This is not the way to do it, just a way but the only way using the new neo4j-embedded Python bindings that I have seen. This tutorial is written for Ubuntu (10.10) but it should work for any GNU Linux flavor and I have seen a similar setup in OS X.
Download a sample database, I will use the Twitter database from example-data.neo4j.org. (http://example-data.neo4j.org/files/twitter.s12gx.zip)
Download jpype (0.5.4.2). (http://sourceforge.net/projects/jpype/files/)
sudo apt-get install virtualenv
git clone git://github.com/johanlundberg/neo4j-django-tutorial.git
cd neo4j-django-tutorial
virtualenv --no-site-packages env
source env/bin/activate
sudo apt-get install openjdk-6-jdk python-dev
export JAVA_HOME=/usr/lib/jvm/java-6-openjdk/
pip install /path/to/JPype-0.5.4.2.zip
pip install django neo4j-embedded
mkdir neo4jdb
unzip twitter.s12gx.zip -d neo4jdb
Copy neo4jtut/generic_settings.py to neo4jtut/settings.py and change the path on line 14 to the path matching your system.
NEO4JTUT_ROOT = '/path/to/neo4j-django-tutorial'
python neo4jtut/manage.py syncdb
python neo4jtut/manage.py runserver
Open http://localhost:8000 in your favorite browser.
mkproj.sh project_name
mkapp.sh project_name app_name
Have a look in the neo4jtut projects generic_settings.py and neo4jclient.py file for some tips on how to I use Neo4j and Django.
Some tips when I remember them.
If you don't use it, start now. If you have it installed in your virtualenv the Django shell uses it.
pip install ipython
# In your project directory run
python manage.py shell
pip install lucene-querybuilder