diff --git a/core/src/main/java/org/apache/sqoop/repository/JdbcRepository.java b/core/src/main/java/org/apache/sqoop/repository/JdbcRepository.java
index 2d9bf4e7..095f3e9b 100644
--- a/core/src/main/java/org/apache/sqoop/repository/JdbcRepository.java
+++ b/core/src/main/java/org/apache/sqoop/repository/JdbcRepository.java
@@ -127,11 +127,8 @@ public void createOrUpdateInternals() {
     doWithConnection(new DoWithConnection() {
       @Override
       public Object doIt(Connection conn) throws Exception {
-        if (!handler.schemaExists()) {
-          LOG.info("Creating repository schema objects");
-          handler.createSchema();
-        }
-
+        LOG.info("Creating repository schema objects");
+        handler.createOrUpdateInternals(conn);
         return null;
       }
     });
@@ -145,7 +142,7 @@ public boolean haveSuitableInternals() {
     return (Boolean) doWithConnection(new DoWithConnection() {
       @Override
       public Object doIt(Connection conn) throws Exception {
-        return handler.schemaExists();
+        return handler.haveSuitableInternals(conn);
       }
     });
   }
diff --git a/core/src/main/java/org/apache/sqoop/repository/JdbcRepositoryHandler.java b/core/src/main/java/org/apache/sqoop/repository/JdbcRepositoryHandler.java
index 538def56..d468b794 100644
--- a/core/src/main/java/org/apache/sqoop/repository/JdbcRepositoryHandler.java
+++ b/core/src/main/java/org/apache/sqoop/repository/JdbcRepositoryHandler.java
@@ -135,16 +135,24 @@ public abstract List<MJob> findJobsForConnector(long connectorID,
   public abstract void registerFramework(MFramework mf, Connection conn);
 
   /**
-   * Check if schema is already present in the repository.
+   * Return true if repository tables exists and are suitable for use.
    *
-   * @return true if schema is already present or false if it's not
+   * This method should return false in case that the tables do exists, but
+   * are not suitable for use or if they requires upgrade.
+   *
+   * @return Boolean values if internal structures are suitable for use
    */
-  public abstract boolean schemaExists();
+  public abstract boolean haveSuitableInternals(Connection conn);
 
   /**
-   * Create required schema in repository.
+   * Create or update tables in the repository.
+   *
+   * This method will be called only if Sqoop server is enabled with changing
+   * repository on disk structures. Repository should not change its disk structures
+   * outside of this method. This method must be no-op in case that the structures
+   * do not need any maintenance.
    */
-  public abstract void createSchema();
+  public abstract void createOrUpdateInternals(Connection conn);
 
   /**
    * Termination callback for repository.
diff --git a/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepoConfigurationConstants.java b/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepoConstants.java
similarity index 68%
rename from repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepoConfigurationConstants.java
rename to repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepoConstants.java
index beb983c8..607b8d5f 100644
--- a/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepoConfigurationConstants.java
+++ b/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepoConstants.java
@@ -17,11 +17,23 @@
  */
 package org.apache.sqoop.repository.derby;
 
-public final class DerbyRepoConfigurationConstants {
+public final class DerbyRepoConstants {
 
-  public static final String PREFIX_DERBY = "derby.";
+  public static final String CONF_PREFIX_DERBY = "derby.";
 
-  private DerbyRepoConfigurationConstants() {
+  public static final String SYSKEY_VERSION = "version";
+
+  /**
+   * Expected version of the repository structures.
+   *
+   * History:
+   * 0 - empty/unknown state
+   * 1 - First two releases (1.99.1, 1.99.2)
+   * 2 - added SQ_SYSTEM
+   */
+  public static final int VERSION = 2;
+
+  private DerbyRepoConstants() {
     // Disable explicit object creation
   }
 }
diff --git a/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepoError.java b/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepoError.java
index 4455f489..aeb7533d 100644
--- a/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepoError.java
+++ b/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepoError.java
@@ -169,6 +169,9 @@ public enum DerbyRepoError implements ErrorCode {
   /** Can't retrieve submissions for a job **/
   DERBYREPO_0040("Can't retrieve submissions for a job"),
 
+  /** Can't detect version of the database structures **/
+  DERBYREPO_0041("Can't detect version of repository storage"),
+
   ;
 
   private final String message;
diff --git a/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepositoryHandler.java b/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepositoryHandler.java
index 0ec4da1c..72c72bbf 100644
--- a/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepositoryHandler.java
+++ b/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbyRepositoryHandler.java
@@ -30,9 +30,11 @@
 import java.util.ArrayList;
 import java.util.Date;
 import java.util.HashMap;
+import java.util.HashSet;
 import java.util.LinkedList;
 import java.util.List;
 import java.util.Map;
+import java.util.Set;
 
 import javax.sql.DataSource;
 
@@ -245,64 +247,126 @@ public synchronized void shutdown() {
     }
   }
 
+  /**
+   * Detect version of underlying database structures.
+   *
+   * @param conn JDBC Connection
+   * @return
+   */
+  public int detectVersion(Connection conn) {
+    ResultSet rs = null;
+    PreparedStatement stmt = null;
+
+    // First release went out without system table, so we have to detect
+    // this version differently.
+    try {
+      rs = conn.getMetaData().getTables(null, null, null, null);
+
+      Set<String> tableNames = new HashSet<String>();
+      while(rs.next()) {
+        tableNames.add(rs.getString("TABLE_NAME"));
+      }
+      closeResultSets(rs);
+
+      LOG.debug("Detecting old version of repository");
+      boolean foundAll = true;
+      for( String expectedTable : DerbySchemaConstants.tablesV1) {
+        if(!tableNames.contains(expectedTable)) {
+          foundAll = false;
+          LOG.debug("Missing table " + expectedTable);
+        }
+      }
+
+      // If we find all expected tables, then we are on version 1
+      if(foundAll && !tableNames.contains(DerbySchemaConstants.TABLE_SQ_SYSTEM_NAME)) {
+        return 1;
+      }
+
+    } catch (SQLException e) {
+      throw new SqoopException(DerbyRepoError.DERBYREPO_0041, e);
+    } finally {
+      closeResultSets(rs);
+    }
+
+    // Normal version detection, select and return the version
+    try {
+      stmt = conn.prepareStatement(STMT_SELECT_SYSTEM);
+      stmt.setString(1, DerbyRepoConstants.SYSKEY_VERSION);
+      rs = stmt.executeQuery();
+
+      if(!rs.next()) {
+        return 0;
+      }
+
+      return rs.getInt(1);
+    } catch (SQLException e) {
+      LOG.info("Can't fetch repository structure version.", e);
+      return 0;
+    } finally {
+      closeResultSets(rs);
+      closeStatements(stmt);
+    }
+  }
+
+
   /**
    * {@inheritDoc}
    */
   @Override
-  public void createSchema() {
-    runQuery(QUERY_CREATE_SCHEMA_SQOOP);
-    runQuery(QUERY_CREATE_TABLE_SQ_CONNECTOR);
-    runQuery(QUERY_CREATE_TABLE_SQ_FORM);
-    runQuery(QUERY_CREATE_TABLE_SQ_INPUT);
-    runQuery(QUERY_CREATE_TABLE_SQ_CONNECTION);
-    runQuery(QUERY_CREATE_TABLE_SQ_JOB);
-    runQuery(QUERY_CREATE_TABLE_SQ_CONNECTION_INPUT);
-    runQuery(QUERY_CREATE_TABLE_SQ_JOB_INPUT);
-    runQuery(QUERY_CREATE_TABLE_SQ_SUBMISSION);
-    runQuery(QUERY_CREATE_TABLE_SQ_COUNTER_GROUP);
-    runQuery(QUERY_CREATE_TABLE_SQ_COUNTER);
-    runQuery(QUERY_CREATE_TABLE_SQ_COUNTER_SUBMISSION);
+  public void createOrUpdateInternals(Connection conn) {
+    int version = detectVersion(conn);
+
+    if(version <= 0) {
+      runQuery(QUERY_CREATE_SCHEMA_SQOOP, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_CONNECTOR, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_FORM, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_INPUT, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_CONNECTION, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_JOB, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_CONNECTION_INPUT, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_JOB_INPUT, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_SUBMISSION, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_COUNTER_GROUP, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_COUNTER, conn);
+      runQuery(QUERY_CREATE_TABLE_SQ_COUNTER_SUBMISSION, conn);
+    }
+    if(version <= 1) {
+      runQuery(QUERY_CREATE_TABLE_SQ_SYSTEM, conn);
+    }
+
+    ResultSet rs = null;
+    PreparedStatement stmt = null;
+    try {
+      stmt = conn.prepareStatement(STMT_DELETE_SYSTEM);
+      stmt.setString(1, DerbyRepoConstants.SYSKEY_VERSION);
+      stmt.executeUpdate();
+
+      closeStatements(stmt);
+
+      stmt = conn.prepareStatement(STMT_INSERT_SYSTEM);
+      stmt.setString(1, DerbyRepoConstants.SYSKEY_VERSION);
+      stmt.setString(2, "" + DerbyRepoConstants.VERSION);
+      stmt.executeUpdate();
+    } catch (SQLException e) {
+      LOG.error("Can't persist the repository version", e);
+    } finally {
+      closeResultSets(rs);
+      closeStatements(stmt);
+    }
   }
 
   /**
    * {@inheritDoc}
    */
   @Override
-  public boolean schemaExists() {
-    Connection connection = null;
-    Statement stmt = null;
-    try {
-      connection = dataSource.getConnection();
-      stmt = connection.createStatement();
-      ResultSet rset = stmt.executeQuery(QUERY_SYSSCHEMA_SQOOP);
+  public boolean haveSuitableInternals(Connection conn) {
+    int version = detectVersion(conn);
 
-      if (!rset.next()) {
-        LOG.warn("Schema for SQOOP does not exist");
-        return false;
-      }
-      String sqoopSchemaId = rset.getString(1);
-      LOG.debug("SQOOP schema ID: " + sqoopSchemaId);
-      connection.commit();
-    } catch (SQLException ex) {
-      if (connection != null) {
-        try {
-          connection.rollback();
-        } catch (SQLException ex2) {
-          LOG.error("Unable to rollback transaction", ex2);
-        }
-      }
-      throw new SqoopException(DerbyRepoError.DERBYREPO_0001, ex);
-    } finally {
-      closeStatements(stmt);
-      if (connection != null) {
-        try {
-          connection.close();
-        } catch (SQLException ex) {
-          LOG.error("Unable to close connection", ex);
-        }
-      }
+    if(version != DerbyRepoConstants.VERSION) {
+      return false;
     }
 
+    // TODO(jarcec): Verify that all structures are present (e.g. something like corruption validation)
     return true;
   }
 
@@ -1656,52 +1720,27 @@ private void registerFormInputs(long formId, List<MInput<?>> inputs,
   /**
    * Execute given query on database.
    *
-   * Passed query will be executed in it's own transaction
-   *
    * @param query Query that should be executed
    */
-  private void runQuery(String query) {
-    Connection connection = null;
+  private void runQuery(String query, Connection conn) {
     Statement stmt = null;
     try {
-      connection = dataSource.getConnection();
-      stmt = connection.createStatement();
+      stmt = conn.createStatement();
       if (stmt.execute(query)) {
         ResultSet rset = stmt.getResultSet();
         int count = 0;
         while (rset.next()) {
           count++;
         }
-        LOG.info("QUERY(" + query + ") produced unused resultset with "
-            + count + " rows");
+        LOG.info("QUERY(" + query + ") produced unused resultset with "+ count + " rows");
       } else {
         int updateCount = stmt.getUpdateCount();
         LOG.info("QUERY(" + query + ") Update count: " + updateCount);
       }
-      connection.commit();
     } catch (SQLException ex) {
-      try {
-        connection.rollback();
-      } catch (SQLException ex2) {
-        LOG.error("Unable to rollback transaction", ex2);
-      }
-      throw new SqoopException(DerbyRepoError.DERBYREPO_0003,
-          query, ex);
+      throw new SqoopException(DerbyRepoError.DERBYREPO_0003, query, ex);
     } finally {
-      if (stmt != null) {
-        try {
-          stmt.close();
-        } catch (SQLException ex) {
-          LOG.error("Unable to close statement", ex);
-        }
-        if (connection != null) {
-          try {
-            connection.close();
-          } catch (SQLException ex) {
-            LOG.error("Unable to close connection", ex);
-          }
-        }
-      }
+      closeStatements(stmt);
     }
   }
 
diff --git a/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbySchemaConstants.java b/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbySchemaConstants.java
index 8cdbc63d..68cb1c08 100644
--- a/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbySchemaConstants.java
+++ b/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbySchemaConstants.java
@@ -17,6 +17,9 @@
  */
 package org.apache.sqoop.repository.derby;
 
+import java.util.HashSet;
+import java.util.Set;
+
 public final class DerbySchemaConstants {
 
   public static final String SCHEMA_SQOOP = "SQOOP";
@@ -25,6 +28,19 @@ public final class DerbySchemaConstants {
 
   private static final String CONSTRAINT_PREFIX = "FK_";
 
+  // SQ_SYSTEM
+
+  public static final String TABLE_SQ_SYSTEM_NAME = "SQ_SYSTEM";
+
+  public static final String TABLE_SQ_SYSTEM = SCHEMA_PREFIX
+    + TABLE_SQ_SYSTEM_NAME;
+
+  public static final String COLUMN_SQM_ID = "SQM_ID";
+
+  public static final String COLUMN_SQM_KEY = "SQM_KEY";
+
+  public static final String COLUMN_SQM_VALUE = "SQM_VALUE";
+
   // SQ_CONNECTOR
 
   public static final String TABLE_SQ_CONNECTOR_NAME = "SQ_CONNECTOR";
@@ -260,6 +276,26 @@ public final class DerbySchemaConstants {
 
   public static final String CONSTRAINT_SQRS_SQS = SCHEMA_PREFIX + CONSTRAINT_SQRS_SQS_NAME;
 
+  /**
+   * List of expected tables for first version;
+   * This list here is for backward compatibility.
+   */
+  public static final Set<String> tablesV1;
+  static {
+    tablesV1 = new HashSet<String>();
+    tablesV1.add(TABLE_SQ_CONNECTOR_NAME);
+    tablesV1.add(TABLE_SQ_CONNECTION_NAME);
+    tablesV1.add(TABLE_SQ_CONNECTION_INPUT_NAME);
+    tablesV1.add(TABLE_SQ_COUNTER_NAME);
+    tablesV1.add(TABLE_SQ_COUNTER_GROUP_NAME);
+    tablesV1.add(TABLE_SQ_COUNTER_SUBMISSION_NAME);
+    tablesV1.add(TABLE_SQ_FORM_NAME);
+    tablesV1.add(TABLE_SQ_INPUT_NAME);
+    tablesV1.add(TABLE_SQ_JOB_NAME);
+    tablesV1.add(TABLE_SQ_JOB_INPUT_NAME);
+    tablesV1.add(TABLE_SQ_SUBMISSION_NAME);
+  }
+
   private DerbySchemaConstants() {
     // Disable explicit object creation
   }
diff --git a/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbySchemaQuery.java b/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbySchemaQuery.java
index 7a9ce505..b2cd6cc6 100644
--- a/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbySchemaQuery.java
+++ b/repository/repository-derby/src/main/java/org/apache/sqoop/repository/derby/DerbySchemaQuery.java
@@ -22,7 +22,18 @@
 /**
  * DDL queries that create the Sqoop repository schema in Derby database. These
  * queries create the following tables:
- *
+ * <p>
+ * <strong>SQ_SYSTEM</strong>: Store for various state information
+ * <pre>
+ *    +----------------------------+
+ *    | SQ_SYSTEM                  |
+ *    +----------------------------+
+ *    | SQM_ID: BIGINT PK          |
+ *    | SQM_KEY: VARCHAR(64)       |
+ *    | SQM_VALUE: VARCHAR(64)     |
+ *    +----------------------------+
+ * </pre>
+ * </p>
  * <p>
  * <strong>SQ_CONNECTOR</strong>: Connector registration.
  * <pre>
@@ -185,6 +196,14 @@ public final class DerbySchemaQuery {
     "SELECT SCHEMAID FROM SYS.SYSSCHEMAS WHERE SCHEMANAME = '"
     + SCHEMA_SQOOP + "'";
 
+  // DDL: Create table SQ_SYSTEM
+  public static final String QUERY_CREATE_TABLE_SQ_SYSTEM =
+    "CREATE TABLE " + TABLE_SQ_SYSTEM + " ("
+    + COLUMN_SQM_ID + " BIGINT GENERATED ALWAYS AS IDENTITY (START WITH 1, INCREMENT BY 1) PRIMARY KEY, "
+    + COLUMN_SQM_KEY + " VARCHAR(64), "
+    + COLUMN_SQM_VALUE + " VARCHAR(64) "
+    + ")";
+
   // DDL: Create table SQ_CONNECTOR
   public static final String QUERY_CREATE_TABLE_SQ_CONNECTOR =
       "CREATE TABLE " + TABLE_SQ_CONNECTOR + " ("
@@ -336,6 +355,25 @@ public final class DerbySchemaQuery {
         + "REFERENCES " + TABLE_SQ_SUBMISSION + "(" + COLUMN_SQS_ID + ") ON DELETE CASCADE "
     + ")";
 
+  // DML: Get system key
+  public static final String STMT_SELECT_SYSTEM =
+    "SELECT "
+    + COLUMN_SQM_VALUE
+    + " FROM " + TABLE_SQ_SYSTEM
+    + " WHERE " + COLUMN_SQM_KEY + " = ?";
+
+  // DML: Remove system key
+  public static final String STMT_DELETE_SYSTEM =
+    "DELETE FROM "  + TABLE_SQ_SYSTEM
+    + " WHERE " + COLUMN_SQM_KEY + " = ?";
+
+  // DML: Insert new system key
+  public static final String STMT_INSERT_SYSTEM =
+    "INSERT INTO " + TABLE_SQ_SYSTEM + "("
+    + COLUMN_SQM_KEY + ", "
+    + COLUMN_SQM_VALUE + ") "
+    + "VALUES(?, ?)";
+
   // DML: Fetch connector Given Name
   public static final String STMT_FETCH_BASE_CONNECTOR =
       "SELECT "
diff --git a/repository/repository-derby/src/test/java/org/apache/sqoop/repository/derby/DerbyTestCase.java b/repository/repository-derby/src/test/java/org/apache/sqoop/repository/derby/DerbyTestCase.java
index 5ace598e..677b0bee 100644
--- a/repository/repository-derby/src/test/java/org/apache/sqoop/repository/derby/DerbyTestCase.java
+++ b/repository/repository-derby/src/test/java/org/apache/sqoop/repository/derby/DerbyTestCase.java
@@ -98,6 +98,8 @@ protected void createSchema() throws Exception {
     runQuery(QUERY_CREATE_TABLE_SQ_COUNTER_GROUP);
     runQuery(QUERY_CREATE_TABLE_SQ_COUNTER);
     runQuery(QUERY_CREATE_TABLE_SQ_COUNTER_SUBMISSION);
+    runQuery(QUERY_CREATE_TABLE_SQ_SYSTEM);
+    runQuery("INSERT INTO SQOOP.SQ_SYSTEM(SQM_KEY, SQM_VALUE) VALUES('version', '2')");
   }
 
   /**
diff --git a/repository/repository-derby/src/test/java/org/apache/sqoop/repository/derby/TestInternals.java b/repository/repository-derby/src/test/java/org/apache/sqoop/repository/derby/TestInternals.java
new file mode 100644
index 00000000..25e6196d
--- /dev/null
+++ b/repository/repository-derby/src/test/java/org/apache/sqoop/repository/derby/TestInternals.java
@@ -0,0 +1,47 @@
+/**
+ * Licensed to the Apache Software Foundation (ASF) under one
+ * or more contributor license agreements.  See the NOTICE file
+ * distributed with this work for additional information
+ * regarding copyright ownership.  The ASF licenses this file
+ * to you under the Apache License, Version 2.0 (the
+ * "License"); you may not use this file except in compliance
+ * with the License.  You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+package org.apache.sqoop.repository.derby;
+
+/**
+ *
+ */
+public class TestInternals extends DerbyTestCase {
+
+  DerbyRepositoryHandler handler;
+
+  @Override
+  public void setUp() throws Exception {
+    super.setUp();
+
+    handler = new DerbyRepositoryHandler();
+  }
+
+  public void testSuitableInternals() throws Exception {
+    assertFalse(handler.haveSuitableInternals(getDerbyConnection()));
+    createSchema(); // Test code is building the structures
+    assertTrue(handler.haveSuitableInternals(getDerbyConnection()));
+  }
+
+  public void testCreateorUpdateInternals() throws Exception {
+    assertFalse(handler.haveSuitableInternals(getDerbyConnection()));
+    handler.createOrUpdateInternals(getDerbyConnection());
+    assertTrue(handler.haveSuitableInternals(getDerbyConnection()));
+  }
+
+
+}