diff --git a/homeassistant/components/pushover/__init__.py b/homeassistant/components/pushover/__init__.py
index 3c0c92db044..551e374fbb6 100644
--- a/homeassistant/components/pushover/__init__.py
+++ b/homeassistant/components/pushover/__init__.py
@@ -35,7 +35,7 @@ async def async_setup_entry(hass: HomeAssistant, entry: ConfigEntry) -> bool:
             pushover_api.validate, entry.data[CONF_USER_KEY]
         )
 
-    except BadAPIRequestError as err:
+    except (BadAPIRequestError, ValueError) as err:
         if "application token is invalid" in str(err):
             raise ConfigEntryAuthFailed(err) from err
         raise ConfigEntryNotReady(err) from err
diff --git a/tests/components/pushover/test_init.py b/tests/components/pushover/test_init.py
index 7a8b02c93a0..ff85e88f07e 100644
--- a/tests/components/pushover/test_init.py
+++ b/tests/components/pushover/test_init.py
@@ -6,6 +6,7 @@ from unittest.mock import MagicMock, patch
 import aiohttp
 from pushover_complete import BadAPIRequestError
 import pytest
+from requests_mock import Mocker
 
 from homeassistant.components.notify import DOMAIN as NOTIFY_DOMAIN
 from homeassistant.components.pushover.const import DOMAIN
@@ -19,7 +20,7 @@ from tests.common import MockConfigEntry
 from tests.components.repairs import get_repairs
 
 
-@pytest.fixture(autouse=True)
+@pytest.fixture(autouse=False)
 def mock_pushover():
     """Mock pushover."""
     with patch(
@@ -33,6 +34,7 @@ async def test_setup(
     hass_ws_client: Callable[
         [HomeAssistant], Awaitable[aiohttp.ClientWebSocketResponse]
     ],
+    mock_pushover: MagicMock,
 ) -> None:
     """Test integration failed due to an error."""
     assert await async_setup_component(
@@ -56,7 +58,9 @@ async def test_setup(
     assert issues[0]["issue_id"] == "deprecated_yaml"
 
 
-async def test_async_setup_entry_success(hass: HomeAssistant) -> None:
+async def test_async_setup_entry_success(
+    hass: HomeAssistant, mock_pushover: MagicMock
+) -> None:
     """Test pushover successful setup."""
     entry = MockConfigEntry(
         domain=DOMAIN,
@@ -68,7 +72,7 @@ async def test_async_setup_entry_success(hass: HomeAssistant) -> None:
     assert entry.state == ConfigEntryState.LOADED
 
 
-async def test_unique_id_updated(hass: HomeAssistant) -> None:
+async def test_unique_id_updated(hass: HomeAssistant, mock_pushover: MagicMock) -> None:
     """Test updating unique_id to new format."""
     entry = MockConfigEntry(domain=DOMAIN, data=MOCK_CONFIG, unique_id="MYUSERKEY")
     entry.add_to_hass(hass)
@@ -106,3 +110,20 @@ async def test_async_setup_entry_failed_conn_error(
     await hass.config_entries.async_setup(entry.entry_id)
     await hass.async_block_till_done()
     assert entry.state == ConfigEntryState.SETUP_RETRY
+
+
+async def test_async_setup_entry_failed_json_error(
+    hass: HomeAssistant, requests_mock: Mocker
+) -> None:
+    """Test pushover failed setup due to bad json response from library."""
+    entry = MockConfigEntry(
+        domain=DOMAIN,
+        data=MOCK_CONFIG,
+    )
+    entry.add_to_hass(hass)
+    requests_mock.post(
+        "https://api.pushover.net/1/users/validate.json", status_code=204
+    )
+    await hass.config_entries.async_setup(entry.entry_id)
+    await hass.async_block_till_done()
+    assert entry.state == ConfigEntryState.SETUP_RETRY