diff --git a/proxy/README.md b/proxy/README.md
index 8d850737bede..d5cc6eb2151b 100644
--- a/proxy/README.md
+++ b/proxy/README.md
@@ -122,3 +122,43 @@ and connect to it
 ```sh
 PGSSLROOTCERT=./server.crt psql 'postgres://my-cluster-42.localtest.me:1234?sslmode=verify-full'
 ```
+
+## Test proxy locally
+
+Firstly, we need to build proxy with 'testing' feature and run, e.g.:
+
+```
+RUST_LOG=proxy cargo run --release -p proxy --bin proxy --features testing -- --auth-backend postgres --auth-endpoint 'postgresql://proxy:password@127.0.0.1:5432/postgres' --is-private-access-proxy true
+```
+
+We will also need to have a postgres instance. Assuming that we have setted up docker we can set it up as follows:
+```sh
+mkdir -p "$HOME/.pgdata/proxy-postgres"
+
+docker network create proxy-net
+
+exec docker \
+  run \
+  --platform linux/aarch64 \
+  --detach \
+  --name proxy-postgres \
+  --env POSTGRES_PASSWORD=proxy-postgres \
+  --env PGDATA=/var/lib/postgresql/data/pgdata \
+  --volume "$HOME/.pgdata/proxy-postgres":/var/lib/postgresql/data \
+  --publish 5432:5432 \
+  --network proxy-net \
+  postgres:17-bookworm
+```
+
+Next step is setting up auth table and schema as well as creating role:
+```sh
+docker exec -it proxy-postgres psql -U postgres -c "CREATE SCHEMA IF NOT EXISTS neon_control_plane"
+docker exec -it proxy-postgres psql -U postgres -c "CREATE TABLE neon_control_plane.endpoints "(endpoint_id VARCHAR(255) PRIMARY KEY, allowed_ips VARCHAR(255))"
+docker exec -it proxy-postgres psql -U postgres -c "CREATE ROLE proxy WITH SUPERUSER LOGIN PASSWORD 'password';"
+```
+
+Now from client you can start a new session:
+
+```sh
+psql  "postgresql://proxy:password@127.0.0.1:4432/postgres?options=endpoint%3D"
+```
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