The following list identifies all of the conditions under which a report server database is upgraded:

• Setup upgrades a single instance of a report server. Then the database schema is automatically upgraded after service startup and the report server determines that the database schema version does not match the server version.
  
• At service startup, the report server checks the database schema version to verify that it matches the server version. If the database schema version is an older version, it is automatically upgraded to the schema version that is required by the report server. Automatic upgrade is especially useful if you restored or attached an older report server database. A message is entered in the report server trace log file indicating that the database schema version was upgraded.
  
• The Reporting Services Configuration tool upgrades a local or remote report server database when you select an older version to use with a newer report server instance. In this case, you must confirm the upgrade action before it happens.
  The Reporting Services Configuration tool no longer provides a separate Upgrade button or upgrade script. Those features are obsolete in SQL Server 2008 due to the automatic upgrade feature of the Report Server service.
  

After the schema is updated, you cannot rollback the upgrade to an earlier version. Always backup the report server database in case you need to recreate a previous installation.

The report server database is upgraded in three stages:

1. The schema is upgraded automatically after setup and service startup, or when you select a SQL Server 2005 or 2000 report server database in the Reporting Services Configuration tool. In addition, the Report Server service checks the database version at startup. If the report server is connected to a database that is an earlier version, the report server will update the database during startup.
   
2. Security descriptors are upgraded on first use of the report server database after the schema is updated.
   
3. Published reports and compiled report snapshots are updated on first use. For more information, see Upgrading Reports.
   

In addition to the report server database, a report server also uses a temporary database. The temporary database is upgraded automatically when you upgrade the report server database.

If you are upgrading a Reporting Services installation that includes a report server database, you might encounter problems when upgrading the database schema. By default, Setup uses the security token of the user who is running the Setup program to connect to the remote SQL Server instance and update the schema. If you have SQL Server sysadmin permissions on the database server that hosts the report server databases, the database upgrade will succeed. Similarly, if you run Setup from the command prompt and specify the RSUPGRADEDATABASEACCOUNT and RSUPGRADEPASSWORD arguments for an account that has sysadmin permission to modify the schema on the remote computer, the database upgrade will succeed.

However, if you do not have permission to on the database on the remote computer, the connection will be refused with the following error:

"Setup was not able to upgrade the report server database schema. You must update the database schema manually after setup is finished. To update the schema, run the Reporting Services Configuration tool, open the Database Setup page, re-select the database, and click Apply. The database will be upgraded automatically."

At this point, the report server program files will be upgraded, but the report server database will be in the format of the previous version. The report server will be unavailable until you finish the upgrade process by upgrading the database manually.