diff --git a/internal/database/postgresql.go b/internal/database/postgresql.go
index b32acfe..6ecb256 100644
--- a/internal/database/postgresql.go
+++ b/internal/database/postgresql.go
@@ -349,8 +349,8 @@ func (p *PostgreSQL) BuildRestoreCommand(database, inputFile string, options Res
 	}
 	cmd = append(cmd, "-U", p.cfg.User)
 	
-	// Parallel jobs
-	if options.Parallel > 1 {
+	// Parallel jobs (incompatible with --single-transaction per PostgreSQL docs)
+	if options.Parallel > 1 && !options.SingleTransaction {
 		cmd = append(cmd, "--jobs="+strconv.Itoa(options.Parallel))
 	}
 	
@@ -371,6 +371,13 @@ func (p *PostgreSQL) BuildRestoreCommand(database, inputFile string, options Res
 		cmd = append(cmd, "--single-transaction")
 	}
 	
+	// CRITICAL: Exit on first error (by default pg_restore continues on errors)
+	// This ensures we catch failures immediately instead of at the end
+	cmd = append(cmd, "--exit-on-error")
+	
+	// Skip data restore if table creation fails (prevents duplicate data errors)
+	cmd = append(cmd, "--no-data-for-failed-tables")
+	
 	// Add verbose flag for better error reporting
 	cmd = append(cmd, "--verbose")
 	
diff --git a/internal/restore/engine.go b/internal/restore/engine.go
index 5445c31..33d7d61 100644
--- a/internal/restore/engine.go
+++ b/internal/restore/engine.go
@@ -865,13 +865,15 @@ func (e *Engine) ensureDatabaseExists(ctx context.Context, dbName string) error
 	}
 
 	// Database doesn't exist, create it
-	e.log.Info("Creating database", "name", dbName)
+	// IMPORTANT: Use template0 to avoid duplicate definition errors from local additions to template1
+	// See PostgreSQL docs: https://www.postgresql.org/docs/current/app-pgrestore.html#APP-PGRESTORE-NOTES
+	e.log.Info("Creating database from template0", "name", dbName)
 
 	createArgs := []string{
 		"-p", fmt.Sprintf("%d", e.cfg.Port),
 		"-U", e.cfg.User,
 		"-d", "postgres",
-		"-c", fmt.Sprintf("CREATE DATABASE \"%s\"", dbName),
+		"-c", fmt.Sprintf("CREATE DATABASE \"%s\" WITH TEMPLATE template0", dbName),
 	}
 
 	// Only add -h flag if host is not localhost (to use Unix socket for peer auth)
@@ -891,7 +893,7 @@ func (e *Engine) ensureDatabaseExists(ctx context.Context, dbName string) error
 		return fmt.Errorf("failed to create database '%s': %w (output: %s)", dbName, err, strings.TrimSpace(string(output)))
 	}
 
-	e.log.Info("Successfully created database", "name", dbName)
+	e.log.Info("Successfully created database from template0", "name", dbName)
 	return nil
 }