diff --git a/CHANGELOG.md b/CHANGELOG.md
index c28ca2be5..649fe3f1c 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -6,6 +6,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 ## [Unreleased]
 
+- Introduce `DatabaseFactory` trait.
 
 ## [v0.20.0] - [v0.19.0]
 
diff --git a/src/database/any.rs b/src/database/any.rs
index bbd9d41a5..06cc66925 100644
--- a/src/database/any.rs
+++ b/src/database/any.rs
@@ -425,3 +425,42 @@ impl ConfigurableDatabase for AnyDatabase {
 impl_from!((), AnyDatabaseConfig, Memory,);
 impl_from!(SledDbConfiguration, AnyDatabaseConfig, Sled, #[cfg(feature = "key-value-db")]);
 impl_from!(SqliteDbConfiguration, AnyDatabaseConfig, Sqlite, #[cfg(feature = "sqlite")]);
+
+/// Type that implements [`DatabaseFactory`] that builds [`AnyDatabase`].
+pub enum AnyDatabaseFactory {
+    /// Memory database factory
+    Memory(memory::MemoryDatabaseFactory),
+    #[cfg(feature = "key-value-db")]
+    #[cfg_attr(docsrs, doc(cfg(feature = "key-value-db")))]
+    /// Key-value database factory
+    Sled(sled::Db),
+    #[cfg(feature = "sqlite")]
+    #[cfg_attr(docsrs, doc(cfg(feature = "sqlite")))]
+    /// Sqlite database factory
+    Sqlite(sqlite::SqliteDatabaseFactory<String>),
+}
+
+impl DatabaseFactory for AnyDatabaseFactory {
+    type Inner = AnyDatabase;
+
+    fn build(
+        &self,
+        descriptor: &ExtendedDescriptor,
+        network: Network,
+        secp: &SecpCtx,
+    ) -> Result<Self::Inner, Error> {
+        match self {
+            AnyDatabaseFactory::Memory(f) => {
+                f.build(descriptor, network, secp).map(Self::Inner::Memory)
+            }
+            #[cfg(feature = "key-value-db")]
+            AnyDatabaseFactory::Sled(f) => {
+                f.build(descriptor, network, secp).map(Self::Inner::Sled)
+            }
+            #[cfg(feature = "sqlite")]
+            AnyDatabaseFactory::Sqlite(f) => {
+                f.build(descriptor, network, secp).map(Self::Inner::Sqlite)
+            }
+        }
+    }
+}
diff --git a/src/database/keyvalue.rs b/src/database/keyvalue.rs
index e10ada1fa..e9162f00d 100644
--- a/src/database/keyvalue.rs
+++ b/src/database/keyvalue.rs
@@ -21,6 +21,9 @@ use crate::database::memory::MapKey;
 use crate::database::{BatchDatabase, BatchOperations, Database, SyncTime};
 use crate::error::Error;
 use crate::types::*;
+use crate::wallet::wallet_name_from_descriptor;
+
+use super::DatabaseFactory;
 
 macro_rules! impl_batch_operations {
     ( { $($after_insert:tt)* }, $process_delete:ident ) => {
@@ -402,6 +405,21 @@ impl BatchDatabase for Tree {
     }
 }
 
+/// A [`DatabaseFactory`] implementation that builds [`Tree`]
+impl DatabaseFactory for sled::Db {
+    type Inner = sled::Tree;
+
+    fn build(
+        &self,
+        descriptor: &crate::descriptor::ExtendedDescriptor,
+        network: bitcoin::Network,
+        secp: &crate::wallet::utils::SecpCtx,
+    ) -> Result<Self::Inner, Error> {
+        let name = wallet_name_from_descriptor(descriptor.clone(), None, network, secp)?;
+        self.open_tree(&name).map_err(Error::Sled)
+    }
+}
+
 #[cfg(test)]
 mod test {
     use lazy_static::lazy_static;
@@ -492,4 +510,16 @@ mod test {
     fn test_sync_time() {
         crate::database::test::test_sync_time(get_tree());
     }
+
+    #[test]
+    fn test_factory() {
+        let time = SystemTime::now().duration_since(UNIX_EPOCH).unwrap();
+        let mut dir = std::env::temp_dir();
+        dir.push(format!("bdk_{}", time.as_nanos()));
+
+        let fac = sled::open(&dir).unwrap();
+        crate::database::test::test_factory(&fac);
+
+        std::fs::remove_dir_all(&dir).unwrap();
+    }
 }
diff --git a/src/database/memory.rs b/src/database/memory.rs
index 7d806eb4a..ccc8d8175 100644
--- a/src/database/memory.rs
+++ b/src/database/memory.rs
@@ -26,6 +26,8 @@ use crate::database::{BatchDatabase, BatchOperations, ConfigurableDatabase, Data
 use crate::error::Error;
 use crate::types::*;
 
+use super::DatabaseFactory;
+
 // path -> script       p{i,e}<path> -> script
 // script -> path       s<script> -> {i,e}<path>
 // outpoint             u<outpoint> -> txout
@@ -475,6 +477,23 @@ impl ConfigurableDatabase for MemoryDatabase {
     }
 }
 
+/// A [`DatabaseFactory`] implementation that builds [`MemoryDatabase`].
+#[derive(Debug, Default)]
+pub struct MemoryDatabaseFactory;
+
+impl DatabaseFactory for MemoryDatabaseFactory {
+    type Inner = MemoryDatabase;
+
+    fn build(
+        &self,
+        _descriptor: &crate::descriptor::ExtendedDescriptor,
+        _network: bitcoin::Network,
+        _secp: &crate::wallet::utils::SecpCtx,
+    ) -> Result<Self::Inner, Error> {
+        Ok(MemoryDatabase::default())
+    }
+}
+
 #[macro_export]
 #[doc(hidden)]
 /// Artificially insert a tx in the database, as if we had found it with a `sync`. This is a hidden
@@ -579,7 +598,7 @@ macro_rules! doctest_wallet {
 
 #[cfg(test)]
 mod test {
-    use super::MemoryDatabase;
+    use super::{MemoryDatabase, MemoryDatabaseFactory};
 
     fn get_tree() -> MemoryDatabase {
         MemoryDatabase::new()
@@ -629,4 +648,10 @@ mod test {
     fn test_sync_time() {
         crate::database::test::test_sync_time(get_tree());
     }
+
+    #[test]
+    fn test_factory() {
+        let fac = MemoryDatabaseFactory;
+        crate::database::test::test_factory(&fac);
+    }
 }
diff --git a/src/database/mod.rs b/src/database/mod.rs
index c7ff17951..4230a500a 100644
--- a/src/database/mod.rs
+++ b/src/database/mod.rs
@@ -27,10 +27,12 @@
 use serde::{Deserialize, Serialize};
 
 use bitcoin::hash_types::Txid;
-use bitcoin::{OutPoint, Script, Transaction, TxOut};
+use bitcoin::{Network, OutPoint, Script, Transaction, TxOut};
 
+use crate::descriptor::ExtendedDescriptor;
 use crate::error::Error;
 use crate::types::*;
+use crate::wallet::utils::SecpCtx;
 
 pub mod any;
 pub use any::{AnyDatabase, AnyDatabaseConfig};
@@ -212,12 +214,28 @@ pub(crate) trait DatabaseUtils: Database {
 
 impl<T: Database> DatabaseUtils for T {}
 
+/// A factory trait that builds databases which share underlying configurations and/or storage
+/// paths.
+pub trait DatabaseFactory: Sized {
+    /// Inner type to build
+    type Inner: BatchDatabase;
+
+    /// Builds the defined [`DatabaseFactory::Inner`] type.
+    fn build(
+        &self,
+        descriptor: &ExtendedDescriptor,
+        network: Network,
+        secp: &SecpCtx,
+    ) -> Result<Self::Inner, Error>;
+}
+
 #[cfg(test)]
 pub mod test {
     use std::str::FromStr;
 
     use bitcoin::consensus::encode::deserialize;
     use bitcoin::hashes::hex::*;
+    use bitcoin::util::bip32::{self, DerivationPath, ExtendedPubKey};
     use bitcoin::*;
 
     use super::*;
@@ -441,5 +459,42 @@ pub mod test {
         assert!(tree.get_sync_time().unwrap().is_none());
     }
 
+    pub fn test_factory<F: DatabaseFactory>(fac: &F) {
+        let secp = SecpCtx::new();
+        let network = Network::Regtest;
+        let master_privkey = bip32::ExtendedPrivKey::from_str("tprv8ZgxMBicQKsPdowxEXJxXqPYd7i7WN3jG8NTVsq9MYVaR7qnLgi5xo1KZq4z1T89GfGs7BwQTVrtVKWozxwuQLgFNcd3snADMeivux1Y5u5").unwrap();
+
+        let descriptor = |acc: usize| -> ExtendedDescriptor {
+            let path = DerivationPath::from_str(&format!("m/84h/1h/{}h", acc)).unwrap();
+            let sk = master_privkey.derive_priv(&secp, &path).unwrap();
+            let pk = ExtendedPubKey::from_priv(&secp, &sk);
+            ExtendedDescriptor::from_str(&format!(
+                "wpkh([{}/84h/1h/{}h]{}/0/*)",
+                master_privkey.fingerprint(&secp),
+                acc,
+                pk
+            ))
+            .unwrap()
+        };
+
+        let mut acc_index = 0_usize;
+        let mut database = || {
+            let db = fac.build(&descriptor(acc_index), network, &secp).unwrap();
+            acc_index += 1;
+            db
+        };
+
+        test_script_pubkey(database());
+        test_batch_script_pubkey(database());
+        test_iter_script_pubkey(database());
+        test_del_script_pubkey(database());
+        test_utxo(database());
+        test_raw_tx(database());
+        test_tx(database());
+        test_list_transaction(database());
+        test_last_index(database());
+        test_sync_time(database());
+    }
+
     // TODO: more tests...
 }
diff --git a/src/database/sqlite.rs b/src/database/sqlite.rs
index 06ed7e43c..0d5651a45 100644
--- a/src/database/sqlite.rs
+++ b/src/database/sqlite.rs
@@ -9,6 +9,8 @@
 // You may not use this file except in accordance with one or both of these
 // licenses.
 
+use std::path::Path;
+
 use bitcoin::consensus::encode::{deserialize, serialize};
 use bitcoin::hash_types::Txid;
 use bitcoin::{OutPoint, Script, Transaction, TxOut};
@@ -16,9 +18,12 @@ use bitcoin::{OutPoint, Script, Transaction, TxOut};
 use crate::database::{BatchDatabase, BatchOperations, Database, SyncTime};
 use crate::error::Error;
 use crate::types::*;
+use crate::wallet::wallet_name_from_descriptor;
 
 use rusqlite::{named_params, Connection};
 
+use super::DatabaseFactory;
+
 static MIGRATIONS: &[&str] = &[
     "CREATE TABLE version (version INTEGER)",
     "INSERT INTO version VALUES (1)",
@@ -970,11 +975,48 @@ pub fn migrate(conn: &Connection) -> rusqlite::Result<()> {
     Ok(())
 }
 
+/// A [`DatabaseFactory`] implementation that builds [`SqliteDatabase`].
+///
+/// Each built database is stored in path of format: `<path_root>_<hash>.<path_ext>`
+/// Where `hash` contains identifying data derived with inputs provided by
+/// [`DatabaseFactory::build`] or [`DatabaseFactory::build_with_change`] calls.
+pub struct SqliteDatabaseFactory<P> {
+    pub dir: P,
+    pub ext: String,
+}
+
+impl<P: AsRef<Path>> DatabaseFactory for SqliteDatabaseFactory<P> {
+    type Inner = SqliteDatabase;
+
+    fn build(
+        &self,
+        descriptor: &crate::descriptor::ExtendedDescriptor,
+        network: bitcoin::Network,
+        secp: &crate::wallet::utils::SecpCtx,
+    ) -> Result<Self::Inner, Error> {
+        // ensure dir exists
+        std::fs::create_dir_all(&self.dir).map_err(|e| Error::Generic(e.to_string()))?;
+
+        let name = wallet_name_from_descriptor(descriptor.clone(), None, network, secp)?;
+        let ext = self.ext.trim_start_matches('.');
+
+        let mut path = std::path::PathBuf::new();
+        path.push(&self.dir);
+        path.push(name);
+        path.set_extension(ext);
+
+        // TODO: This is stupid, fix this
+        Ok(Self::Inner::new(path.to_str().unwrap().to_string()))
+    }
+}
+
 #[cfg(test)]
 pub mod test {
     use crate::database::SqliteDatabase;
     use std::time::{SystemTime, UNIX_EPOCH};
 
+    use super::SqliteDatabaseFactory;
+
     fn get_database() -> SqliteDatabase {
         let time = SystemTime::now().duration_since(UNIX_EPOCH).unwrap();
         let mut dir = std::env::temp_dir();
@@ -1031,4 +1073,20 @@ pub mod test {
     fn test_txs() {
         crate::database::test::test_list_transaction(get_database());
     }
+
+    #[test]
+    fn test_factory() {
+        let time = SystemTime::now().duration_since(UNIX_EPOCH).unwrap();
+        let mut dir = std::env::temp_dir();
+        dir.push(format!("bdk_{}", time.as_nanos()));
+
+        let fac = SqliteDatabaseFactory {
+            dir: dir.clone(),
+            ext: "db".to_string(),
+        };
+
+        crate::database::test::test_factory(&fac);
+
+        std::fs::remove_dir_all(&dir).unwrap();
+    }
 }