diff --git a/homeassistant/components/sensor/__init__.py b/homeassistant/components/sensor/__init__.py
index 1d06e1a24c4..ad6b3454ea9 100644
--- a/homeassistant/components/sensor/__init__.py
+++ b/homeassistant/components/sensor/__init__.py
@@ -747,13 +747,15 @@ class SensorEntity(Entity, cached_properties=CACHED_PROPERTIES_WITH_ATTR_):
 
         return value
 
-    def _suggested_precision_or_none(self) -> int | None:
-        """Return suggested display precision, or None if not set."""
+    def _display_precision_or_none(self) -> int | None:
+        """Return display precision, or None if not set."""
         assert self.registry_entry
-        if (sensor_options := self.registry_entry.options.get(DOMAIN)) and (
-            precision := sensor_options.get("suggested_display_precision")
-        ) is not None:
-            return cast(int, precision)
+        if not (sensor_options := self.registry_entry.options.get(DOMAIN)):
+            return None
+
+        for option in ("display_precision", "suggested_display_precision"):
+            if (precision := sensor_options.get(option)) is not None:
+                return cast(int, precision)
         return None
 
     def _update_suggested_precision(self) -> None:
@@ -835,7 +837,7 @@ class SensorEntity(Entity, cached_properties=CACHED_PROPERTIES_WITH_ATTR_):
         Called when the entity registry entry has been updated and before the sensor is
         added to the state machine.
         """
-        self._sensor_option_display_precision = self._suggested_precision_or_none()
+        self._sensor_option_display_precision = self._display_precision_or_none()
         assert self.registry_entry
         if (
             sensor_options := self.registry_entry.options.get(f"{DOMAIN}.private")
diff --git a/tests/components/sensor/test_init.py b/tests/components/sensor/test_init.py
index 9e8e401ea46..74fd81188cd 100644
--- a/tests/components/sensor/test_init.py
+++ b/tests/components/sensor/test_init.py
@@ -1146,6 +1146,14 @@ async def test_unit_conversion_priority_precision(
         suggested_display_precision=suggested_precision,
         suggested_unit_of_measurement=suggested_unit,
     )
+    entity4 = MockSensor(
+        name="Test",
+        device_class=device_class,
+        native_unit_of_measurement=native_unit,
+        native_value=str(native_value),
+        suggested_display_precision=None,
+        unique_id="very_unique_4",
+    )
     setup_test_component_platform(
         hass,
         sensor.DOMAIN,
@@ -1154,6 +1162,7 @@ async def test_unit_conversion_priority_precision(
             entity1,
             entity2,
             entity3,
+            entity4,
         ],
     )
 
@@ -1230,6 +1239,21 @@ async def test_unit_conversion_priority_precision(
         round(custom_state, 4)
     )
 
+    # Set a display_precision without having suggested_display_precision
+    entity_registry.async_update_entity_options(
+        entity4.entity_id,
+        "sensor",
+        {"display_precision": 4},
+    )
+    entry4 = entity_registry.async_get(entity4.entity_id)
+    assert "suggested_display_precision" not in entry4.options["sensor"]
+    assert entry4.options["sensor"]["display_precision"] == 4
+    await hass.async_block_till_done()
+    state = hass.states.get(entity4.entity_id)
+    assert float(async_rounded_state(hass, entity4.entity_id, state)) == pytest.approx(
+        round(automatic_state, 4)
+    )
+
 
 @pytest.mark.parametrize(
     (