diff --git a/CHANGELOG.md b/CHANGELOG.md
index aca7b64fa1f..e3668aad4ed 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -48,6 +48,8 @@ Ref: https://keepachangelog.com/en/1.0.0/
 
 ### Bug Fixes
 
+* (core/03-connection) [\#7397](https://github.com/cosmos/ibc-go/pull/7397) Skip the genesis validation connectionID for localhost client.
+
 ## [v7.4.1](https://github.com/cosmos/ibc-go/releases/tag/v7.4.1) - 2024-05-22
 
 ### Improvements
diff --git a/modules/core/03-connection/types/genesis.go b/modules/core/03-connection/types/genesis.go
index 3a4e5595f35..f3591235319 100644
--- a/modules/core/03-connection/types/genesis.go
+++ b/modules/core/03-connection/types/genesis.go
@@ -4,6 +4,7 @@ import (
 	"fmt"
 
 	host "github.com/cosmos/ibc-go/v7/modules/core/24-host"
+	"github.com/cosmos/ibc-go/v7/modules/core/exported"
 )
 
 // NewConnectionPaths creates a ConnectionPaths instance.
@@ -45,13 +46,15 @@ func (gs GenesisState) Validate() error {
 	var maxSequence uint64
 
 	for i, conn := range gs.Connections {
-		sequence, err := ParseConnectionSequence(conn.Id)
-		if err != nil {
-			return err
-		}
+		if conn.Id != exported.LocalhostConnectionID {
+			sequence, err := ParseConnectionSequence(conn.Id)
+			if err != nil {
+				return err
+			}
 
-		if sequence > maxSequence {
-			maxSequence = sequence
+			if sequence > maxSequence {
+				maxSequence = sequence
+			}
 		}
 
 		if err := conn.ValidateBasic(); err != nil {
diff --git a/modules/core/03-connection/types/genesis_test.go b/modules/core/03-connection/types/genesis_test.go
index 0b513cfdace..e1dc71cadad 100644
--- a/modules/core/03-connection/types/genesis_test.go
+++ b/modules/core/03-connection/types/genesis_test.go
@@ -7,6 +7,7 @@ import (
 
 	"github.com/cosmos/ibc-go/v7/modules/core/03-connection/types"
 	commitmenttypes "github.com/cosmos/ibc-go/v7/modules/core/23-commitment/types"
+	"github.com/cosmos/ibc-go/v7/modules/core/exported"
 	ibctesting "github.com/cosmos/ibc-go/v7/testing"
 )
 
@@ -91,6 +92,20 @@ func TestValidateGenesis(t *testing.T) {
 			),
 			expPass: false,
 		},
+		{
+			name: "localhost connection identifier",
+			genState: types.NewGenesisState(
+				[]types.IdentifiedConnection{
+					types.NewIdentifiedConnection(exported.LocalhostConnectionID, types.NewConnectionEnd(types.INIT, clientID, types.Counterparty{clientID2, connectionID2, commitmenttypes.NewMerklePrefix([]byte("prefix"))}, []*types.Version{ibctesting.ConnectionVersion}, 500)),
+				},
+				[]types.ConnectionPaths{
+					{clientID, []string{connectionID}},
+				},
+				0,
+				types.DefaultParams(),
+			),
+			expPass: true,
+		},
 		{
 			name: "next connection sequence is not greater than maximum connection identifier sequence provided",
 			genState: types.NewGenesisState(