diff --git a/CHANGELOG.md b/CHANGELOG.md
index 2bcbedca0..4f1fc9c7b 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -98,6 +98,7 @@ when method receivers are offline/multisig keys.
 types (eg. keys) to the `auth` module internal amino codec.
 * (rest) [\#5906](https://github.com/cosmos/cosmos-sdk/pull/5906) Fix an issue that make some REST calls panic when sending
 invalid or incomplete requests.
+* (x/genutil) [\#5938](https://github.com/cosmos/cosmos-sdk/pull/5938) Fix `InitializeNodeValidatorFiles` error handling.
 
 ### State Machine Breaking
 
diff --git a/x/genutil/utils.go b/x/genutil/utils.go
index 7d1a761ef..3d8aa8f2e 100644
--- a/x/genutil/utils.go
+++ b/x/genutil/utils.go
@@ -52,7 +52,7 @@ func InitializeNodeValidatorFiles(config *cfg.Config,
 
 	nodeKey, err := p2p.LoadOrGenNodeKey(config.NodeKeyFile())
 	if err != nil {
-		return nodeID, valPubKey, err
+		return "", nil, err
 	}
 
 	nodeID = string(nodeKey.ID())
@@ -60,12 +60,12 @@ func InitializeNodeValidatorFiles(config *cfg.Config,
 
 	pvKeyFile := config.PrivValidatorKeyFile()
 	if err := tmos.EnsureDir(filepath.Dir(pvKeyFile), 0777); err != nil {
-		return nodeID, valPubKey, nil
+		return "", nil, err
 	}
 
 	pvStateFile := config.PrivValidatorStateFile()
 	if err := tmos.EnsureDir(filepath.Dir(pvStateFile), 0777); err != nil {
-		return nodeID, valPubKey, nil
+		return "", nil, err
 	}
 
 	valPubKey = privval.LoadOrGenFilePV(pvKeyFile, pvStateFile).GetPubKey()