diff --git a/crates/astria-core/src/generated/astria.sequencer.v1alpha1.rs b/crates/astria-core/src/generated/astria.sequencer.v1alpha1.rs
index 83bea3c14c..43f91c66ee 100644
--- a/crates/astria-core/src/generated/astria.sequencer.v1alpha1.rs
+++ b/crates/astria-core/src/generated/astria.sequencer.v1alpha1.rs
@@ -365,6 +365,9 @@ pub struct Ics20Withdrawal {
     /// the source channel used for the withdrawal.
     #[prost(string, tag = "7")]
     pub source_channel: ::prost::alloc::string::String,
+    /// the asset used to pay the transaction fee
+    #[prost(bytes = "vec", tag = "8")]
+    pub fee_asset_id: ::prost::alloc::vec::Vec<u8>,
 }
 #[allow(clippy::derive_partial_eq_without_eq)]
 #[derive(Clone, PartialEq, ::prost::Message)]
diff --git a/crates/astria-core/src/sequencer/v1alpha1/transaction/action.rs b/crates/astria-core/src/sequencer/v1alpha1/transaction/action.rs
index efecbfc217..7b29df0ed1 100644
--- a/crates/astria-core/src/sequencer/v1alpha1/transaction/action.rs
+++ b/crates/astria-core/src/sequencer/v1alpha1/transaction/action.rs
@@ -564,6 +564,8 @@ pub struct Ics20Withdrawal {
     timeout_time: u64,
     // the source channel used for the withdrawal.
     source_channel: ChannelId,
+    // the asset to use for fee payment.
+    fee_asset_id: asset::Id,
 }
 
 impl Ics20Withdrawal {
@@ -602,6 +604,11 @@ impl Ics20Withdrawal {
         &self.source_channel
     }
 
+    #[must_use]
+    pub fn fee_asset_id(&self) -> &asset::Id {
+        &self.fee_asset_id
+    }
+
     #[must_use]
     pub fn to_fungible_token_packet_data(&self) -> FungibleTokenPacketData {
         FungibleTokenPacketData {
@@ -622,6 +629,7 @@ impl Ics20Withdrawal {
             timeout_height: Some(self.timeout_height.into_raw()),
             timeout_time: self.timeout_time,
             source_channel: self.source_channel.to_string(),
+            fee_asset_id: self.fee_asset_id.as_bytes().to_vec(),
         }
     }
 
@@ -635,6 +643,7 @@ impl Ics20Withdrawal {
             timeout_height: Some(self.timeout_height.into_raw()),
             timeout_time: self.timeout_time,
             source_channel: self.source_channel.to_string(),
+            fee_asset_id: self.fee_asset_id.as_bytes().to_vec(),
         }
     }
 
@@ -667,6 +676,8 @@ impl Ics20Withdrawal {
                 .source_channel
                 .parse()
                 .map_err(Ics20WithdrawalError::invalid_source_channel)?,
+            fee_asset_id: asset::Id::try_from_slice(&proto.fee_asset_id)
+                .map_err(Ics20WithdrawalError::invalid_fee_asset_id)?,
         })
     }
 }
@@ -724,6 +735,11 @@ impl Ics20WithdrawalError {
     fn invalid_source_channel(err: IdentifierError) -> Self {
         Self(Ics20WithdrawalErrorKind::InvalidSourceChannel(err))
     }
+
+    #[must_use]
+    fn invalid_fee_asset_id(err: asset::IncorrectAssetIdLength) -> Self {
+        Self(Ics20WithdrawalErrorKind::InvalidFeeAssetId(err))
+    }
 }
 
 #[derive(Debug, thiserror::Error)]
@@ -736,4 +752,6 @@ enum Ics20WithdrawalErrorKind {
     MissingTimeoutHeight,
     #[error("`source_channel` field was invalid")]
     InvalidSourceChannel(IdentifierError),
+    #[error("`fee_asset_id` field was invalid")]
+    InvalidFeeAssetId(asset::IncorrectAssetIdLength),
 }
diff --git a/crates/astria-sequencer/src/accounts/ics20_withdrawal.rs b/crates/astria-sequencer/src/accounts/ics20_withdrawal.rs
index bf398bdbf3..c081b56d65 100644
--- a/crates/astria-sequencer/src/accounts/ics20_withdrawal.rs
+++ b/crates/astria-sequencer/src/accounts/ics20_withdrawal.rs
@@ -1,4 +1,5 @@
 use anyhow::{
+    anyhow,
     ensure,
     Context as _,
     Result,
@@ -28,6 +29,9 @@ use crate::{
     transaction::action_handler::ActionHandler,
 };
 
+/// Fee charged for a `Ics20Withdrawal` action.
+pub(crate) const ICS20_WITHDRAWAL_FEE: u128 = 24;
+
 fn withdrawal_to_unchecked_ibc_packet(
     withdrawal: &action::Ics20Withdrawal,
 ) -> IBCPacket<Unchecked> {
@@ -68,14 +72,42 @@ impl ActionHandler for action::Ics20Withdrawal {
             .await
             .context("packet failed send check")?;
 
-        let from_transfer_balance = state
-            .get_account_balance(from, self.denom().id())
+        let transfer_asset_id = self.denom().id();
+
+        let from_fee_balance = state
+            .get_account_balance(from, *self.fee_asset_id())
             .await
-            .context("failed getting `from` account balance for transfer")?;
-        ensure!(
-            from_transfer_balance >= self.amount(),
-            "insufficient funds for transfer"
-        );
+            .context("failed getting `from` account balance for fee payment")?;
+
+        // if fee asset is same as transfer asset, ensure accounts has enough funds
+        // to cover both the fee and the amount transferred
+        if self.fee_asset_id() == &transfer_asset_id {
+            let payment_amount = self
+                .amount()
+                .checked_add(ICS20_WITHDRAWAL_FEE)
+                .ok_or(anyhow!("transfer amount plus fee overflowed"))?;
+
+            ensure!(
+                from_fee_balance >= payment_amount,
+                "insufficient funds for transfer and fee payment"
+            );
+        } else {
+            // otherwise, check the fee asset account has enough to cover the fees,
+            // and the transfer asset account has enough to cover the transfer
+            ensure!(
+                from_fee_balance >= ICS20_WITHDRAWAL_FEE,
+                "insufficient funds for fee payment"
+            );
+
+            let from_transfer_balance = state
+                .get_account_balance(from, transfer_asset_id)
+                .await
+                .context("failed to get account balance in transfer check")?;
+            ensure!(
+                from_transfer_balance >= self.amount(),
+                "insufficient funds for transfer"
+            );
+        }
 
         Ok(())
     }
@@ -87,7 +119,7 @@ impl ActionHandler for action::Ics20Withdrawal {
         let from_transfer_balance = state
             .get_account_balance(from, self.denom().id())
             .await
-            .context("failed getting `from` account balance for transfer")?;
+            .context("failed getting `from` account balance for Ics20Withdrawal")?;
 
         state
             .put_account_balance(
@@ -95,7 +127,22 @@ impl ActionHandler for action::Ics20Withdrawal {
                 self.denom().id(),
                 from_transfer_balance
                     .checked_sub(self.amount())
-                    .context("insufficient funds for transfer")?,
+                    .context("insufficient funds for Ics20Withdrawal")?,
+            )
+            .context("failed to update sender balance")?;
+
+        let from_fee_balance = state
+            .get_account_balance(from, *self.fee_asset_id())
+            .await
+            .context("failed getting `from` account balance for Ics20Withdrawal fee payment")?;
+
+        state
+            .put_account_balance(
+                from,
+                *self.fee_asset_id(),
+                from_fee_balance
+                    .checked_sub(ICS20_WITHDRAWAL_FEE)
+                    .context("insufficient funds for Ics20Withdrawal fee")?,
             )
             .context("failed to update sender balance")?;
 
diff --git a/proto/sequencerapis/astria/sequencer/v1alpha1/transaction.proto b/proto/sequencerapis/astria/sequencer/v1alpha1/transaction.proto
index 9366387192..af2f225a38 100644
--- a/proto/sequencerapis/astria/sequencer/v1alpha1/transaction.proto
+++ b/proto/sequencerapis/astria/sequencer/v1alpha1/transaction.proto
@@ -96,6 +96,8 @@ message Ics20Withdrawal {
   uint64 timeout_time = 6;
   // the source channel used for the withdrawal.
   string source_channel = 7;
+  // the asset used to pay the transaction fee
+  bytes fee_asset_id = 8;
 }
 
 message IbcHeight {