diff --git a/CHANGELOG.md b/CHANGELOG.md
index c083889b67f7..57d8d87266e9 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -44,6 +44,7 @@ Every module contains its own CHANGELOG.md. Please refer to the module you are i
 
 * (client) [#21436](https://github.com/cosmos/cosmos-sdk/pull/21436) Use `address.Codec` from client.Context in `tx.Sign`.
 * (internal) [#21412](https://github.com/cosmos/cosmos-sdk/pull/21412) Using unsafe.String and unsafe.SliceData.
+* (x/genutil) [#21249](https://github.com/cosmos/cosmos-sdk/pull/21249) Incremental JSON parsing for AppGenesis where possible.
 
 ### API Breaking Changes
 
diff --git a/x/genutil/types/genesis.go b/x/genutil/types/genesis.go
index f4b2d53f9dab..1566c0affaac 100644
--- a/x/genutil/types/genesis.go
+++ b/x/genutil/types/genesis.go
@@ -1,7 +1,6 @@
 package types
 
 import (
-	"bufio"
 	"bytes"
 	"encoding/json"
 	"errors"
@@ -89,35 +88,50 @@ func (ag *AppGenesis) SaveAs(file string) error {
 
 // AppGenesisFromReader reads the AppGenesis from the reader.
 func AppGenesisFromReader(reader io.Reader) (*AppGenesis, error) {
-	jsonBlob, err := io.ReadAll(reader)
-	if err != nil {
-		return nil, err
-	}
-
-	var appGenesis AppGenesis
-	if err := json.Unmarshal(jsonBlob, &appGenesis); err != nil {
-		// fallback to CometBFT genesis
-		var ctmGenesis cmttypes.GenesisDoc
-		if err2 := cmtjson.Unmarshal(jsonBlob, &ctmGenesis); err2 != nil {
-			return nil, fmt.Errorf("error unmarshalling AppGenesis: %w\n failed fallback to CometBFT GenDoc: %w", err, err2)
+	var ag AppGenesis
+	var err error
+	// check if io.ReadSeeker is implemented
+	if rs, ok := reader.(io.ReadSeeker); ok {
+		err = json.NewDecoder(rs).Decode(&ag)
+		if err == nil {
+			return &ag, nil
 		}
 
-		appGenesis = AppGenesis{
-			AppName: version.AppName,
-			// AppVersion is not filled as we do not know it from a CometBFT genesis
-			GenesisTime:   ctmGenesis.GenesisTime,
-			ChainID:       ctmGenesis.ChainID,
-			InitialHeight: ctmGenesis.InitialHeight,
-			AppHash:       ctmGenesis.AppHash,
-			AppState:      ctmGenesis.AppState,
-			Consensus: &ConsensusGenesis{
-				Validators: ctmGenesis.Validators,
-				Params:     ctmGenesis.ConsensusParams,
-			},
+		err = fmt.Errorf("error unmarshalling AppGenesis: %w", err)
+		if _, serr := rs.Seek(0, io.SeekStart); serr != nil {
+			err = errors.Join(err, fmt.Errorf("error seeking back to the front: %w", serr))
+			return nil, err
 		}
 	}
 
-	return &appGenesis, nil
+	// TODO: once cmtjson implements incremental parsing, we can avoid storing the entire file in memory
+	jsonBlob, ioerr := io.ReadAll(reader)
+	if ioerr != nil {
+		err = errors.Join(err, fmt.Errorf("failed to read file completely: %w", ioerr))
+		return nil, err
+	}
+
+	// fallback to comet genesis parsing
+	var ctmGenesis cmttypes.GenesisDoc
+	if uerr := cmtjson.Unmarshal(jsonBlob, &ctmGenesis); uerr != nil {
+		err = errors.Join(err, fmt.Errorf("failed fallback to CometBFT GenDoc: %w", uerr))
+		return nil, err
+	}
+
+	ag = AppGenesis{
+		AppName: version.AppName,
+		// AppVersion is not filled as we do not know it from a CometBFT genesis
+		GenesisTime:   ctmGenesis.GenesisTime,
+		ChainID:       ctmGenesis.ChainID,
+		InitialHeight: ctmGenesis.InitialHeight,
+		AppHash:       ctmGenesis.AppHash,
+		AppState:      ctmGenesis.AppState,
+		Consensus: &ConsensusGenesis{
+			Validators: ctmGenesis.Validators,
+			Params:     ctmGenesis.ConsensusParams,
+		},
+	}
+	return &ag, nil
 }
 
 // AppGenesisFromFile reads the AppGenesis from the provided file.
@@ -127,13 +141,14 @@ func AppGenesisFromFile(genFile string) (*AppGenesis, error) {
 		return nil, err
 	}
 
-	appGenesis, err := AppGenesisFromReader(bufio.NewReader(file))
+	appGenesis, err := AppGenesisFromReader(file)
+	ferr := file.Close()
 	if err != nil {
 		return nil, fmt.Errorf("failed to read genesis from file %s: %w", genFile, err)
 	}
 
-	if err := file.Close(); err != nil {
-		return nil, err
+	if ferr != nil {
+		return nil, ferr
 	}
 
 	return appGenesis, nil