diff --git a/docs/snippets/ov_model_with_state_infer.cpp b/docs/snippets/ov_model_with_state_infer.cpp
index 3f124851ac8..e7720c77123 100644
--- a/docs/snippets/ov_model_with_state_infer.cpp
+++ b/docs/snippets/ov_model_with_state_infer.cpp
@@ -26,7 +26,6 @@ int main(int argc, char* argv[]) {
 
         // Creating ov::Model
         auto read = std::make_shared<ov::opset11::ReadValue>(init_const, variable);
-        std::vector<std::shared_ptr<ov::Node>> args = {arg, read};
         auto add = std::make_shared<ov::opset11::Add>(arg, read);
         auto assign = std::make_shared<ov::opset11::Assign>(add, variable);
         auto add2 = std::make_shared<ov::opset11::Add>(add, read);
diff --git a/src/bindings/python/tests/test_runtime/test_infer_request.py b/src/bindings/python/tests/test_runtime/test_infer_request.py
index 1cb21bb0c73..cc0bce2073d 100644
--- a/src/bindings/python/tests/test_runtime/test_infer_request.py
+++ b/src/bindings/python/tests/test_runtime/test_infer_request.py
@@ -663,9 +663,7 @@ def test_infer_queue_get_idle_handle(device):
 @pytest.mark.parametrize("data_type",
                          [np.float32,
                           np.int32,
-                          # issue after ConvertPrecision transformation, ticket: TBA
-                          # np.float16
-                          ])
+                          np.float16])
 @pytest.mark.parametrize("mode", ["set_init_memory_state", "reset_memory_state", "normal"])
 @pytest.mark.parametrize("input_shape", [[10], [10, 10], [10, 10, 10], [2, 10, 10, 10]])
 @pytest.mark.skipif(
diff --git a/src/common/transformations/src/transformations/common_optimizations/moc_transformations.cpp b/src/common/transformations/src/transformations/common_optimizations/moc_transformations.cpp
index 401b1296d71..0f7d02b3eca 100644
--- a/src/common/transformations/src/transformations/common_optimizations/moc_transformations.cpp
+++ b/src/common/transformations/src/transformations/common_optimizations/moc_transformations.cpp
@@ -101,10 +101,13 @@ bool ov::pass::MOCTransformations::run_on_model(const std::shared_ptr<ov::Model>
             input_shapes[param.get()] = param->get_partial_shape();
             param->set_partial_shape(PartialShape::dynamic(param->get_partial_shape().rank()));
         }
+        // After setting dynamic ranks into Parameters, the initializing subgraph of ReadValue operation might
+        // also have a dynamic rank. The shape consistency check between this subgraph and Variable might fail.
+        // We have to set dynamic rank to Variables to keep the ov::Model consistent.
         for (const auto& variable : f->get_variables()) {
             const auto& var_info = variable->get_info();
             variable_shapes[variable.get()] = var_info.data_shape;
-            variable->update_partial_shape(PartialShape::dynamic(var_info.data_shape.rank()));
+            variable->update_data_shape(PartialShape::dynamic(var_info.data_shape.rank()));
         }
         f->validate_nodes_and_infer_types();
     }
@@ -271,7 +274,7 @@ bool ov::pass::MOCTransformations::run_on_model(const std::shared_ptr<ov::Model>
         }
 
         for (const auto& variable : f->get_variables()) {
-            variable->update_partial_shape(variable_shapes.at(variable.get()));
+            variable->update_data_shape(variable_shapes.at(variable.get()));
         }
     }
     f->validate_nodes_and_infer_types();
diff --git a/src/common/transformations/src/transformations/convert_precision.cpp b/src/common/transformations/src/transformations/convert_precision.cpp
index abce1a034d7..5e843650800 100644
--- a/src/common/transformations/src/transformations/convert_precision.cpp
+++ b/src/common/transformations/src/transformations/convert_precision.cpp
@@ -35,6 +35,12 @@ bool fuse_type_to_parameter(const std::shared_ptr<ov::Node>& node,
                             const precisions_map& precisions,
                             bool convert_input_precision);
 
+// this function inserts Convert operations to 'data' input and outputs of `node`
+// to execute 'node' with the original type.
+bool wrap_into_original_type(const std::shared_ptr<ov::Node>& node, const precisions_map& precisions);
+
+bool fuse_type_to_variable(const std::shared_ptr<op::util::Variable>& variable, const precisions_map& precisions);
+
 bool fuse_type_to_constant(const std::shared_ptr<ov::Node>& node,
                            const precisions_map& precisions,
                            const std::vector<ov::Input<ov::Node>>& consumers);
@@ -207,6 +213,12 @@ bool convert_function_precision(const std::shared_ptr<Model>& f,
         is_changed |= fuse_type_to_parameter(param, precisions, convert_input_output_precision);
     }
 
+    if (convert_input_output_precision) {
+        for (const auto& variable : f->get_variables()) {
+            is_changed |= fuse_type_to_variable(variable, precisions);
+        }
+    }
+
     if (is_changed)
         ops = f->get_ordered_ops();
 
@@ -245,6 +257,14 @@ bool convert_function_precision(const std::shared_ptr<Model>& f,
                                                          true);
             }
         }
+        // if convert_input_output_precision flag is set, we don't need to preserve the original precision
+        // for Assign/ReadValue ops, we have already changed the type in Variable.
+        // Otherwise, we have insert Convert ops to inputs/outputs of ReadValue/Assign
+        if ((as_type_ptr<op::util::AssignBase>(node) || as_type_ptr<op::util::ReadValueBase>(node)) &&
+            convert_input_output_precision) {
+            node->revalidate_and_infer_types();
+            continue;
+        }
         is_output_precision_changed |= convert_node_output_precision(node,
                                                                      precisions,
                                                                      type_to_fuse,
@@ -380,6 +400,8 @@ bool ov::pass::ConvertPrecision::run_on_model(const std::shared_ptr<ov::Model>&
     type_to_fuse_map type_to_fuse{
         {opset4::Convert::get_type_info_static(), fuse_type_to_convert},
         {opset4::ShapeOf::get_type_info_static(), fuse_type_to_shapeof},
+        {opset6::Assign::get_type_info_static(), wrap_into_original_type},
+        {opset6::ReadValue::get_type_info_static(), wrap_into_original_type},
         {opset3::NonMaxSuppression::get_type_info_static(), fuse_type_to_nms3},
         {opset4::NonMaxSuppression::get_type_info_static(), fuse_type_to_nms4},
         {opset5::NonMaxSuppression::get_type_info_static(), fuse_type_to_nms5},
@@ -557,6 +579,38 @@ bool fuse_type_to_parameter(const std::shared_ptr<ov::Node>& node,
     return changed;
 }
 
+bool wrap_into_original_type(const std::shared_ptr<ov::Node>& node, const precisions_map& precisions) {
+    auto it = precisions.find(node->get_output_element_type(0));
+    if (it == precisions.end())
+        return false;
+
+    const auto& to = it->second;
+    const auto& from = it->first;
+
+    auto convert_before = std::make_shared<opset4::Convert>(node->input_value(0), from);
+    node->input(0).replace_source_output(convert_before);
+    auto consumers = node->output(0).get_target_inputs();
+    auto convert_after = std::make_shared<opset4::Convert>(node, to);
+    for (auto& input : consumers) {
+        const auto consumer = input.get_node();
+        if (ov::is_type<ov::op::v0::Result>(consumer) || ov::is_type<ov::op::v0::Convert>(consumer)) {
+            continue;
+        }
+        input.replace_source_output(convert_after);
+    }
+
+    return true;
+}
+
+bool fuse_type_to_variable(const std::shared_ptr<op::util::Variable>& variable, const precisions_map& precisions) {
+    auto it = precisions.find(variable->get_info().data_type);
+    if (it == precisions.end())
+        return false;
+    const auto& to = it->second;
+    variable->update_data_type(to);
+    return true;
+}
+
 bool fuse_type_to_convert(const std::shared_ptr<ov::Node>& node, const precisions_map& precisions) {
     auto it = precisions.find(node->get_output_element_type(0));
     if (it == precisions.end())
diff --git a/src/common/transformations/tests/utils/convert_precision.cpp b/src/common/transformations/tests/utils/convert_precision.cpp
index 012334161cd..b5227917342 100644
--- a/src/common/transformations/tests/utils/convert_precision.cpp
+++ b/src/common/transformations/tests/utils/convert_precision.cpp
@@ -2340,3 +2340,106 @@ TEST(TransformationTests, align_mixed_fp16_fp32_with_parameter_for_shape_2) {
     FunctionsComparator::Result result = func_comparator(model_ref, model);
     ASSERT_TRUE(result.valid) << result.message;
 }
+
+TEST(TransformationTests, ConvertPrecision_assign_read_value_preserve_orig_types) {
+    shared_ptr<Model> model, model_ref;
+    pass::Manager manager;
+
+    {
+        auto variable = std::make_shared<ov::op::util::Variable>(
+            ov::op::util::VariableInfo{ov::PartialShape{10, 10}, ov::element::f32, "variable_name"});
+
+        auto input = make_shared<opset10::Parameter>(element::f32, Shape{10, 10});
+        auto read_value = make_shared<opset10::ReadValue>(input, variable);
+
+        auto some_value = opset10::Constant::create(element::f32, Shape{1}, {2});
+        auto mul = make_shared<opset10::Multiply>(read_value, some_value);
+        auto res = make_shared<opset10::Result>(mul);
+        auto assign = make_shared<opset10::Assign>(mul, variable);
+
+        model = make_shared<Model>(ResultVector{res}, SinkVector{assign}, ParameterVector{input});
+
+        type_to_fuse_map empty_type_to_fuse_map = {};
+        bool keep_precision_sensitive_in_fp32 = true;
+        bool convert_input_output_precision = false;
+        manager.register_pass<pass::ConvertPrecision>(precisions_map{{element::f32, element::f16}},
+                                                      empty_type_to_fuse_map,
+                                                      keep_precision_sensitive_in_fp32,
+                                                      convert_input_output_precision);
+        manager.run_passes(model);
+    }
+
+    {
+        auto variable = std::make_shared<ov::op::util::Variable>(
+            ov::op::util::VariableInfo{ov::PartialShape{10, 10}, ov::element::f32, "variable_name"});
+
+        auto input = make_shared<opset10::Parameter>(element::f32, Shape{10, 10});
+        auto convert_1 = make_shared<opset10::Convert>(input, element::f16);
+        auto convert_2 = make_shared<opset10::Convert>(convert_1, element::f32);
+
+        auto read_value = make_shared<opset10::ReadValue>(convert_2, variable);
+        auto convert_3 = make_shared<opset10::Convert>(read_value, element::f16);
+
+        auto some_value = opset10::Constant::create(element::f16, Shape{1}, {2});
+        auto mul = make_shared<opset10::Multiply>(convert_3, some_value);
+        auto convert_4 = make_shared<opset10::Convert>(mul, element::f32);
+        auto res = make_shared<opset10::Result>(convert_4);
+
+        auto convert_5 = make_shared<opset10::Convert>(mul, element::f32);
+        auto assign = make_shared<opset10::Assign>(convert_5, variable);
+
+        model_ref = make_shared<Model>(ResultVector{res}, SinkVector{assign}, ParameterVector{input});
+    }
+
+    const FunctionsComparator func_comparator = FunctionsComparator::with_default();
+    FunctionsComparator::Result result = func_comparator(model_ref, model);
+    ASSERT_TRUE(result.valid) << result.message;
+}
+
+TEST(TransformationTests, ConvertPrecision_assign_read_value_change_variable_type) {
+    shared_ptr<Model> model, model_ref;
+    pass::Manager manager;
+
+    {
+        auto variable = std::make_shared<ov::op::util::Variable>(
+            ov::op::util::VariableInfo{ov::PartialShape{10, 10}, ov::element::f32, "variable_name"});
+
+        auto input = make_shared<opset10::Parameter>(element::f32, Shape{10, 10});
+        auto read_value = make_shared<opset10::ReadValue>(input, variable);
+
+        auto some_value = opset10::Constant::create(element::f32, Shape{1}, {2});
+        auto mul = make_shared<opset10::Multiply>(read_value, some_value);
+        auto res = make_shared<opset10::Result>(mul);
+        auto assign = make_shared<opset10::Assign>(mul, variable);
+
+        model = make_shared<Model>(ResultVector{res}, SinkVector{assign}, ParameterVector{input});
+
+        type_to_fuse_map empty_type_to_fuse_map = {};
+        bool keep_precision_sensitive_in_fp32 = true;
+        bool convert_input_output_precision = true;
+        manager.register_pass<pass::ConvertPrecision>(precisions_map{{element::f32, element::f16}},
+                                                      empty_type_to_fuse_map,
+                                                      keep_precision_sensitive_in_fp32,
+                                                      convert_input_output_precision);
+        manager.run_passes(model);
+    }
+
+    {
+        auto variable = std::make_shared<ov::op::util::Variable>(
+            ov::op::util::VariableInfo{ov::PartialShape{10, 10}, ov::element::f16, "variable_name"});
+
+        auto input = make_shared<opset10::Parameter>(element::f16, Shape{10, 10});
+        auto read_value = make_shared<opset10::ReadValue>(input, variable);
+
+        auto some_value = opset10::Constant::create(element::f16, Shape{1}, {2});
+        auto mul = make_shared<opset10::Multiply>(read_value, some_value);
+        auto res = make_shared<opset10::Result>(mul);
+        auto assign = make_shared<opset10::Assign>(mul, variable);
+
+        model_ref = make_shared<Model>(ResultVector{res}, SinkVector{assign}, ParameterVector{input});
+    }
+
+    const FunctionsComparator func_comparator = FunctionsComparator::with_default();
+    FunctionsComparator::Result result = func_comparator(model_ref, model);
+    ASSERT_TRUE(result.valid) << result.message;
+}
\ No newline at end of file
diff --git a/src/core/include/openvino/op/util/variable.hpp b/src/core/include/openvino/op/util/variable.hpp
index 666569a441e..039f97a1a47 100644
--- a/src/core/include/openvino/op/util/variable.hpp
+++ b/src/core/include/openvino/op/util/variable.hpp
@@ -38,10 +38,14 @@ public:
         m_info = variable_info;
     }
 
-    void update_partial_shape(const PartialShape& new_pshape) {
+    void update_data_shape(const PartialShape& new_pshape) {
         m_info.data_shape = new_pshape;
     }
 
+    void update_data_type(const element::Type& new_type) {
+        m_info.data_type = new_type;
+    }
+
 private:
     VariableInfo m_info;
 };
diff --git a/src/core/tests/type_prop/assign.cpp b/src/core/tests/type_prop/assign.cpp
index 6c2f3ff0aef..700eae07cbe 100644
--- a/src/core/tests/type_prop/assign.cpp
+++ b/src/core/tests/type_prop/assign.cpp
@@ -10,8 +10,6 @@
 #include "openvino/core/model.hpp"
 #include "openvino/op/read_value.hpp"
 #include "openvino/op/util/variable.hpp"
-#include "openvino/pass/manager.hpp"
-#include "openvino/pass/serialize.hpp"
 
 using namespace std;
 using namespace ov;
diff --git a/tools/mo/openvino/tools/mo/ops/read_value.py b/tools/mo/openvino/tools/mo/ops/read_value.py
index 1858787aec1..4aed9a393ae 100644
--- a/tools/mo/openvino/tools/mo/ops/read_value.py
+++ b/tools/mo/openvino/tools/mo/ops/read_value.py
@@ -1,12 +1,13 @@
 # Copyright (C) 2018-2023 Intel Corporation
 # SPDX-License-Identifier: Apache-2.0
 import numpy as np
+from openvino.runtime import PartialShape
 
-from openvino.tools.mo.ops.op import Op
-from openvino.tools.mo.middle.passes.convert_data_type import np_data_type_to_destination_type
 from openvino.tools.mo.front.common.partial_infer.utils import unmask_shape
 from openvino.tools.mo.graph.graph import Graph, Node
-from openvino.runtime import PartialShape
+from openvino.tools.mo.middle.passes.convert_data_type import np_data_type_to_destination_type
+from openvino.tools.mo.ops.op import Op
+
 
 class ReadValue(Op):
     op = 'ReadValue'