An old guide is written on the Apple Developer Forum however if you are using Homebrew it is much simpler.

$ brew install postgresql

Define a data area for the database to be stored.

mkdir -p ~/.psgrs/data

Initialize the database folder:

#initidb can be found here /usr/local/Cellar/postgresql/9.0.4/bin/
$ initdb -D ~/.psgrs/data

Create the database:

$ createdb example_dev

Start the postgresql server:

# postgres can be found here /usr/local/Cellar/postgresql/9.0.4/bin
$ postgres -D ~/.psgrs/data

Summary of Postgresql setup for Development

$ brew install postgresql
$ mkdir -p ~/.psgrs/data
$ initdb -D ~/.psgrs/data
$ createdb example_dev
$ postgres -D ~/.psgrs/data

A Rails database.yaml file might look something like:

development:
    adapter: postgresql
    host: localhost
    port: 5432
    username: 
    password: 
    database: example_dev