diff --git a/CHANGELOG.md b/CHANGELOG.md
index 2cdf5fcf38e6..b81c79292e25 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -62,6 +62,8 @@ Ref: https://keepachangelog.com/en/1.0.0/
 * (x/group) [#17146](https://github.com/cosmos/cosmos-sdk/pull/17146) Rename x/group legacy ORM package's error codespace from "orm" to "legacy_orm", preventing collisions with ORM's error codespace "orm".
 * (x/bank) [#17170](https://github.com/cosmos/cosmos-sdk/pull/17170) Avoid empty spendable error message on send coins.
 * (x/distribution) [#17236](https://github.com/cosmos/cosmos-sdk/pull/17236) Using "validateCommunityTax" in "Params.ValidateBasic", preventing panic when field "CommunityTax" is nil.
+* (types) [#16583](https://github.com/cosmos/cosmos-sdk/pull/16583) Add `MigrationModuleManager` to handle migration of upgrade module before other modules, ensuring access to the updated context with consensus parameters within the same block that executes the migration.
+* (baseapp) [#17372](https://github.com/cosmos/cosmos-sdk/pull/17372) Stop state-machine when `RunMigrationBeginBlock` has error.
 
 ### API Breaking Changes
 
diff --git a/UPGRADING.md b/UPGRADING.md
index 515a3b37df77..1668638a10d2 100644
--- a/UPGRADING.md
+++ b/UPGRADING.md
@@ -122,7 +122,7 @@ In this section we describe the changes made in Cosmos SDK' SimApp.
 
 #### Module Assertions
 
-Previously, all modules were required to be set in `OrderBeginBlockers`, `OrderEndBlockers` and `OrderInitGenesis / OrderExportGenesis` in `app.go` / `app_config.go`. This is no longer the case, the assertion has been loosened to only require modules implementing, respectively, the `module.BeginBlockAppModule`, `module.EndBlockAppModule` and `module.HasGenesis` interfaces.
+Previously, all modules were required to be set in `OrderBeginBlockers`, `OrderEndBlockers` and `OrderInitGenesis / OrderExportGenesis` in `app.go` / `app_config.go`. This is no longer the case, the assertion has been loosened to only require modules implementing, respectively, the `appmodule.HasBeginBlocker`, `appmodule.HasEndBlocker` and `appmodule.HasGenesis` / `module.HasGenesis` interfaces.
 
 #### Module wiring
 
diff --git a/baseapp/baseapp.go b/baseapp/baseapp.go
index 7db78a04d2bb..84fb00a066f7 100644
--- a/baseapp/baseapp.go
+++ b/baseapp/baseapp.go
@@ -43,6 +43,12 @@ type (
 	StoreLoader func(ms storetypes.CommitMultiStore) error
 )
 
+// MigrationModuleManager is the interface that a migration module manager should implement to handle
+// the execution of migration logic during the beginning of a block.
+type MigrationModuleManager interface {
+	RunMigrationBeginBlock(ctx sdk.Context) (bool, error)
+}
+
 const (
 	execModeCheck           execMode = iota // Check a transaction
 	execModeReCheck                         // Recheck a (pending) transaction after a commit
@@ -92,6 +98,9 @@ type BaseApp struct {
 	// manages snapshots, i.e. dumps of app state at certain intervals
 	snapshotManager *snapshots.Manager
 
+	// manages migrate module
+	migrationModuleManager MigrationModuleManager
+
 	// volatile states:
 	//
 	// - checkState is set on InitChain and reset on Commit
@@ -267,6 +276,11 @@ func (app *BaseApp) SetMsgServiceRouter(msgServiceRouter *MsgServiceRouter) {
 	app.msgServiceRouter = msgServiceRouter
 }
 
+// SetMigrationModuleManager sets the MigrationModuleManager of a BaseApp.
+func (app *BaseApp) SetMigrationModuleManager(migrationModuleManager MigrationModuleManager) {
+	app.migrationModuleManager = migrationModuleManager
+}
+
 // MountStores mounts all IAVL or DB stores to the provided keys in the BaseApp
 // multistore.
 func (app *BaseApp) MountStores(keys ...storetypes.StoreKey) {
@@ -671,7 +685,22 @@ func (app *BaseApp) beginBlock(req *abci.RequestFinalizeBlock) (sdk.BeginBlock,
 	)
 
 	if app.beginBlocker != nil {
-		resp, err = app.beginBlocker(app.finalizeBlockState.ctx)
+		ctx := app.finalizeBlockState.ctx
+		if app.migrationModuleManager != nil {
+			if success, err := app.migrationModuleManager.RunMigrationBeginBlock(ctx); success {
+				cp := ctx.ConsensusParams()
+				// Manager skips this step if Block is non-nil since upgrade module is expected to set this params
+				// and consensus parameters should not be overwritten.
+				if cp.Block == nil {
+					if cp = app.GetConsensusParams(ctx); cp.Block != nil {
+						ctx = ctx.WithConsensusParams(cp)
+					}
+				}
+			} else if err != nil {
+				return sdk.BeginBlock{}, err
+			}
+		}
+		resp, err = app.beginBlocker(ctx)
 		if err != nil {
 			return resp, err
 		}
diff --git a/docs/docs/building-modules/01-module-manager.md b/docs/docs/building-modules/01-module-manager.md
index 6f28829ce1d1..b1e88d59639d 100644
--- a/docs/docs/building-modules/01-module-manager.md
+++ b/docs/docs/building-modules/01-module-manager.md
@@ -265,7 +265,8 @@ The module manager is used throughout the application whenever an action on a co
 * `InitGenesis(ctx context.Context, cdc codec.JSONCodec, genesisData map[string]json.RawMessage)`: Calls the [`InitGenesis`](./08-genesis.md#initgenesis) function of each module when the application is first started, in the order defined in `OrderInitGenesis`. Returns an `abci.ResponseInitChain` to the underlying consensus engine, which can contain validator updates.
 * `ExportGenesis(ctx context.Context, cdc codec.JSONCodec)`: Calls the [`ExportGenesis`](./08-genesis.md#exportgenesis) function of each module, in the order defined in `OrderExportGenesis`. The export constructs a genesis file from a previously existing state, and is mainly used when a hard-fork upgrade of the chain is required.
 * `ExportGenesisForModules(ctx context.Context, cdc codec.JSONCodec, modulesToExport []string)`: Behaves the same as `ExportGenesis`, except takes a list of modules to export.
-* `BeginBlock(ctx context.Context) error`: At the beginning of each block, this function is called from [`BaseApp`](../core/00-baseapp.md#beginblock) and, in turn, calls the [`BeginBlock`](./05-beginblock-endblock.md) function of each modules implementing the `BeginBlockAppModule` interface, in the order defined in `OrderBeginBlockers`. It creates a child [context](../core/02-context.md) with an event manager to aggregate [events](../core/08-events.md) emitted from all modules.
+* `RunMigrationBeginBlock(ctx sdk.Context) (bool, error)`: At the beginning of each block, this function is called from [`BaseApp`](../core/00-baseapp.md#beginblock) and, in turn, calls the [`BeginBlock`](./05-beginblock-endblock.md) function of the upgrade module implementing the `HasBeginBlocker` interface. The function returns a boolean value indicating whether the migration was executed or not and an error if fails.
+* `BeginBlock(ctx context.Context) error`: At the beginning of each block, this function is called from [`BaseApp`](../core/00-baseapp.md#beginblock) and, in turn, calls the [`BeginBlock`](./05-beginblock-endblock.md) function of each non-upgrade modules implementing the `HasBeginBlocker` interface, in the order defined in `OrderBeginBlockers`. It creates a child [context](../core/02-context.md) with an event manager to aggregate [events](../core/08-events.md) emitted from non-upgrade modules.
 * `EndBlock(ctx context.Context) error`: At the end of each block, this function is called from [`BaseApp`](../core/00-baseapp.md#endblock) and, in turn, calls the [`EndBlock`](./05-beginblock-endblock.md) function of each modules implementing the `HasEndBlocker` interface, in the order defined in `OrderEndBlockers`. It creates a child [context](../core/02-context.md) with an event manager to aggregate [events](../core/08-events.md) emitted from all modules. The function returns an `abci` which contains the aforementioned events, as well as validator set updates (if any).
 * `EndBlock(context.Context) ([]abci.ValidatorUpdate, error)`: At the end of each block, this function is called from [`BaseApp`](../core/00-baseapp.md#endblock) and, in turn, calls the [`EndBlock`](./05-beginblock-endblock.md) function of each modules implementing the `HasEndBlocker` interface, in the order defined in `OrderEndBlockers`. It creates a child [context](../core/02-context.md) with an event manager to aggregate [events](../core/08-events.md) emitted from all modules. The function returns an `abci` which contains the aforementioned events, as well as validator set updates (if any).
 * `Precommit(ctx context.Context)`: During [`Commit`](../core/00-baseapp.md#commit), this function is called from `BaseApp` immediately before the [`deliverState`](../core/00-baseapp.md#state-updates) is written to the underlying [`rootMultiStore`](../core/04-store.md#commitmultistore) and, in turn calls the `Precommit` function of each modules implementing the `HasPrecommit` interface, in the order defined in `OrderPrecommiters`. It creates a child [context](../core/02-context.md) where the underlying `CacheMultiStore` is that of the newly committed block's [`finalizeblockstate`](../core/00-baseapp.md#state-updates).
diff --git a/docs/docs/core/00-baseapp.md b/docs/docs/core/00-baseapp.md
index 3a0aa2651d5b..20a89fb11924 100644
--- a/docs/docs/core/00-baseapp.md
+++ b/docs/docs/core/00-baseapp.md
@@ -455,7 +455,7 @@ https://github.com/cosmos/cosmos-sdk/blob/v0.50.0-alpha.0/baseapp/abci.go#L623
   This function also resets the [main gas meter](../basics/04-gas-fees.md#main-gas-meter).
 
 * Initialize the [block gas meter](../basics/04-gas-fees.md#block-gas-meter) with the `maxGas` limit. The `gas` consumed within the block cannot go above `maxGas`. This parameter is defined in the application's consensus parameters.
-* Run the application's [`beginBlocker()`](../basics/00-app-anatomy.md#beginblocker-and-endblock), which mainly runs the [`BeginBlocker()`](../building-modules/05-beginblock-endblock.md#beginblock) method of each of the application's modules.
+* Run the application's [`beginBlocker()`](../basics/00-app-anatomy.md#beginblocker-and-endblock), which mainly runs the [`BeginBlocker()`](../building-modules/05-beginblock-endblock.md#beginblock) method of each of the non-upgrade modules.
 * Set the [`VoteInfos`](https://github.com/cometbft/cometbft/blob/v0.37.x/spec/abci/abci++_methods.md#voteinfo) of the application, i.e. the list of validators whose _precommit_ for the previous block was included by the proposer of the current block. This information is carried into the [`Context`](./02-context.md) so that it can be used during transaction execution and EndBlock.
 
 #### Transaction Execution
diff --git a/runtime/builder.go b/runtime/builder.go
index 72bf965f7082..07e16bfcc20d 100644
--- a/runtime/builder.go
+++ b/runtime/builder.go
@@ -35,6 +35,7 @@ func (a *AppBuilder) Build(db dbm.DB, traceStore io.Writer, baseAppOptions ...fu
 	bApp.SetVersion(version.Version)
 	bApp.SetInterfaceRegistry(a.app.interfaceRegistry)
 	bApp.MountStores(a.app.storeKeys...)
+	bApp.SetMigrationModuleManager(a.app.ModuleManager)
 
 	a.app.BaseApp = bApp
 	a.app.configurator = module.NewConfigurator(a.app.cdc, a.app.MsgServiceRouter(), a.app.GRPCQueryRouter())
diff --git a/simapp/app.go b/simapp/app.go
index 6caa015cf1eb..20ff245460c1 100644
--- a/simapp/app.go
+++ b/simapp/app.go
@@ -401,6 +401,7 @@ func NewSimApp(
 		consensus.NewAppModule(appCodec, app.ConsensusParamsKeeper),
 		circuit.NewAppModule(appCodec, app.CircuitKeeper),
 	)
+	bApp.SetMigrationModuleManager(app.ModuleManager)
 
 	// BasicModuleManager defines the module BasicManager is in charge of setting up basic,
 	// non-dependant module elements, such as codec registration and genesis verification.
diff --git a/testutil/mock/types_mock_appmodule.go b/testutil/mock/types_mock_appmodule.go
index b5cab1121f0e..da310e69d4e7 100644
--- a/testutil/mock/types_mock_appmodule.go
+++ b/testutil/mock/types_mock_appmodule.go
@@ -360,3 +360,40 @@ func (mr *MockCoreAppModuleMockRecorder) ValidateGenesis(arg0 interface{}) *gomo
 	mr.mock.ctrl.T.Helper()
 	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "ValidateGenesis", reflect.TypeOf((*MockCoreAppModule)(nil).ValidateGenesis), arg0)
 }
+
+// MockUpgradeModule is a mock of UpgradeModule interface.
+type MockUpgradeModule struct {
+	*MockCoreAppModule
+	recorder *MockUpgradeModuleMockRecorder
+}
+
+// MockUpgradeModuleMockRecorder is the mock recorder for MockUpgradeModule.
+type MockUpgradeModuleMockRecorder struct {
+	*MockCoreAppModuleMockRecorder
+}
+
+// NewMockUpgradeModule creates a new mock instance.
+func NewMockUpgradeModule(ctrl *gomock.Controller) *MockUpgradeModule {
+	mock := &MockUpgradeModule{
+		MockCoreAppModule: NewMockCoreAppModule(ctrl),
+	}
+	mock.recorder = &MockUpgradeModuleMockRecorder{mock.MockCoreAppModule.recorder}
+	return mock
+}
+
+// EXPECT returns an object that allows the caller to indicate expected use.
+func (m *MockUpgradeModule) EXPECT() *MockUpgradeModuleMockRecorder {
+	return m.recorder
+}
+
+// IsUpgradeModule mocks base method.
+func (m *MockUpgradeModule) IsUpgradeModule() {
+	m.ctrl.T.Helper()
+	m.ctrl.Call(m, "IsUpgradeModule")
+}
+
+// IsUpgradeModule indicates an expected call of IsUpgradeModule.
+func (mr *MockUpgradeModuleMockRecorder) IsUpgradeModule() *gomock.Call {
+	mr.mock.ctrl.T.Helper()
+	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "IsUpgradeModule", reflect.TypeOf((*MockUpgradeModule)(nil).IsUpgradeModule))
+}
diff --git a/types/module/module.go b/types/module/module.go
index 0ba4fa6c5a1d..f985d0d73792 100644
--- a/types/module/module.go
+++ b/types/module/module.go
@@ -67,6 +67,13 @@ type HasName interface {
 	Name() string
 }
 
+// UpgradeModule is the extension interface that upgrade module should implement to differentiate
+// it from other modules, migration handler need ensure the upgrade module's migration is executed
+// before the rest of the modules.
+type UpgradeModule interface {
+	IsUpgradeModule()
+}
+
 // HasGenesisBasics is the legacy interface for stateless genesis methods.
 type HasGenesisBasics interface {
 	DefaultGenesis(codec.JSONCodec) json.RawMessage
@@ -692,17 +699,32 @@ func (m Manager) RunMigrations(ctx context.Context, cfg Configurator, fromVM Ver
 	return updatedVM, nil
 }
 
-// BeginBlock performs begin block functionality for all modules. It creates a
-// child context with an event manager to aggregate events emitted from all
+// RunMigrationBeginBlock performs begin block functionality for upgrade module.
+// It takes the current context as a parameter and returns a boolean value
+// indicating whether the migration was executed or not and an error if fails.
+func (m *Manager) RunMigrationBeginBlock(ctx sdk.Context) (bool, error) {
+	for _, moduleName := range m.OrderBeginBlockers {
+		if mod, ok := m.Modules[moduleName].(appmodule.HasBeginBlocker); ok {
+			if _, ok := mod.(UpgradeModule); ok {
+				err := mod.BeginBlock(ctx)
+				return err == nil, err
+			}
+		}
+	}
+	return false, nil
+}
+
+// BeginBlock performs begin block functionality for non-upgrade modules. It creates a
+// child context with an event manager to aggregate events emitted from non-upgrade
 // modules.
 func (m *Manager) BeginBlock(ctx sdk.Context) (sdk.BeginBlock, error) {
 	ctx = ctx.WithEventManager(sdk.NewEventManager())
-
 	for _, moduleName := range m.OrderBeginBlockers {
 		if module, ok := m.Modules[moduleName].(appmodule.HasBeginBlocker); ok {
-			err := module.BeginBlock(ctx)
-			if err != nil {
-				return sdk.BeginBlock{}, err
+			if _, ok := module.(UpgradeModule); !ok {
+				if err := module.BeginBlock(ctx); err != nil {
+					return sdk.BeginBlock{}, err
+				}
 			}
 		}
 	}
diff --git a/types/module/module_test.go b/types/module/module_test.go
index 3cde79f6a6fe..aaf4c8b3b2de 100644
--- a/types/module/module_test.go
+++ b/types/module/module_test.go
@@ -462,6 +462,37 @@ func TestCoreAPIManagerOrderSetters(t *testing.T) {
 	require.Equal(t, []string{"module3", "module2", "module1"}, mm.OrderPrecommiters)
 }
 
+func TestCoreAPIManager_RunMigrationBeginBlock(t *testing.T) {
+	mockCtrl := gomock.NewController(t)
+	t.Cleanup(mockCtrl.Finish)
+
+	mockAppModule1 := mock.NewMockCoreAppModule(mockCtrl)
+	mockAppModule2 := mock.NewMockUpgradeModule(mockCtrl)
+	mm := module.NewManagerFromMap(map[string]appmodule.AppModule{
+		"module1": mockAppModule1,
+		"module2": mockAppModule2,
+	})
+	require.NotNil(t, mm)
+	require.Equal(t, 2, len(mm.Modules))
+
+	mockAppModule1.EXPECT().BeginBlock(gomock.Any()).Times(0)
+	mockAppModule2.EXPECT().BeginBlock(gomock.Any()).Times(1).Return(nil)
+	success, err := mm.RunMigrationBeginBlock(sdk.Context{})
+	require.Equal(t, true, success)
+	require.NoError(t, err)
+
+	// test false
+	success, err = module.NewManager().RunMigrationBeginBlock(sdk.Context{})
+	require.Equal(t, false, success)
+	require.NoError(t, err)
+
+	// test panic
+	mockAppModule2.EXPECT().BeginBlock(gomock.Any()).Times(1).Return(errors.New("some error"))
+	success, err = mm.RunMigrationBeginBlock(sdk.Context{})
+	require.Equal(t, false, success)
+	require.Error(t, err)
+}
+
 func TestCoreAPIManager_BeginBlock(t *testing.T) {
 	mockCtrl := gomock.NewController(t)
 	t.Cleanup(mockCtrl.Finish)
diff --git a/x/upgrade/module.go b/x/upgrade/module.go
index 9bb9618df7a2..918dc893aa9d 100644
--- a/x/upgrade/module.go
+++ b/x/upgrade/module.go
@@ -74,6 +74,19 @@ func (AppModuleBasic) RegisterInterfaces(registry codectypes.InterfaceRegistry)
 	types.RegisterInterfaces(registry)
 }
 
+// DefaultGenesis is an empty object
+func (AppModuleBasic) DefaultGenesis(_ codec.JSONCodec) json.RawMessage {
+	return []byte("{}")
+}
+
+// ValidateGenesis is always successful, as we ignore the value
+func (AppModuleBasic) ValidateGenesis(_ codec.JSONCodec, config client.TxEncodingConfig, _ json.RawMessage) error {
+	return nil
+}
+
+// IsUpgradeModule implements the module.UpgradeModule interface.
+func (ab AppModuleBasic) IsUpgradeModule() {}
+
 // AppModule implements the sdk.AppModule interface
 type AppModule struct {
 	AppModuleBasic
@@ -137,16 +150,6 @@ func (am AppModule) InitGenesis(ctx sdk.Context, _ codec.JSONCodec, _ json.RawMe
 	return []abci.ValidatorUpdate{}
 }
 
-// DefaultGenesis is an empty object
-func (AppModuleBasic) DefaultGenesis(_ codec.JSONCodec) json.RawMessage {
-	return []byte("{}")
-}
-
-// ValidateGenesis is always successful, as we ignore the value
-func (AppModuleBasic) ValidateGenesis(_ codec.JSONCodec, config client.TxEncodingConfig, _ json.RawMessage) error {
-	return nil
-}
-
 // ExportGenesis is always empty, as InitGenesis does nothing either
 func (am AppModule) ExportGenesis(_ sdk.Context, cdc codec.JSONCodec) json.RawMessage {
 	return am.DefaultGenesis(cdc)