diff --git a/CHANGELOG.md b/CHANGELOG.md
index 6173c2dbdc2..8ce8ac1f5ea 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -52,6 +52,9 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 ### Bug Fix
 
 * [#3715](https://github.com/osmosis-labs/osmosis/pull/3715) Fix x/gamm (golang API) CalculateSpotPrice, balancer.SpotPrice and Stableswap.SpotPrice base and quote asset.
+* [#3746](https://github.com/osmosis-labs/osmosis/pull/3746) Make ApplyFuncIfNoErr logic preserve panics for OutOfGas behavior.
+
+
 
 ## v14
 
@@ -113,7 +116,6 @@ Additionally, the swagger files for v13 have been updated to improve compatibili
 * [#3711](https://github.com/osmosis-labs/osmosis/pull/3711) Use Dec instead of Int for additive `ErrTolerace` in `osmoutils`.
 * [3647](https://github.com/osmosis-labs/osmosis/pull/3647), [3942](https://github.com/osmosis-labs/osmosis/pull/3942) (CLI) re-order the command line arguments for `osmosisd tx gamm join-swap-share-amount-out`
 
-
 ## v13.0.0
 
 This release includes stableswap, and expands the IBC safety & composability functionality of Osmosis. The primary features are:
diff --git a/osmoutils/cache_ctx.go b/osmoutils/cache_ctx.go
index 6e398cdbc4d..0d4cbe6802b 100644
--- a/osmoutils/cache_ctx.go
+++ b/osmoutils/cache_ctx.go
@@ -14,12 +14,20 @@ import (
 // drop the state machine change and log the error.
 // If there is no error, proceeds as normal (but with some slowdown due to SDK store weirdness)
 // Try to avoid usage of iterators in f.
+//
+// If its an out of gas panic, this function will also panic like in normal tx execution flow.
+// This is still safe for beginblock / endblock code though, as they do not have out of gas panics.
 func ApplyFuncIfNoError(ctx sdk.Context, f func(ctx sdk.Context) error) (err error) {
 	// Add a panic safeguard
 	defer func() {
 		if recoveryError := recover(); recoveryError != nil {
-			PrintPanicRecoveryError(ctx, recoveryError)
-			err = errors.New("panic occurred during execution")
+			if isErr, _ := IsOutOfGasError(recoveryError); isErr {
+				// We panic with the same error, to replicate the normal tx execution flow.
+				panic(recoveryError)
+			} else {
+				PrintPanicRecoveryError(ctx, recoveryError)
+				err = errors.New("panic occurred during execution")
+			}
 		}
 	}()
 	// makes a new cache context, which all state changes get wrapped inside of.
@@ -35,6 +43,19 @@ func ApplyFuncIfNoError(ctx sdk.Context, f func(ctx sdk.Context) error) (err err
 	return err
 }
 
+// Frustratingly, this has to return the error descriptor, not an actual error itself
+// because the SDK errors here are not actually errors. (They don't implement error interface)
+func IsOutOfGasError(err any) (bool, string) {
+	switch e := err.(type) {
+	case types.ErrorOutOfGas:
+		return true, e.Descriptor
+	case types.ErrorGasOverflow:
+		return true, e.Descriptor
+	default:
+		return false, ""
+	}
+}
+
 // PrintPanicRecoveryError error logs the recoveryError, along with the stacktrace, if it can be parsed.
 // If not emits them to stdout.
 func PrintPanicRecoveryError(ctx sdk.Context, recoveryError interface{}) {
diff --git a/osmoutils/cache_ctx_test.go b/osmoutils/cache_ctx_test.go
new file mode 100644
index 00000000000..a8058ea0d71
--- /dev/null
+++ b/osmoutils/cache_ctx_test.go
@@ -0,0 +1,59 @@
+package osmoutils_test
+
+import (
+	"github.com/cosmos/cosmos-sdk/store/types"
+	sdk "github.com/cosmos/cosmos-sdk/types"
+
+	"github.com/osmosis-labs/osmosis/v13/osmoutils"
+)
+
+var expectedOutOfGasError = types.ErrorOutOfGas{Descriptor: "my func"}
+
+func consumeGas(ctx sdk.Context, gas uint64, numTimes int) error {
+	for i := 0; i < numTimes; i++ {
+		ctx.GasMeter().ConsumeGas(gas, "my func")
+	}
+	return nil
+}
+
+func (s *TestSuite) TestCacheCtxConsumeGas() {
+	// every test case adds 1k gas 10 times
+	testcases := map[string]struct {
+		gasLimit       uint64
+		gasUsedPreCtx  uint64
+		gasUsedPostCtx uint64
+		expectPanic    bool
+	}{
+		"no gas limit hit": {
+			gasLimit:       15_000,
+			gasUsedPreCtx:  111,
+			gasUsedPostCtx: 111 + 10_000,
+			expectPanic:    false,
+		},
+		"gas limit hit": {
+			gasLimit:       10_000,
+			gasUsedPreCtx:  111,
+			gasUsedPostCtx: 111 + 10_000,
+			expectPanic:    true,
+		},
+	}
+	for name, tc := range testcases {
+		s.Run(name, func() {
+			ctx := s.Ctx.WithGasMeter(sdk.NewGasMeter(tc.gasLimit))
+			ctx.GasMeter().ConsumeGas(tc.gasUsedPreCtx, "pre ctx")
+			var err error
+			f := func() {
+				osmoutils.ApplyFuncIfNoError(ctx, func(c sdk.Context) error {
+					return consumeGas(c, 1000, 10)
+				})
+			}
+			if tc.expectPanic {
+				s.PanicsWithValue(expectedOutOfGasError, f)
+			} else {
+				f()
+				s.Require().NoError(err)
+			}
+			s.Equal(tc.gasUsedPostCtx, ctx.GasMeter().GasConsumed())
+		})
+	}
+}