}
+
+#[derive(Debug, Clone)]
+pub struct TaskRow {
+    pub id: String,
+    pub text: String,
+    pub bucket: String,
+    pub list_id: Option<String>,
+    pub effort: Option<String>,
+    pub done: bool,
+    pub done_at: Option<String>,
+    pub created_at: String,
+    pub source_transcript_id: Option<String>,
+}
+
+#[cfg(test)]
+mod tests {
+    use super::*;
+
+    async fn test_pool() -> SqlitePool {
+        let pool = SqlitePoolOptions::new()
+            .connect("sqlite::memory:")
+            .await
+            .unwrap();
+        run_migrations(&pool).await.unwrap();
+        pool
+    }
+
+    #[tokio::test]
+    async fn transcript_crud_roundtrip() {
+        let pool = test_pool().await;
+
+        insert_transcript(&pool, "t1", "Hello world", "microphone", Some("Test"), None, 1.5)
+            .await
+            .unwrap();
+
+        let t = get_transcript(&pool, "t1").await.unwrap().unwrap();
+        assert_eq!(t.text, "Hello world");
+        assert_eq!(t.source, "microphone");
+        assert_eq!(t.duration, 1.5);
+
+        let list = list_transcripts(&pool, 10).await.unwrap();
+        assert_eq!(list.len(), 1);
+
+        delete_transcript(&pool, "t1").await.unwrap();
+        let deleted = get_transcript(&pool, "t1").await.unwrap();
+        assert!(deleted.is_none());
+    }
+
+    #[tokio::test]
+    async fn task_crud_roundtrip() {
+        let pool = test_pool().await;
+
+        insert_task(&pool, "task1", "Buy groceries", "today", None)
+            .await
+            .unwrap();
+
+        let tasks = list_tasks(&pool).await.unwrap();
+        assert_eq!(tasks.len(), 1);
+        assert_eq!(tasks[0].text, "Buy groceries");
+        assert!(!tasks[0].done);
+
+        complete_task(&pool, "task1").await.unwrap();
+        let tasks = list_tasks(&pool).await.unwrap();
+        assert!(tasks[0].done);
+
+        delete_task(&pool, "task1").await.unwrap();
+        let tasks = list_tasks(&pool).await.unwrap();
+        assert!(tasks.is_empty());
+    }
+
+    #[tokio::test]
+    async fn settings_crud_roundtrip() {
+        let pool = test_pool().await;
+
+        set_setting(&pool, "theme", "dark").await.unwrap();
+        let val = get_setting(&pool, "theme").await.unwrap();
+        assert_eq!(val.as_deref(), Some("dark"));
+
+        set_setting(&pool, "theme", "light").await.unwrap();
+        let val = get_setting(&pool, "theme").await.unwrap();
+        assert_eq!(val.as_deref(), Some("light"));
+
+        let missing = get_setting(&pool, "nonexistent").await.unwrap();
+        assert!(missing.is_none());
+    }
+}
diff --git a/crates/storage/src/file_storage.rs b/crates/storage/src/file_storage.rs
new file mode 100644
index 0000000..6d320f8
--- /dev/null
+++ b/crates/storage/src/file_storage.rs
@@ -0,0 +1,26 @@
+use std::path::PathBuf;
+
+/// Resolve the app data directory.
+/// Windows: %LOCALAPPDATA%/kon
+/// Unix: ~/.kon
+pub fn app_data_dir() -> PathBuf {
+    if cfg!(target_os = "windows") {
+        let local_app_data =
+            std::env::var("LOCALAPPDATA").unwrap_or_else(|_| ".".to_string());
+        PathBuf::from(local_app_data).join("kon")
+    } else {
+        let home =
+            std::env::var("HOME").unwrap_or_else(|_| "/tmp".to_string());
+        PathBuf::from(home).join(".kon")
+    }
+}
+
+/// Path to the SQLite database file.
+pub fn database_path() -> PathBuf {
+    app_data_dir().join("kon.db")
+}
+
+/// Directory for saved audio recordings.
+pub fn recordings_dir() -> PathBuf {
+    app_data_dir().join("recordings")
+}
diff --git a/crates/storage/src/lib.rs b/crates/storage/src/lib.rs
index 53127ee..b50e9f3 100644
--- a/crates/storage/src/lib.rs
+++ b/crates/storage/src/lib.rs
@@ -1,2 +1,9 @@
-// kon-storage: SQLite via sqlx, BM25 full-text search via probly-search,
-// and file storage path management.
+pub mod database;
+pub mod file_storage;
+
+pub use database::{
+    complete_task, delete_task, delete_transcript, get_setting, get_transcript,
+    init, insert_task, insert_transcript, list_tasks, list_transcripts,
+    set_setting, TaskRow, TranscriptRow,
+};
+pub use file_storage::{app_data_dir, database_path, recordings_dir};