diff --git a/CHANGELOG.md b/CHANGELOG.md
index 025ebb8dfe3a..b3db62eb8176 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -70,6 +70,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 * (x/authz) [#24638](https://github.com/cosmos/cosmos-sdk/pull/24638) Fixed a minor bug where the grant key was cast as a string and dumped directly into the error message leading to an error string possibly containing invalid UTF-8.
 * (client, client/rpc, x/auth/tx) [#24551](https://github.com/cosmos/cosmos-sdk/pull/24551) Handle cancellation properly when supplying context to client methods.
 * (x/epochs) [#24770](https://github.com/cosmos/cosmos-sdk/pull/24770) Fix register of epoch hooks in `InvokeSetHooks`.
+* (baseapp) [#24898](https://github.com/cosmos/cosmos-sdk/pull/24898) Don't take mempool error as state machine execution failure.
 * (x/epochs) [#25087](https://github.com/cosmos/cosmos-sdk/pull/25087) Remove redundant error check in BeginBlocker.
 * [GHSA-p22h-3m2v-cmgh](https://github.com/cosmos/cosmos-sdk/security/advisories/GHSA-p22h-3m2v-cmgh) Fix x/distribution can halt when historical rewards overflow.
 * (x/staking) [#25258](https://github.com/cosmos/cosmos-sdk/pull/25258) Add delegator address to redelegate event.
diff --git a/baseapp/baseapp.go b/baseapp/baseapp.go
index 91ef3e1c8f9d..6a2388c5dde9 100644
--- a/baseapp/baseapp.go
+++ b/baseapp/baseapp.go
@@ -880,8 +880,7 @@ func (app *BaseApp) runTx(mode sdk.ExecMode, txBytes []byte, tx sdk.Tx) (gInfo s
 	case execModeFinalize:
 		err = app.mempool.Remove(tx)
 		if err != nil && !errors.Is(err, mempool.ErrTxNotFound) {
-			return gInfo, nil, anteEvents,
-				fmt.Errorf("failed to remove tx from mempool: %w", err)
+			app.logger.Error("failed to remove tx from mempool", "err", err)
 		}
 	}