diff --git a/homeassistant/components/switch_as_x/__init__.py b/homeassistant/components/switch_as_x/__init__.py
index 71cb9e9c225..b07bf0fdaec 100644
--- a/homeassistant/components/switch_as_x/__init__.py
+++ b/homeassistant/components/switch_as_x/__init__.py
@@ -9,7 +9,7 @@ import voluptuous as vol
 from homeassistant.components.homeassistant import exposed_entities
 from homeassistant.config_entries import ConfigEntry
 from homeassistant.const import CONF_ENTITY_ID
-from homeassistant.core import Event, HomeAssistant, callback
+from homeassistant.core import Event, HomeAssistant, callback, valid_entity_id
 from homeassistant.helpers import device_registry as dr, entity_registry as er
 from homeassistant.helpers.event import async_track_entity_registry_updated_event
 
@@ -44,10 +44,12 @@ def async_add_to_device(
 
 async def async_setup_entry(hass: HomeAssistant, entry: ConfigEntry) -> bool:
     """Set up a config entry."""
-    registry = er.async_get(hass)
+    entity_registry = er.async_get(hass)
     device_registry = dr.async_get(hass)
     try:
-        entity_id = er.async_validate_entity_id(registry, entry.options[CONF_ENTITY_ID])
+        entity_id = er.async_validate_entity_id(
+            entity_registry, entry.options[CONF_ENTITY_ID]
+        )
     except vol.Invalid:
         # The entity is identified by an unknown entity registry ID
         _LOGGER.error(
@@ -68,14 +70,21 @@ async def async_setup_entry(hass: HomeAssistant, entry: ConfigEntry) -> bool:
             return
 
         if "entity_id" in data["changes"]:
-            # Entity_id changed, reload the config entry
-            await hass.config_entries.async_reload(entry.entry_id)
+            # Entity_id changed, update or reload the config entry
+            if valid_entity_id(entry.options[CONF_ENTITY_ID]):
+                # If the entity is pointed to by an entity ID, update the entry
+                hass.config_entries.async_update_entry(
+                    entry,
+                    options={**entry.options, CONF_ENTITY_ID: data["entity_id"]},
+                )
+            else:
+                await hass.config_entries.async_reload(entry.entry_id)
 
         if device_id and "device_id" in data["changes"]:
             # If the tracked switch is no longer in the device, remove our config entry
             # from the device
             if (
-                not (entity_entry := registry.async_get(data[CONF_ENTITY_ID]))
+                not (entity_entry := entity_registry.async_get(data[CONF_ENTITY_ID]))
                 or not device_registry.async_get(device_id)
                 or entity_entry.device_id == device_id
             ):
diff --git a/tests/components/switch_as_x/test_init.py b/tests/components/switch_as_x/test_init.py
index cd80fab69bc..0b965fc2ad1 100644
--- a/tests/components/switch_as_x/test_init.py
+++ b/tests/components/switch_as_x/test_init.py
@@ -39,6 +39,44 @@ EXPOSE_SETTINGS = {
 }
 
 
+@pytest.fixture
+def switch_entity_registry_entry(
+    entity_registry: er.EntityRegistry,
+) -> er.RegistryEntry:
+    """Fixture to create a switch entity entry."""
+    return entity_registry.async_get_or_create(
+        "switch", "test", "unique", original_name="ABC"
+    )
+
+
+@pytest.fixture
+def switch_as_x_config_entry(
+    hass: HomeAssistant,
+    switch_entity_registry_entry: er.RegistryEntry,
+    target_domain: str,
+    use_entity_registry_id: bool,
+) -> MockConfigEntry:
+    """Fixture to create a switch_as_x config entry."""
+    config_entry = MockConfigEntry(
+        data={},
+        domain=DOMAIN,
+        options={
+            CONF_ENTITY_ID: switch_entity_registry_entry.id
+            if use_entity_registry_id
+            else switch_entity_registry_entry.entity_id,
+            CONF_INVERT: False,
+            CONF_TARGET_DOMAIN: target_domain,
+        },
+        title="ABC",
+        version=SwitchAsXConfigFlowHandler.VERSION,
+        minor_version=SwitchAsXConfigFlowHandler.MINOR_VERSION,
+    )
+
+    config_entry.add_to_hass(hass)
+
+    return config_entry
+
+
 @pytest.mark.parametrize("target_domain", PLATFORMS_TO_TEST)
 async def test_config_entry_unregistered_uuid(
     hass: HomeAssistant, target_domain: str
@@ -67,6 +105,7 @@ async def test_config_entry_unregistered_uuid(
     assert len(hass.states.async_all()) == 0
 
 
+@pytest.mark.parametrize("use_entity_registry_id", [True, False])
 @pytest.mark.parametrize(
     ("target_domain", "state_on", "state_off"),
     [
@@ -81,33 +120,17 @@ async def test_config_entry_unregistered_uuid(
 async def test_entity_registry_events(
     hass: HomeAssistant,
     entity_registry: er.EntityRegistry,
+    switch_entity_registry_entry: er.RegistryEntry,
+    switch_as_x_config_entry: MockConfigEntry,
     target_domain: str,
     state_on: str,
     state_off: str,
 ) -> None:
     """Test entity registry events are tracked."""
-    registry_entry = entity_registry.async_get_or_create(
-        "switch", "test", "unique", original_name="ABC"
-    )
-    switch_entity_id = registry_entry.entity_id
+    switch_entity_id = switch_entity_registry_entry.entity_id
     hass.states.async_set(switch_entity_id, STATE_ON)
 
-    config_entry = MockConfigEntry(
-        data={},
-        domain=DOMAIN,
-        options={
-            CONF_ENTITY_ID: registry_entry.id,
-            CONF_INVERT: False,
-            CONF_TARGET_DOMAIN: target_domain,
-        },
-        title="ABC",
-        version=SwitchAsXConfigFlowHandler.VERSION,
-        minor_version=SwitchAsXConfigFlowHandler.MINOR_VERSION,
-    )
-
-    config_entry.add_to_hass(hass)
-
-    assert await hass.config_entries.async_setup(config_entry.entry_id)
+    assert await hass.config_entries.async_setup(switch_as_x_config_entry.entry_id)
     await hass.async_block_till_done()
 
     assert hass.states.get(f"{target_domain}.abc").state == state_on