diff --git a/CHANGELOG.md b/CHANGELOG.md
index 5451c22d9f3..ed3cc7a78df 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -45,6 +45,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 ### State Machine Breaking
 
 ### Improvements
+* [\#8303](https://github.com/cosmos/ibc-go/pull/8303) Prefix-based routing in IBCv2 Router
 
 ### Bug Fixes
 
diff --git a/docs/docs/01-ibc/02-integration.md b/docs/docs/01-ibc/02-integration.md
index dcf2e52efad..104909aad60 100644
--- a/docs/docs/01-ibc/02-integration.md
+++ b/docs/docs/01-ibc/02-integration.md
@@ -184,7 +184,7 @@ func NewApp(...args) *App {
 
 #### IBC v2 Router
 
-With IBC v2, there is a new [router](https://github.com/cosmos/ibc-go/blob/main/modules/core/api/router.go) that needs to register the routes for a portID to a given IBCModule. 
+With IBC v2, there is a new [router](https://github.com/cosmos/ibc-go/blob/main/modules/core/api/router.go) that needs to register the routes for a portID to a given IBCModule. It routes IBCv2 messages based on the prefixes of port IDs. For example, if a route named `someModule` exists, messages addressed to port IDs like `someModuleRandomPort1`, `someModuleRandomPort2`, etc., will be passed to the corresponding module.
 
 ```go
 // IBC v2 router creation
diff --git a/modules/core/api/router.go b/modules/core/api/router.go
index 753bfc7f9c0..43b434d8cc5 100644
--- a/modules/core/api/router.go
+++ b/modules/core/api/router.go
@@ -3,13 +3,14 @@ package api
 import (
 	"errors"
 	"fmt"
+	"strings"
 
 	sdk "github.com/cosmos/cosmos-sdk/types"
 )
 
 // Router contains all the module-defined callbacks required by IBC Protocol V2.
 type Router struct {
-	// routes is a map from portID to IBCModule
+	// routes is a map associating port prefixes to the IBCModules implementations.
 	routes map[string]IBCModule
 }
 
@@ -20,32 +21,57 @@ func NewRouter() *Router {
 	}
 }
 
-// AddRoute registers a route for a given portID to a given IBCModule.
-func (rtr *Router) AddRoute(portID string, cbs IBCModule) *Router {
-	if !sdk.IsAlphaNumeric(portID) {
+// AddRoute registers a route for a given port ID prefix to a given IBCModule.
+// There can be up to one prefix registered for a given port ID in the router.
+//
+// Panics:
+//   - if a prefix of `portIDprefix` is already a registered route.
+//   - if `portIDprefix` is a prefix of already registered route.
+func (rtr *Router) AddRoute(portIDprefix string, cbs IBCModule) *Router {
+	if !sdk.IsAlphaNumeric(portIDprefix) {
 		panic(errors.New("route expressions can only contain alphanumeric characters"))
 	}
 
-	if rtr.HasRoute(portID) {
-		panic(fmt.Errorf("route %s has already been registered", portID))
+	for prefix := range rtr.routes {
+		// Prevent two scenarios:
+		//  * Adding a string that prefix is already registered e.g.
+		//    add prefix "portPrefix" and try to add "portPrefixSomeSuffix".
+		//  * Adding a string that is a prefix of already registered route e.g.
+		//    add prefix "portPrefix" and try to add "port".
+		if strings.HasPrefix(portIDprefix, prefix) {
+			panic(fmt.Errorf("route %s has already been covered by registered prefix: %s", portIDprefix, prefix))
+		}
+		if strings.HasPrefix(prefix, portIDprefix) {
+			panic(fmt.Errorf("route %s is a prefix for already registered route: %s", portIDprefix, prefix))
+		}
 	}
 
-	rtr.routes[portID] = cbs
+	rtr.routes[portIDprefix] = cbs
 
 	return rtr
 }
 
 // Route returns the IBCModule for a given portID.
 func (rtr *Router) Route(portID string) IBCModule {
-	route, ok := rtr.routes[portID]
+	_, route, ok := rtr.getRoute(portID)
 	if !ok {
 		panic(fmt.Sprintf("no route for %s", portID))
 	}
 	return route
 }
 
-// HasRoute returns true if the Router has a module registered for the portID or false otherwise.
-func (rtr *Router) HasRoute(portID string) bool {
-	_, ok := rtr.routes[portID]
-	return ok
+// HasRoute returns true along with a prefix if the router has a module
+// registered for the given portID or its prefix. Returns false otherwise.
+func (rtr *Router) HasRoute(portID string) (bool, string) {
+	prefix, _, ok := rtr.getRoute(portID)
+	return ok, prefix
+}
+
+func (rtr *Router) getRoute(portID string) (string, IBCModule, bool) {
+	for prefix, module := range rtr.routes {
+		if strings.HasPrefix(portID, prefix) {
+			return prefix, module, true
+		}
+	}
+	return "", nil, false
 }
diff --git a/modules/core/api/router_test.go b/modules/core/api/router_test.go
index 9e0e8be5921..5d11a8d78be 100644
--- a/modules/core/api/router_test.go
+++ b/modules/core/api/router_test.go
@@ -35,13 +35,29 @@ func (suite *APITestSuite) TestRouter() {
 				suite.Require().True(router.HasRoute("port03"))
 			},
 		},
+		{
+			name: "success: prefix based routing works",
+			malleate: func() {
+				router.AddRoute("somemodule", &mockv2.IBCModule{})
+				router.AddRoute("port01", &mockv2.IBCModule{})
+			},
+			assertionFn: func() {
+				suite.Require().True(router.HasRoute("somemodule"))
+				suite.Require().True(router.HasRoute("somemoduleport01"))
+				ok, prefix := router.HasRoute("somemoduleport01")
+				suite.Require().Equal(true, ok)
+				suite.Require().Equal("somemodule", prefix)
+				suite.Require().NotNil(router.Route("somemoduleport01"))
+				suite.Require().True(router.HasRoute("port01"))
+			},
+		},
 		{
 			name: "failure: panics on duplicate module",
 			malleate: func() {
 				router.AddRoute("port01", &mockv2.IBCModule{})
 			},
 			assertionFn: func() {
-				suite.Require().PanicsWithError("route port01 has already been registered", func() {
+				suite.Require().PanicsWithError("route port01 has already been covered by registered prefix: port01", func() {
 					router.AddRoute("port01", &mockv2.IBCModule{})
 				})
 			},
@@ -55,6 +71,26 @@ func (suite *APITestSuite) TestRouter() {
 				})
 			},
 		},
+		{
+			name:     "failure: panics conflicting routes registered",
+			malleate: func() {},
+			assertionFn: func() {
+				suite.Require().PanicsWithError("route someModuleWithSpecificPath has already been covered by registered prefix: someModule", func() {
+					router.AddRoute("someModule", &mockv2.IBCModule{})
+					router.AddRoute("someModuleWithSpecificPath", &mockv2.IBCModule{})
+				})
+			},
+		},
+		{
+			name:     "failure: panics conflicting routes registered, when shorter prefix is added",
+			malleate: func() {},
+			assertionFn: func() {
+				suite.Require().PanicsWithError("route someLonger is a prefix for already registered route: someLongerPrefixModule", func() {
+					router.AddRoute("someLongerPrefixModule", &mockv2.IBCModule{})
+					router.AddRoute("someLonger", &mockv2.IBCModule{})
+				})
+			},
+		},
 	}
 	for _, tc := range testCases {
 		suite.Run(tc.name, func() {