diff --git a/CHANGELOG.md b/CHANGELOG.md
index 054abb5db9c..a66a9463138 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -51,6 +51,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 
 * [\#383](https://github.com/cosmos/ibc-go/pull/383) Adds helper functions for merging and splitting middleware versions from the underlying app version.
 * (modules/core/05-port) [\#288](https://github.com/cosmos/ibc-go/issues/288) Making the 05-port keeper function IsBound public. The IsBound function checks if the provided portID is already binded to a module.
+* (02-client) [\#568](https://github.com/cosmos/ibc-go/pull/568) In IBC `transfer` cli command use local clock time as reference for relative timestamp timeout if greater than the block timestamp queried from the latest consensus state corresponding to the counterparty channel.
 
 ### Features
 
diff --git a/modules/apps/transfer/client/cli/tx.go b/modules/apps/transfer/client/cli/tx.go
index 1e201bddb37..74ff6ae802b 100644
--- a/modules/apps/transfer/client/cli/tx.go
+++ b/modules/apps/transfer/client/cli/tx.go
@@ -1,8 +1,10 @@
 package cli
 
 import (
+	"errors"
 	"fmt"
 	"strings"
+	"time"
 
 	"github.com/spf13/cobra"
 
@@ -29,9 +31,10 @@ func NewTransferTxCmd() *cobra.Command {
 		Short: "Transfer a fungible token through IBC",
 		Long: strings.TrimSpace(`Transfer a fungible token through IBC. Timeouts can be specified
 as absolute or relative using the "absolute-timeouts" flag. Timeout height can be set by passing in the height string
-in the form {revision}-{height} using the "packet-timeout-height" flag. Relative timeouts are added to
-the block height and block timestamp queried from the latest consensus state corresponding
-to the counterparty channel. Any timeout set to 0 is disabled.`),
+in the form {revision}-{height} using the "packet-timeout-height" flag. Relative timeout height is added to the block
+height queried from the latest consensus state corresponding to the counterparty channel. Relative timeout timestamp 
+is added to the greater value of the local clock time and the block timestamp queried from the latest consensus state 
+corresponding to the counterparty channel. Any timeout set to 0 is disabled.`),
 		Example: fmt.Sprintf("%s tx ibc-transfer transfer [src-port] [src-channel] [receiver] [amount]", version.AppName),
 		Args:    cobra.ExactArgs(4),
 		RunE: func(cmd *cobra.Command, args []string) error {
@@ -89,7 +92,21 @@ to the counterparty channel. Any timeout set to 0 is disabled.`),
 				}
 
 				if timeoutTimestamp != 0 {
-					timeoutTimestamp = consensusState.GetTimestamp() + timeoutTimestamp
+					// use local clock time as reference time if it is later than the
+					// consensus state timestamp of the counter party chain, otherwise
+					// still use consensus state timestamp as reference
+					now := time.Now().UnixNano()
+					consensusStateTimestamp := consensusState.GetTimestamp()
+					if now > 0 {
+						now := uint64(now)
+						if now > consensusStateTimestamp {
+							timeoutTimestamp = now + timeoutTimestamp
+						} else {
+							timeoutTimestamp = consensusStateTimestamp + timeoutTimestamp
+						}
+					} else {
+						return errors.New("local clock time is not greater than Jan 1st, 1970 12:00 AM")
+					}
 				}
 			}