diff --git a/app/app.go b/app/app.go
index 6ed498f6..15ea52e7 100644
--- a/app/app.go
+++ b/app/app.go
@@ -1134,6 +1134,7 @@ func (app *TerraApp) RegisterUpgradeHandlers(cfg module.Configurator) {
 			app.IBCKeeper.ClientKeeper,
 			app.ParamsKeeper,
 			app.ConsensusParamsKeeper,
+			app.ICAControllerKeeper,
 		),
 	)
 }
diff --git a/app/upgrades/v2.5/upgrade.go b/app/upgrades/v2.5/upgrade.go
index 268b408a..1c1482c8 100644
--- a/app/upgrades/v2.5/upgrade.go
+++ b/app/upgrades/v2.5/upgrade.go
@@ -9,6 +9,8 @@ import (
 	paramskeeper "github.com/cosmos/cosmos-sdk/x/params/keeper"
 	paramstypes "github.com/cosmos/cosmos-sdk/x/params/types"
 	upgradetypes "github.com/cosmos/cosmos-sdk/x/upgrade/types"
+	icacontrollerkeeper "github.com/cosmos/ibc-go/v7/modules/apps/27-interchain-accounts/controller/keeper"
+	icacontrollertypes "github.com/cosmos/ibc-go/v7/modules/apps/27-interchain-accounts/controller/types"
 	clientkeeper "github.com/cosmos/ibc-go/v7/modules/core/02-client/keeper"
 	ibcexported "github.com/cosmos/ibc-go/v7/modules/core/exported"
 	ibctmmigrations "github.com/cosmos/ibc-go/v7/modules/light-clients/07-tendermint/migrations"
@@ -21,6 +23,7 @@ func CreateUpgradeHandler(
 	clientKeeper clientkeeper.Keeper,
 	paramsKeeper paramskeeper.Keeper,
 	consensusParamsKeeper consensuskeeper.Keeper,
+	icacontrollerKeeper icacontrollerkeeper.Keeper,
 ) upgradetypes.UpgradeHandler {
 	return func(ctx sdk.Context, _ upgradetypes.Plan, fromVM module.VersionMap) (module.VersionMap, error) {
 		// READ: https://github.com/cosmos/cosmos-sdk/blob/v0.47.4/UPGRADING.md#xconsensus
@@ -39,6 +42,9 @@ func CreateUpgradeHandler(
 		params.AllowedClients = append(params.AllowedClients, ibcexported.Localhost)
 		clientKeeper.SetParams(ctx, params)
 
+		// READ: https://github.com/terra-money/core/issues/166
+		icacontrollerKeeper.SetParams(ctx, icacontrollertypes.DefaultParams())
+
 		return mm.RunMigrations(ctx, cfg, fromVM)
 	}
 }