diff --git a/Cargo.lock b/Cargo.lock
index f1838a09b..0723c6d08 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -3294,6 +3294,7 @@ dependencies = [
 name = "gateway"
 version = "1.1.1"
 dependencies = [
+ "assert_ok",
  "axelar-wasm-std",
  "client",
  "cosmwasm-schema",
@@ -3307,6 +3308,7 @@ dependencies = [
  "rand",
  "report",
  "router-api",
+ "semver 1.0.23",
  "serde",
  "serde_json",
  "thiserror",
diff --git a/contracts/gateway/Cargo.toml b/contracts/gateway/Cargo.toml
index 204d90e39..7115ac6e5 100644
--- a/contracts/gateway/Cargo.toml
+++ b/contracts/gateway/Cargo.toml
@@ -45,12 +45,14 @@ gateway-api = { workspace = true }
 itertools = { workspace = true }
 report = { workspace = true }
 router-api = { workspace = true }
+semver = { workspace = true }
 serde = { workspace = true }
 serde_json = { workspace = true }
 thiserror = { workspace = true }
 voting-verifier = { workspace = true, features = ["library"] }
 
 [dev-dependencies]
+assert_ok = { workspace = true }
 cw-multi-test = "0.15.1"
 rand = { workspace = true }
 
diff --git a/contracts/gateway/src/contract.rs b/contracts/gateway/src/contract.rs
index 80d12bfd5..b0c493abc 100644
--- a/contracts/gateway/src/contract.rs
+++ b/contracts/gateway/src/contract.rs
@@ -3,9 +3,11 @@ use std::fmt::Debug;
 use axelar_wasm_std::{address, FnExt};
 #[cfg(not(feature = "library"))]
 use cosmwasm_std::entry_point;
-use cosmwasm_std::{Binary, Deps, DepsMut, Empty, Env, MessageInfo, Response};
-use error_stack::ResultExt;
+use cosmwasm_std::{ensure, Binary, Deps, DepsMut, Empty, Env, MessageInfo, Response};
+use cw2::VersionError;
+use error_stack::{report, ResultExt};
 use router_api::client::Router;
+use semver::Version;
 
 use crate::msg::{ExecuteMsg, InstantiateMsg, QueryMsg};
 use crate::state;
@@ -17,7 +19,6 @@ mod query;
 
 const CONTRACT_NAME: &str = env!("CARGO_PKG_NAME");
 const CONTRACT_VERSION: &str = env!("CARGO_PKG_VERSION");
-const BASE_VERSION: &str = "1.0.0";
 
 #[derive(thiserror::Error, Debug)]
 pub enum Error {
@@ -45,7 +46,15 @@ pub fn migrate(
     _env: Env,
     _msg: Empty,
 ) -> Result<Response, axelar_wasm_std::error::ContractError> {
-    cw2::assert_contract_version(deps.storage, CONTRACT_NAME, BASE_VERSION)?;
+    let old_version = Version::parse(&cw2::get_contract_version(deps.storage)?.version)?;
+    ensure!(
+        old_version.major == 1 && old_version.minor == 1,
+        report!(VersionError::WrongVersion {
+            expected: "1.1.x".into(),
+            found: old_version.to_string()
+        })
+    );
+
     cw2::set_contract_version(deps.storage, CONTRACT_NAME, CONTRACT_VERSION)?;
 
     Ok(Response::default())
@@ -110,3 +119,37 @@ pub fn query(
     }?
     .then(Ok)
 }
+
+#[cfg(test)]
+mod test {
+    use assert_ok::assert_ok;
+    use cosmwasm_std::testing::{mock_dependencies, mock_env, mock_info};
+    use cosmwasm_std::{Addr, Empty};
+
+    use crate::contract::{instantiate, migrate, CONTRACT_NAME, CONTRACT_VERSION};
+    use crate::msg::InstantiateMsg;
+
+    #[test]
+    fn migrate_sets_contract_version() {
+        let mut deps = mock_dependencies();
+        let env = mock_env();
+        let info = mock_info("sender", &[]);
+        let instantiate_msg = InstantiateMsg {
+            verifier_address: Addr::unchecked("verifier").to_string(),
+            router_address: Addr::unchecked("router").to_string(),
+        };
+
+        assert_ok!(instantiate(
+            deps.as_mut(),
+            env.clone(),
+            info.clone(),
+            instantiate_msg
+        ));
+
+        migrate(deps.as_mut(), mock_env(), Empty {}).unwrap();
+
+        let contract_version = cw2::get_contract_version(deps.as_mut().storage).unwrap();
+        assert_eq!(contract_version.contract, CONTRACT_NAME);
+        assert_eq!(contract_version.version, CONTRACT_VERSION);
+    }
+}