diff --git a/.changes/unreleased/Dependencies-20240328-133507.yaml b/.changes/unreleased/Dependencies-20240328-133507.yaml
new file mode 100644
index 00000000..c7dbd319
--- /dev/null
+++ b/.changes/unreleased/Dependencies-20240328-133507.yaml
@@ -0,0 +1,6 @@
+kind: Dependencies
+body: add "no-binary" install option
+time: 2024-03-28T13:35:07.300121-07:00
+custom:
+  Author: colin-rogers-dbt
+  Issue: "6"
diff --git a/hatch_build.py b/hatch_build.py
new file mode 100644
index 00000000..02693cf0
--- /dev/null
+++ b/hatch_build.py
@@ -0,0 +1,54 @@
+import os
+from typing import Any, Dict
+
+from hatchling.builders.config import BuilderConfig
+from hatchling.builders.hooks.plugin.interface import BuildHookInterface
+from hatchling.plugin import hookimpl
+
+BASE_DEPS = [
+    # psycopg2 dependency installed in custom hatch_build.py
+    "dbt-adapters>=0.1.0a1,<2.0",
+    # installed via dbt-adapters but used directly
+    "dbt-common>=0.1.0a1,<2.0",
+    "agate>=1.0,<2.0",
+]
+
+PSYCOPG2_MESSAGE = """
+No package name override was set.
+Using 'psycopg2-binary' package to satisfy 'psycopg2'
+
+If you experience segmentation faults, silent crashes, or installation errors,
+consider retrying with the 'DBT_PSYCOPG2_NAME' environment variable set to
+'psycopg2'. It may require a compiler toolchain and development libraries!
+""".strip()
+
+
+def _dbt_psycopg2_name():
+    # if the user chose something, use that
+    package_name = os.getenv("DBT_PSYCOPG2_NAME", "")
+    if package_name:
+        return package_name
+
+    # default to psycopg2-binary for all OSes/versions
+    print(PSYCOPG2_MESSAGE)
+    return "psycopg2-binary"
+
+
+class CustomBuildHook(BuildHookInterface[BuilderConfig]):
+    """
+    Custom build hook to install psycopg2 instead of psycopg2-binary based on the presence of `DBT_PSYCOPG2_NAME` env
+    var. This is necessary as psycopg2-binary is better for local development, but psycopg2 is better for production.
+    """
+
+    def __init__(self, *args: Any, **kwargs: Any) -> None:
+        super().__init__(*args, **kwargs)
+
+    def initialize(self, version: str, build_data: Dict) -> None:
+        build_data["dependencies"] = BASE_DEPS
+        psycopg2_pkg_name = _dbt_psycopg2_name()
+        build_data["dependencies"].append(f"{psycopg2_pkg_name}>=2.9,<3.0")
+
+
+@hookimpl
+def hatch_register_build_hook():
+    return CustomBuildHook
diff --git a/pyproject.toml b/pyproject.toml
index 10fd7f7f..e9d880a2 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -1,5 +1,5 @@
 [project]
-dynamic = ["version"]
+dynamic = ["version", "dependencies"]
 name = "dbt-postgres"
 description = "The set of adapter protocols and base functionality that supports integration with dbt-core"
 readme = "README.md"
@@ -22,13 +22,7 @@ classifiers = [
     "Programming Language :: Python :: 3.10",
     "Programming Language :: Python :: 3.11",
 ]
-dependencies = [
-    "dbt-adapters>=0.1.0a1,<2.0",
-    "psycopg2>=2.9,<3.0",
-    # installed via dbt-adapters but used directly
-    "dbt-common>=0.1.0a1,<2.0",
-    "agate>=1.0,<2.0",
-]
+
 [project.urls]
 Homepage = "https://github.com/dbt-labs/dbt-postgres"
 Documentation = "https://docs.getdbt.com"
@@ -49,6 +43,9 @@ packages = ["dbt"]
 [tool.hatch.version]
 path = "dbt/adapters/postgres/__version__.py"
 
+[tool.hatch.build.hooks.custom]
+path = "./hatch_build.py"
+
 [tool.hatch.envs.default]
 dependencies = [
     "dbt-adapters @ git+https://github.com/dbt-labs/dbt-adapters.git",
@@ -119,6 +116,8 @@ dependencies = [
     "twine",
     "check-wheel-contents",
 ]
+
+
 [tool.hatch.envs.build.scripts]
 check-all = [
     "- check-wheel",
@@ -166,4 +165,4 @@ env_files = ["test.env"]
 testpaths = [
     "tests/functional",
     "tests/unit",
-]
+]
\ No newline at end of file