diff --git a/packages/core/src/application_init.ts b/packages/core/src/application_init.ts
index d464573b44b0b..06f3b74883bea 100644
--- a/packages/core/src/application_init.ts
+++ b/packages/core/src/application_init.ts
@@ -7,7 +7,7 @@
  */
 
 import {Inject, Injectable, InjectionToken, Optional} from './di';
-import {isPromise} from './util/lang';
+import {isObservable, isPromise} from './util/lang';
 import {noop} from './util/noop';
 
 
@@ -16,8 +16,8 @@ import {noop} from './util/noop';
  * one or more initialization functions.
  *
  * The provided functions are injected at application startup and executed during
- * app initialization. If any of these functions returns a Promise, initialization
- * does not complete until the Promise is resolved.
+ * app initialization. If any of these functions returns a Promise or an Observable, initialization
+ * does not complete until the Promise is resolved or the Observable is completed.
  *
  * You can, for example, create a factory function that loads language data
  * or an external configuration, and provide that function to the `APP_INITIALIZER` token.
@@ -68,6 +68,11 @@ export class ApplicationInitStatus {
         const initResult = this.appInits[i]();
         if (isPromise(initResult)) {
           asyncInitPromises.push(initResult);
+        } else if (isObservable(initResult)) {
+          // Note: `.toPromise()` will be deprecated in RxJS v7 and removed completely in later
+          // versions. Once RxJS is updated in the repo to v7, this code should be refactored and
+          // the `lastValueFrom` function should be used instead.
+          asyncInitPromises.push(initResult.toPromise());
         }
       }
     }
diff --git a/packages/core/test/application_init_spec.ts b/packages/core/test/application_init_spec.ts
index ee078a606ea0f..0df7d39b11175 100644
--- a/packages/core/test/application_init_spec.ts
+++ b/packages/core/test/application_init_spec.ts
@@ -7,6 +7,7 @@
  */
 import {Injector} from '@angular/core';
 import {APP_INITIALIZER, ApplicationInitStatus} from '@angular/core/src/application_init';
+import {Observable, Subscriber} from 'rxjs';
 
 import {inject, TestBed, waitForAsync} from '../testing';
 
@@ -28,21 +29,23 @@ import {inject, TestBed, waitForAsync} from '../testing';
          })));
     });
 
-    describe('with async initializers', () => {
+    describe('with async promise initializers', () => {
       let resolve: (result: any) => void;
+      let reject: (reason?: any) => void;
       let promise: Promise<any>;
-      let completerResolver = false;
+      let initFnInvoked = false;
       beforeEach(() => {
         let initializerFactory = (injector: Injector) => {
           return () => {
             const initStatus = injector.get(ApplicationInitStatus);
             initStatus.donePromise.then(() => {
-              expect(completerResolver).toBe(true);
+              expect(initFnInvoked).toBe(true);
             });
           };
         };
-        promise = new Promise((res) => {
+        promise = new Promise((res, rej) => {
           resolve = res;
+          reject = rej;
         });
         TestBed.configureTestingModule({
           providers: [
@@ -57,21 +60,101 @@ import {inject, TestBed, waitForAsync} from '../testing';
         });
       });
 
-      it('should update the status once all async initializers are done',
+      it('should update the status once all async promise initializers are done',
          waitForAsync(inject([ApplicationInitStatus], (status: ApplicationInitStatus) => {
+           // Accessing internal `runInitializers` function of the `ApplicationInitStatus` class
+           // instance for testing purposes to invoke initializer functions.
            (status as any).runInitializers();
 
            setTimeout(() => {
-             completerResolver = true;
+             initFnInvoked = true;
              resolve(null);
            });
 
            expect(status.done).toBe(false);
            status.donePromise.then(() => {
              expect(status.done).toBe(true);
-             expect(completerResolver).toBe(true);
+             expect(initFnInvoked).toBe(true);
            });
          })));
+
+      it('should handle a case when promise is rejected',
+         waitForAsync(inject([ApplicationInitStatus], (status: ApplicationInitStatus) => {
+           // Accessing internal `runInitializers` function of the `ApplicationInitStatus` class
+           // instance for testing purposes to invoke initializer functions.
+           (status as any).runInitializers();
+
+           setTimeout(() => {
+             initFnInvoked = true;
+             reject();
+           });
+
+           expect(status.done).toBe(false);
+           status.donePromise
+               .then(
+                   () => fail('`donePromise.then` should not be invoked when promise is rejected'))
+               .catch(() => {
+                 expect(status.done).toBe(false);
+                 expect(initFnInvoked).toBe(true);
+               });
+         })));
+    });
+
+    describe('with app initializers represented using observables', () => {
+      let subscriber: Subscriber<any>;
+      let observable: Observable<any>;
+      let initFnInvoked = false;
+      beforeEach(() => {
+        observable = new Observable((res) => {
+          subscriber = res;
+        });
+        TestBed.configureTestingModule({
+          providers: [
+            {provide: APP_INITIALIZER, multi: true, useValue: () => observable},
+          ]
+        });
+      });
+
+      it('should update the status once all async observable initializers are done',
+         waitForAsync(inject([ApplicationInitStatus], (status: ApplicationInitStatus) => {
+           // Accessing internal `runInitializers` function of the `ApplicationInitStatus` class
+           // instance for testing purposes to invoke initializer functions.
+           (status as any).runInitializers();
+
+           setTimeout(() => {
+             initFnInvoked = true;
+             subscriber.next();
+             subscriber.complete();
+           });
+
+           expect(status.done).toBe(false);
+           status.donePromise.then(() => {
+             expect(status.done).toBe(true);
+             expect(initFnInvoked).toBe(true);
+           });
+         })));
+
+      it('should handle a case when observable emits an error',
+         waitForAsync(inject([ApplicationInitStatus], (status: ApplicationInitStatus) => {
+           // Accessing internal `runInitializers` function of the `ApplicationInitStatus` class
+           // instance for testing purposes to invoke initializer functions.
+           (status as any).runInitializers();
+
+           setTimeout(() => {
+             initFnInvoked = true;
+             subscriber.error();
+           });
+
+           expect(status.done).toBe(false);
+           status.donePromise
+               .then(
+                   () => fail(
+                       '`donePromise.then` should not be invoked when observable emits an error'))
+               .catch(() => {
+                 expect(status.done).toBe(false);
+                 expect(initFnInvoked).toBe(true);
+               });
+         })));
     });
   });
 }
diff --git a/packages/core/test/bundling/forms/bundle.golden_symbols.json b/packages/core/test/bundling/forms/bundle.golden_symbols.json
index 8ef0dcdff914b..b3f2e76e2eb2a 100644
--- a/packages/core/test/bundling/forms/bundle.golden_symbols.json
+++ b/packages/core/test/bundling/forms/bundle.golden_symbols.json
@@ -1250,6 +1250,9 @@
   {
     "name": "isObject"
   },
+  {
+    "name": "isObservable"
+  },
   {
     "name": "isOptionsObj"
   },
diff --git a/packages/core/test/bundling/router/bundle.golden_symbols.json b/packages/core/test/bundling/router/bundle.golden_symbols.json
index d7ca828b94523..2662be9614d27 100644
--- a/packages/core/test/bundling/router/bundle.golden_symbols.json
+++ b/packages/core/test/bundling/router/bundle.golden_symbols.json
@@ -1577,6 +1577,9 @@
   {
     "name": "isObject"
   },
+  {
+    "name": "isObservable"
+  },
   {
     "name": "isPositive"
   },