diff --git a/CHANGELOG.md b/CHANGELOG.md
index a416c5ca8a4d..08d1c6cde8a3 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -49,6 +49,10 @@ Ref: https://keepachangelog.com/en/1.0.0/
 * (x/distribution) [#15462](https://github.com/cosmos/cosmos-sdk/pull/15462) Add delegator address to the event for withdrawing delegation rewards.
 * [#14609](https://github.com/cosmos/cosmos-sdk/pull/14609) Add `RetryForBlocks` method to use in tests that require waiting for a transaction to be included in a block.
 
+### Bug Fixes
+
+* (cli) [#15123](https://github.com/cosmos/cosmos-sdk/pull/15123) Fix the CLI `offline` mode behavior to be really offline. The API of `clienttx.NewFactoryCLI` is updated to return an error. 
+
 ### Deprecated
 
 * (x/genutil) [#15316](https://github.com/cosmos/cosmos-sdk/pull/15316) Remove requirement on node & IP being included in a gentx.
diff --git a/client/tx/factory.go b/client/tx/factory.go
index 3d174c0e8946..e9482bc854ad 100644
--- a/client/tx/factory.go
+++ b/client/tx/factory.go
@@ -47,7 +47,7 @@ type Factory struct {
 }
 
 // NewFactoryCLI creates a new Factory.
-func NewFactoryCLI(clientCtx client.Context, flagSet *pflag.FlagSet) Factory {
+func NewFactoryCLI(clientCtx client.Context, flagSet *pflag.FlagSet) (Factory, error) {
 	signModeStr := clientCtx.SignModeStr
 
 	signMode := signing.SignMode_SIGN_MODE_UNSPECIFIED
@@ -62,8 +62,16 @@ func NewFactoryCLI(clientCtx client.Context, flagSet *pflag.FlagSet) Factory {
 		signMode = signing.SignMode_SIGN_MODE_EIP_191
 	}
 
-	accNum, _ := flagSet.GetUint64(flags.FlagAccountNumber)
-	accSeq, _ := flagSet.GetUint64(flags.FlagSequence)
+	var accNum, accSeq uint64
+	if clientCtx.Offline {
+		if flagSet.Changed(flags.FlagAccountNumber) && flagSet.Changed(flags.FlagSequence) {
+			accNum, _ = flagSet.GetUint64(flags.FlagAccountNumber)
+			accSeq, _ = flagSet.GetUint64(flags.FlagSequence)
+		} else {
+			return Factory{}, errors.New("account-number and sequence must be set in offline mode")
+		}
+	}
+
 	gasAdj, _ := flagSet.GetFloat64(flags.FlagGasAdjustment)
 	memo, _ := flagSet.GetString(flags.FlagNote)
 	timeoutHeight, _ := flagSet.GetUint64(flags.FlagTimeoutHeight)
@@ -103,7 +111,7 @@ func NewFactoryCLI(clientCtx client.Context, flagSet *pflag.FlagSet) Factory {
 
 	f = f.WithPreprocessTxHook(clientCtx.PreprocessTxHook)
 
-	return f
+	return f, nil
 }
 
 func (f Factory) AccountNumber() uint64                     { return f.accountNumber }
@@ -433,19 +441,14 @@ func (f Factory) Prepare(clientCtx client.Context) (Factory, error) {
 	}
 
 	initNum, initSeq := fc.accountNumber, fc.sequence
-	if initNum == 0 || initSeq == 0 {
+	if initNum == 0 && initSeq == 0 {
 		num, seq, err := fc.accountRetriever.GetAccountNumberSequence(clientCtx, from)
 		if err != nil {
 			return fc, err
 		}
 
-		if initNum == 0 {
-			fc = fc.WithAccountNumber(num)
-		}
-
-		if initSeq == 0 {
-			fc = fc.WithSequence(seq)
-		}
+		fc = fc.WithAccountNumber(num)
+		fc = fc.WithSequence(seq)
 	}
 
 	return fc, nil
diff --git a/client/tx/tx.go b/client/tx/tx.go
index 2463d1d4cfa5..059ce3a1b9a3 100644
--- a/client/tx/tx.go
+++ b/client/tx/tx.go
@@ -24,7 +24,10 @@ import (
 // GenerateOrBroadcastTxCLI will either generate and print and unsigned transaction
 // or sign it and broadcast it returning an error upon failure.
 func GenerateOrBroadcastTxCLI(clientCtx client.Context, flagSet *pflag.FlagSet, msgs ...sdk.Msg) error {
-	txf := NewFactoryCLI(clientCtx, flagSet)
+	txf, err := NewFactoryCLI(clientCtx, flagSet)
+	if err != nil {
+		return err
+	}
 
 	return GenerateOrBroadcastTxWithFactory(clientCtx, txf, msgs...)
 }
@@ -69,6 +72,10 @@ func BroadcastTx(clientCtx client.Context, txf Factory, msgs ...sdk.Msg) error {
 	}
 
 	if txf.SimulateAndExecute() || clientCtx.Simulate {
+		if clientCtx.Offline {
+			return errors.New("cannot estimate gas in offline mode")
+		}
+
 		_, adjusted, err := CalculateGas(clientCtx, txf, msgs...)
 		if err != nil {
 			return err
diff --git a/simapp/go.mod b/simapp/go.mod
index d8db9d2df471..17264ea74ac5 100644
--- a/simapp/go.mod
+++ b/simapp/go.mod
@@ -14,6 +14,7 @@ require (
 	github.com/golang/mock v1.6.0
 	github.com/spf13/cast v1.5.0
 	github.com/spf13/cobra v1.6.1
+	github.com/spf13/pflag v1.0.5
 	github.com/spf13/viper v1.14.0
 	github.com/stretchr/testify v1.8.2
 	google.golang.org/protobuf v1.29.1
@@ -131,7 +132,6 @@ require (
 	github.com/sasha-s/go-deadlock v0.3.1 // indirect
 	github.com/spf13/afero v1.9.2 // indirect
 	github.com/spf13/jwalterweatherman v1.1.0 // indirect
-	github.com/spf13/pflag v1.0.5 // indirect
 	github.com/subosito/gotenv v1.4.1 // indirect
 	github.com/syndtr/goleveldb v1.0.1-0.20210819022825-2ae1ddf74ef7 // indirect
 	github.com/tecbot/gorocksdb v0.0.0-20191217155057-f0fad39f321c // indirect
diff --git a/tests/e2e/auth/suite.go b/tests/e2e/auth/suite.go
index 77d85795e9cd..e103f46052ae 100644
--- a/tests/e2e/auth/suite.go
+++ b/tests/e2e/auth/suite.go
@@ -1213,9 +1213,20 @@ func (s *E2ETestSuite) TestCLIMultisign() {
 	sign2File := testutil.WriteToNewTempFile(s.T(), account2Signature.String())
 	defer sign2File.Close()
 
-	// Does not work in offline mode.
-	_, err = authclitestutil.TxMultiSignExec(val1.ClientCtx, multisigRecord.Name, multiGeneratedTxFile.Name(), "--offline", sign1File.Name(), sign2File.Name())
-	s.Require().EqualError(err, fmt.Sprintf("couldn't verify signature for address %s", addr1))
+	// Work in offline mode.
+	multisigAccNum, multisigSeq, err := val1.ClientCtx.AccountRetriever.GetAccountNumberSequence(val1.ClientCtx, addr)
+	s.Require().NoError(err)
+	_, err = authclitestutil.TxMultiSignExec(
+		val1.ClientCtx,
+		multisigRecord.Name,
+		multiGeneratedTxFile.Name(),
+		fmt.Sprintf("--%s", flags.FlagOffline),
+		fmt.Sprintf("--%s=%d", flags.FlagAccountNumber, multisigAccNum),
+		fmt.Sprintf("--%s=%d", flags.FlagSequence, multisigSeq),
+		sign1File.Name(),
+		sign2File.Name(),
+	)
+	s.Require().NoError(err)
 
 	val1.ClientCtx.Offline = false
 	multiSigWith2Signatures, err := authclitestutil.TxMultiSignExec(val1.ClientCtx, multisigRecord.Name, multiGeneratedTxFile.Name(), sign1File.Name(), sign2File.Name())
diff --git a/tests/e2e/tx/service_test.go b/tests/e2e/tx/service_test.go
index 6537ef243733..93f93be9dc34 100644
--- a/tests/e2e/tx/service_test.go
+++ b/tests/e2e/tx/service_test.go
@@ -93,6 +93,8 @@ func (s *E2ETestSuite) SetupSuite() {
 			sdk.NewCoin(s.cfg.BondDenom, sdk.NewInt(1)),
 		),
 		fmt.Sprintf("--%s=true", flags.FlagSkipConfirmation),
+		fmt.Sprintf("--%s", flags.FlagOffline),
+		fmt.Sprintf("--%s=0", flags.FlagAccountNumber),
 		fmt.Sprintf("--%s=2", flags.FlagSequence),
 		fmt.Sprintf("--%s=%s", flags.FlagBroadcastMode, flags.BroadcastSync),
 		fmt.Sprintf("--%s=%s", flags.FlagFees, sdk.NewCoins(sdk.NewCoin(s.cfg.BondDenom, sdk.NewInt(10))).String()),
diff --git a/x/auth/client/cli/tips.go b/x/auth/client/cli/tips.go
index fcf5a2cb28c8..dd6ec56a980d 100644
--- a/x/auth/client/cli/tips.go
+++ b/x/auth/client/cli/tips.go
@@ -35,7 +35,10 @@ func GetAuxToFeeCommand() *cobra.Command {
 				return fmt.Errorf("expected chain-id %s, got %s in aux signer data", clientCtx.ChainID, auxSignerData.SignDoc.ChainId)
 			}
 
-			f := clienttx.NewFactoryCLI(clientCtx, cmd.Flags())
+			f, err := clienttx.NewFactoryCLI(clientCtx, cmd.Flags())
+			if err != nil {
+				return err
+			}
 
 			txBuilder := clientCtx.TxConfig.NewTxBuilder()
 			err = txBuilder.AddAuxSignerData(auxSignerData)
diff --git a/x/auth/client/cli/tx_multisign.go b/x/auth/client/cli/tx_multisign.go
index ea91580a7f47..b1fd2525c3cf 100644
--- a/x/auth/client/cli/tx_multisign.go
+++ b/x/auth/client/cli/tx_multisign.go
@@ -80,7 +80,10 @@ func makeMultiSignCmd() func(cmd *cobra.Command, args []string) (err error) {
 			return
 		}
 
-		txFactory := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+		txFactory, err := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+		if err != nil {
+			return err
+		}
 		if txFactory.SignMode() == signingtypes.SignMode_SIGN_MODE_UNSPECIFIED {
 			txFactory = txFactory.WithSignMode(signingtypes.SignMode_SIGN_MODE_LEGACY_AMINO_JSON)
 		}
@@ -254,7 +257,10 @@ func makeBatchMultisignCmd() func(cmd *cobra.Command, args []string) error {
 		}
 
 		txCfg := clientCtx.TxConfig
-		txFactory := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+		txFactory, err := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+		if err != nil {
+			return err
+		}
 		if txFactory.SignMode() == signingtypes.SignMode_SIGN_MODE_UNSPECIFIED {
 			txFactory = txFactory.WithSignMode(signingtypes.SignMode_SIGN_MODE_LEGACY_AMINO_JSON)
 		}
diff --git a/x/auth/client/cli/tx_sign.go b/x/auth/client/cli/tx_sign.go
index 30132ec14fd3..9b37937dc634 100644
--- a/x/auth/client/cli/tx_sign.go
+++ b/x/auth/client/cli/tx_sign.go
@@ -71,7 +71,10 @@ func makeSignBatchCmd() func(cmd *cobra.Command, args []string) error {
 		if err != nil {
 			return err
 		}
-		txFactory := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+		txFactory, err := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+		if err != nil {
+			return err
+		}
 		txCfg := clientCtx.TxConfig
 		printSignatureOnly, _ := cmd.Flags().GetBool(flagSigOnly)
 
diff --git a/x/auth/client/cli/validate_sigs.go b/x/auth/client/cli/validate_sigs.go
index 0ad65c71e35a..4e03b8200707 100644
--- a/x/auth/client/cli/validate_sigs.go
+++ b/x/auth/client/cli/validate_sigs.go
@@ -131,7 +131,10 @@ func readTxAndInitContexts(clientCtx client.Context, cmd *cobra.Command, filenam
 		return clientCtx, tx.Factory{}, nil, err
 	}
 
-	txFactory := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+	txFactory, err := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+	if err != nil {
+		return clientCtx, tx.Factory{}, nil, err
+	}
 
 	return clientCtx, txFactory, stdTx, nil
 }
diff --git a/x/genutil/client/cli/gentx.go b/x/genutil/client/cli/gentx.go
index 73c195bf745a..4d5b31aaa13d 100644
--- a/x/genutil/client/cli/gentx.go
+++ b/x/genutil/client/cli/gentx.go
@@ -128,7 +128,10 @@ $ %s gentx my-key-name 1000000stake --home=/path/to/home/dir --keyring-backend=o
 				return errors.Wrap(err, "failed to validate account in genesis")
 			}
 
-			txFactory := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+			txFactory, err := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+			if err != nil {
+				return err
+			}
 
 			pub, err := key.GetAddress()
 			if err != nil {
diff --git a/x/staking/client/cli/tx.go b/x/staking/client/cli/tx.go
index b70b0b120700..d3592e91fc5e 100644
--- a/x/staking/client/cli/tx.go
+++ b/x/staking/client/cli/tx.go
@@ -64,8 +64,11 @@ func NewCreateValidatorCmd() *cobra.Command {
 				return err
 			}
 
-			txf := tx.NewFactoryCLI(clientCtx, cmd.Flags()).
-				WithTxConfig(clientCtx.TxConfig).WithAccountRetriever(clientCtx.AccountRetriever)
+			txf, err := tx.NewFactoryCLI(clientCtx, cmd.Flags())
+			if err != nil {
+				return err
+			}
+
 			txf, msg, err := newBuildCreateValidatorMsg(clientCtx, txf, cmd.Flags())
 			if err != nil {
 				return err