diff --git a/homeassistant/components/hassio/__init__.py b/homeassistant/components/hassio/__init__.py
index 2e50207fe53..1180e0a01d2 100644
--- a/homeassistant/components/hassio/__init__.py
+++ b/homeassistant/components/hassio/__init__.py
@@ -145,7 +145,7 @@ async def async_install_addon(hass: HomeAssistantType, slug: str) -> dict:
     """
     hassio = hass.data[DOMAIN]
     command = f"/addons/{slug}/install"
-    return await hassio.send_command(command)
+    return await hassio.send_command(command, timeout=None)
 
 
 @bind_hass
@@ -169,7 +169,7 @@ async def async_start_addon(hass: HomeAssistantType, slug: str) -> dict:
     """
     hassio = hass.data[DOMAIN]
     command = f"/addons/{slug}/start"
-    return await hassio.send_command(command)
+    return await hassio.send_command(command, timeout=60)
 
 
 @bind_hass
diff --git a/homeassistant/components/ozw/__init__.py b/homeassistant/components/ozw/__init__.py
index f57d737bf36..5706b75efb8 100644
--- a/homeassistant/components/ozw/__init__.py
+++ b/homeassistant/components/ozw/__init__.py
@@ -20,6 +20,7 @@ from openzwavemqtt.models.value import OZWValue
 import voluptuous as vol
 
 from homeassistant.components import mqtt
+from homeassistant.components.hassio.handler import HassioAPIError
 from homeassistant.config_entries import ConfigEntry
 from homeassistant.core import HomeAssistant, callback
 from homeassistant.helpers.device_registry import async_get_registry as get_dev_reg
@@ -27,6 +28,7 @@ from homeassistant.helpers.dispatcher import async_dispatcher_send
 
 from . import const
 from .const import (
+    CONF_INTEGRATION_CREATED_ADDON,
     DATA_UNSUBSCRIBE,
     DOMAIN,
     MANAGER,
@@ -265,6 +267,22 @@ async def async_unload_entry(hass: HomeAssistant, entry: ConfigEntry):
     return True
 
 
+async def async_remove_entry(hass: HomeAssistant, entry: ConfigEntry) -> None:
+    """Remove a config entry."""
+    if not entry.data.get(CONF_INTEGRATION_CREATED_ADDON):
+        return
+
+    try:
+        await hass.components.hassio.async_stop_addon("core_zwave")
+    except HassioAPIError as err:
+        _LOGGER.error("Failed to stop the OpenZWave add-on: %s", err)
+        return
+    try:
+        await hass.components.hassio.async_uninstall_addon("core_zwave")
+    except HassioAPIError as err:
+        _LOGGER.error("Failed to uninstall the OpenZWave add-on: %s", err)
+
+
 async def async_handle_remove_node(hass: HomeAssistant, node: OZWNode):
     """Handle the removal of a Z-Wave node, removing all traces in device/entity registry."""
     dev_registry = await get_dev_reg(hass)
diff --git a/homeassistant/components/ozw/config_flow.py b/homeassistant/components/ozw/config_flow.py
index 3153324322e..1c0ccdefa70 100644
--- a/homeassistant/components/ozw/config_flow.py
+++ b/homeassistant/components/ozw/config_flow.py
@@ -1,10 +1,26 @@
 """Config flow for ozw integration."""
-from homeassistant import config_entries
+import logging
 
+import voluptuous as vol
+
+from homeassistant import config_entries
+from homeassistant.core import callback
+from homeassistant.data_entry_flow import AbortFlow
+
+from .const import CONF_INTEGRATION_CREATED_ADDON
 from .const import DOMAIN  # pylint:disable=unused-import
 
+_LOGGER = logging.getLogger(__name__)
+
+CONF_ADDON_DEVICE = "device"
+CONF_ADDON_NETWORK_KEY = "network_key"
+CONF_NETWORK_KEY = "network_key"
+CONF_USB_PATH = "usb_path"
+CONF_USE_ADDON = "use_addon"
 TITLE = "OpenZWave"
 
+ON_SUPERVISOR_SCHEMA = vol.Schema({vol.Optional(CONF_USE_ADDON, default=False): bool})
+
 
 class DomainConfigFlow(config_entries.ConfigFlow, domain=DOMAIN):
     """Handle a config flow for ozw."""
@@ -12,13 +28,156 @@ class DomainConfigFlow(config_entries.ConfigFlow, domain=DOMAIN):
     VERSION = 1
     CONNECTION_CLASS = config_entries.CONN_CLASS_LOCAL_PUSH
 
+    def __init__(self):
+        """Set up flow instance."""
+        self.addon_config = None
+        self.network_key = None
+        self.usb_path = None
+        self.use_addon = False
+        # If we install the add-on we should uninstall it on entry remove.
+        self.integration_created_addon = False
+
     async def async_step_user(self, user_input=None):
         """Handle the initial step."""
         if self._async_current_entries():
             return self.async_abort(reason="single_instance_allowed")
+
+        # Currently all flow results need the MQTT integration.
+        # This will change when we have the direct MQTT client connection.
+        # When that is implemented, move this check to _async_use_mqtt_integration.
         if "mqtt" not in self.hass.config.components:
             return self.async_abort(reason="mqtt_required")
-        if user_input is not None:
-            return self.async_create_entry(title=TITLE, data={})
 
-        return self.async_show_form(step_id="user")
+        if not self.hass.components.hassio.is_hassio():
+            return self._async_use_mqtt_integration()
+
+        return await self.async_step_on_supervisor()
+
+    def _async_create_entry_from_vars(self):
+        """Return a config entry for the flow."""
+        return self.async_create_entry(
+            title=TITLE,
+            data={
+                CONF_USB_PATH: self.usb_path,
+                CONF_NETWORK_KEY: self.network_key,
+                CONF_USE_ADDON: self.use_addon,
+                CONF_INTEGRATION_CREATED_ADDON: self.integration_created_addon,
+            },
+        )
+
+    @callback
+    def _async_use_mqtt_integration(self):
+        """Handle logic when using the MQTT integration.
+
+        This is the entry point for the logic that is needed
+        when this integration will depend on the MQTT integration.
+        """
+        return self._async_create_entry_from_vars()
+
+    async def async_step_on_supervisor(self, user_input=None):
+        """Handle logic when on Supervisor host."""
+        if user_input is None:
+            return self.async_show_form(
+                step_id="on_supervisor", data_schema=ON_SUPERVISOR_SCHEMA
+            )
+        if not user_input[CONF_USE_ADDON]:
+            return self._async_create_entry_from_vars()
+
+        self.use_addon = True
+
+        if await self._async_is_addon_running():
+            return self._async_create_entry_from_vars()
+
+        if await self._async_is_addon_installed():
+            return await self.async_step_start_addon()
+
+        return await self.async_step_install_addon()
+
+    async def async_step_install_addon(self):
+        """Install OpenZWave add-on."""
+        try:
+            await self.hass.components.hassio.async_install_addon("core_zwave")
+        except self.hass.components.hassio.HassioAPIError as err:
+            _LOGGER.error("Failed to install OpenZWave add-on: %s", err)
+            return self.async_abort(reason="addon_install_failed")
+        self.integration_created_addon = True
+
+        return await self.async_step_start_addon()
+
+    async def async_step_start_addon(self, user_input=None):
+        """Ask for config and start OpenZWave add-on."""
+        if self.addon_config is None:
+            self.addon_config = await self._async_get_addon_config()
+
+        errors = {}
+
+        if user_input is not None:
+            self.network_key = user_input[CONF_NETWORK_KEY]
+            self.usb_path = user_input[CONF_USB_PATH]
+
+            new_addon_config = {CONF_ADDON_DEVICE: self.usb_path}
+            if self.network_key:
+                new_addon_config[CONF_ADDON_NETWORK_KEY] = self.network_key
+
+            if new_addon_config != self.addon_config:
+                await self._async_set_addon_config(new_addon_config)
+
+            try:
+                await self.hass.components.hassio.async_start_addon("core_zwave")
+            except self.hass.components.hassio.HassioAPIError as err:
+                _LOGGER.error("Failed to start OpenZWave add-on: %s", err)
+                errors["base"] = "addon_start_failed"
+            else:
+                return self._async_create_entry_from_vars()
+
+        self.usb_path = self.addon_config.get(CONF_ADDON_DEVICE, "")
+        self.network_key = self.addon_config.get(CONF_ADDON_NETWORK_KEY, "")
+
+        data_schema = vol.Schema(
+            {
+                vol.Required(CONF_USB_PATH, default=self.usb_path): str,
+                vol.Optional(CONF_NETWORK_KEY, default=self.network_key): str,
+            }
+        )
+
+        return self.async_show_form(
+            step_id="start_addon", data_schema=data_schema, errors=errors
+        )
+
+    async def _async_get_addon_info(self):
+        """Return and cache OpenZWave add-on info."""
+        try:
+            addon_info = await self.hass.components.hassio.async_get_addon_info(
+                "core_zwave"
+            )
+        except self.hass.components.hassio.HassioAPIError as err:
+            _LOGGER.error("Failed to get OpenZWave add-on info: %s", err)
+            raise AbortFlow("addon_info_failed") from err
+
+        return addon_info
+
+    async def _async_is_addon_running(self):
+        """Return True if OpenZWave add-on is running."""
+        addon_info = await self._async_get_addon_info()
+        return addon_info["state"] == "started"
+
+    async def _async_is_addon_installed(self):
+        """Return True if OpenZWave add-on is installed."""
+        addon_info = await self._async_get_addon_info()
+        return addon_info["version"] is not None
+
+    async def _async_get_addon_config(self):
+        """Get OpenZWave add-on config."""
+        addon_info = await self._async_get_addon_info()
+        return addon_info["options"]
+
+    async def _async_set_addon_config(self, config):
+        """Set OpenZWave add-on config."""
+        options = {"options": config}
+        try:
+            await self.hass.components.hassio.async_set_addon_options(
+                "core_zwave", options
+            )
+        except self.hass.components.hassio.HassioAPIError as err:
+            _LOGGER.error("Failed to set OpenZWave add-on config: %s", err)
+            raise AbortFlow("addon_set_config_failed") from err
diff --git a/homeassistant/components/ozw/const.py b/homeassistant/components/ozw/const.py
index 8e5007a8419..160b251eeca 100644
--- a/homeassistant/components/ozw/const.py
+++ b/homeassistant/components/ozw/const.py
@@ -10,6 +10,9 @@ from homeassistant.components.switch import DOMAIN as SWITCH_DOMAIN
 
 DOMAIN = "ozw"
 DATA_UNSUBSCRIBE = "unsubscribe"
+
+CONF_INTEGRATION_CREATED_ADDON = "integration_created_addon"
+
 PLATFORMS = [
     BINARY_SENSOR_DOMAIN,
     COVER_DOMAIN,
diff --git a/homeassistant/components/ozw/strings.json b/homeassistant/components/ozw/strings.json
index 88f8911db0d..52317b3d6a8 100644
--- a/homeassistant/components/ozw/strings.json
+++ b/homeassistant/components/ozw/strings.json
@@ -1,13 +1,25 @@
 {
   "config": {
     "step": {
-      "user": {
-        "title": "Confirm set up"
+      "on_supervisor": {
+        "title": "Select connection method",
+        "description": "Do you want to use the OpenZWave Supervisor add-on?",
+        "data": {"use_addon": "Use the OpenZWave Supervisor add-on"}
+      },
+      "start_addon": {
+        "title": "Enter the OpenZWave add-on configuration",
+        "data": {"usb_path": "[%key:common::config_flow::data::usb_path%]", "network_key": "Network Key"}
       }
     },
     "abort": {
+      "addon_info_failed": "Failed to get OpenZWave add-on info.",
+      "addon_install_failed": "Failed to install the OpenZWave add-on.",
+      "addon_set_config_failed": "Failed to set OpenZWave configuration.",
       "single_instance_allowed": "[%key:common::config_flow::abort::single_instance_allowed%]",
       "mqtt_required": "The MQTT integration is not set up"
+    },
+    "error": {
+      "addon_start_failed": "Failed to start the OpenZWave add-on. Check the configuration."
     }
   }
 }
diff --git a/homeassistant/components/ozw/translations/en.json b/homeassistant/components/ozw/translations/en.json
index 4e41ee58d11..e028e1923ae 100644
--- a/homeassistant/components/ozw/translations/en.json
+++ b/homeassistant/components/ozw/translations/en.json
@@ -1,13 +1,29 @@
 {
     "config": {
         "abort": {
+            "addon_info_failed": "Failed to get OpenZWave add-on info.",
+            "addon_install_failed": "Failed to install the OpenZWave add-on.",
+            "addon_set_config_failed": "Failed to set OpenZWave configuration.",
             "mqtt_required": "The MQTT integration is not set up",
-            "one_instance_allowed": "The integration only supports one Z-Wave instance",
             "single_instance_allowed": "Already configured. Only a single configuration possible."
         },
+        "error": {
+            "addon_start_failed": "Failed to start the OpenZWave add-on. Check the configuration."
+        },
         "step": {
-            "user": {
-                "title": "Confirm set up"
+            "on_supervisor": {
+                "data": {
+                    "use_addon": "Use the OpenZWave Supervisor add-on"
+                },
+                "description": "Do you want to use the OpenZWave Supervisor add-on?",
+                "title": "Select connection method"
+            },
+            "start_addon": {
+                "data": {
+                    "network_key": "Network Key",
+                    "usb_path": "USB Device Path"
+                },
+                "title": "Enter the OpenZWave add-on configuration"
             }
         }
     }
diff --git a/tests/components/ozw/conftest.py b/tests/components/ozw/conftest.py
index e09dacd8342..f2518fb8007 100644
--- a/tests/components/ozw/conftest.py
+++ b/tests/components/ozw/conftest.py
@@ -237,3 +237,19 @@ async def lock_msg_fixture(hass):
     message = MQTTMessage(topic=lock_json["topic"], payload=lock_json["payload"])
     message.encode()
     return message
+
+
+@pytest.fixture(name="stop_addon")
+def mock_install_addon():
+    """Mock stop add-on."""
+    with patch("homeassistant.components.hassio.async_stop_addon") as stop_addon:
+        yield stop_addon
+
+
+@pytest.fixture(name="uninstall_addon")
+def mock_uninstall_addon():
+    """Mock uninstall add-on."""
+    with patch(
+        "homeassistant.components.hassio.async_uninstall_addon"
+    ) as uninstall_addon:
+        yield uninstall_addon
diff --git a/tests/components/ozw/test_config_flow.py b/tests/components/ozw/test_config_flow.py
index f6b9f388146..7561244999d 100644
--- a/tests/components/ozw/test_config_flow.py
+++ b/tests/components/ozw/test_config_flow.py
@@ -1,5 +1,8 @@
 """Test the Z-Wave over MQTT config flow."""
+import pytest
+
 from homeassistant import config_entries, setup
+from homeassistant.components.hassio.handler import HassioAPIError
 from homeassistant.components.ozw.config_flow import TITLE
 from homeassistant.components.ozw.const import DOMAIN
 
@@ -7,15 +10,70 @@ from tests.async_mock import patch
 from tests.common import MockConfigEntry
 
 
-async def test_user_create_entry(hass):
-    """Test the user step creates an entry."""
+@pytest.fixture(name="supervisor")
+def mock_supervisor_fixture():
+    """Mock Supervisor."""
+    with patch("homeassistant.components.hassio.is_hassio", return_value=True):
+        yield
+
+
+@pytest.fixture(name="addon_info")
+def mock_addon_info():
+    """Mock Supervisor add-on info."""
+    with patch("homeassistant.components.hassio.async_get_addon_info") as addon_info:
+        addon_info.return_value = {}
+        yield addon_info
+
+
+@pytest.fixture(name="addon_running")
+def mock_addon_running(addon_info):
+    """Mock add-on already running."""
+    addon_info.return_value["state"] = "started"
+    return addon_info
+
+
+@pytest.fixture(name="addon_installed")
+def mock_addon_installed(addon_info):
+    """Mock add-on already installed but not running."""
+    addon_info.return_value["state"] = "stopped"
+    addon_info.return_value["version"] = "1.0"
+    return addon_info
+
+
+@pytest.fixture(name="addon_options")
+def mock_addon_options(addon_info):
+    """Mock add-on options."""
+    addon_info.return_value["options"] = {}
+    return addon_info
+
+
+@pytest.fixture(name="set_addon_options")
+def mock_set_addon_options():
+    """Mock set add-on options."""
+    with patch(
+        "homeassistant.components.hassio.async_set_addon_options"
+    ) as set_options:
+        yield set_options
+
+
+@pytest.fixture(name="install_addon")
+def mock_install_addon():
+    """Mock install add-on."""
+    with patch("homeassistant.components.hassio.async_install_addon") as install_addon:
+        yield install_addon
+
+
+@pytest.fixture(name="start_addon")
+def mock_start_addon():
+    """Mock start add-on."""
+    with patch("homeassistant.components.hassio.async_start_addon") as start_addon:
+        yield start_addon
+
+
+async def test_user_not_supervisor_create_entry(hass):
+    """Test the user step creates an entry not on Supervisor."""
     hass.config.components.add("mqtt")
     await setup.async_setup_component(hass, "persistent_notification", {})
-    result = await hass.config_entries.flow.async_init(
-        DOMAIN, context={"source": config_entries.SOURCE_USER}
-    )
-    assert result["type"] == "form"
-    assert result["errors"] is None
 
     with patch(
         "homeassistant.components.ozw.async_setup", return_value=True
@@ -23,12 +81,19 @@ async def test_user_create_entry(hass):
         "homeassistant.components.ozw.async_setup_entry",
         return_value=True,
     ) as mock_setup_entry:
-        result2 = await hass.config_entries.flow.async_configure(result["flow_id"], {})
+        result = await hass.config_entries.flow.async_init(
+            DOMAIN, context={"source": config_entries.SOURCE_USER}
+        )
         await hass.async_block_till_done()
 
-    assert result2["type"] == "create_entry"
-    assert result2["title"] == TITLE
-    assert result2["data"] == {}
+    assert result["type"] == "create_entry"
+    assert result["title"] == TITLE
+    assert result["data"] == {
+        "usb_path": None,
+        "network_key": None,
+        "use_addon": False,
+        "integration_created_addon": False,
+    }
     assert len(mock_setup.mock_calls) == 1
     assert len(mock_setup_entry.mock_calls) == 1
 
@@ -52,3 +117,230 @@ async def test_one_instance_allowed(hass):
     )
     assert result["type"] == "abort"
     assert result["reason"] == "single_instance_allowed"
+
+
+async def test_not_addon(hass, supervisor):
+    """Test opting out of add-on on Supervisor."""
+    hass.config.components.add("mqtt")
+    await setup.async_setup_component(hass, "persistent_notification", {})
+
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN, context={"source": config_entries.SOURCE_USER}
+    )
+
+    with patch(
+        "homeassistant.components.ozw.async_setup", return_value=True
+    ) as mock_setup, patch(
+        "homeassistant.components.ozw.async_setup_entry",
+        return_value=True,
+    ) as mock_setup_entry:
+        result = await hass.config_entries.flow.async_configure(
+            result["flow_id"], {"use_addon": False}
+        )
+        await hass.async_block_till_done()
+
+    assert result["type"] == "create_entry"
+    assert result["title"] == TITLE
+    assert result["data"] == {
+        "usb_path": None,
+        "network_key": None,
+        "use_addon": False,
+        "integration_created_addon": False,
+    }
+    assert len(mock_setup.mock_calls) == 1
+    assert len(mock_setup_entry.mock_calls) == 1
+
+
+async def test_addon_running(hass, supervisor, addon_running):
+    """Test add-on already running on Supervisor."""
+    hass.config.components.add("mqtt")
+    await setup.async_setup_component(hass, "persistent_notification", {})
+
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN, context={"source": config_entries.SOURCE_USER}
+    )
+
+    with patch(
+        "homeassistant.components.ozw.async_setup", return_value=True
+    ) as mock_setup, patch(
+        "homeassistant.components.ozw.async_setup_entry",
+        return_value=True,
+    ) as mock_setup_entry:
+        result = await hass.config_entries.flow.async_configure(
+            result["flow_id"], {"use_addon": True}
+        )
+        await hass.async_block_till_done()
+
+    assert result["type"] == "create_entry"
+    assert result["title"] == TITLE
+    assert result["data"] == {
+        "usb_path": None,
+        "network_key": None,
+        "use_addon": True,
+        "integration_created_addon": False,
+    }
+    assert len(mock_setup.mock_calls) == 1
+    assert len(mock_setup_entry.mock_calls) == 1
+
+
+async def test_addon_info_failure(hass, supervisor, addon_info):
+    """Test add-on info failure."""
+    hass.config.components.add("mqtt")
+    addon_info.side_effect = HassioAPIError()
+    await setup.async_setup_component(hass, "persistent_notification", {})
+
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN, context={"source": config_entries.SOURCE_USER}
+    )
+
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], {"use_addon": True}
+    )
+
+    assert result["type"] == "abort"
+    assert result["reason"] == "addon_info_failed"
+
+
+async def test_addon_installed(
+    hass, supervisor, addon_installed, addon_options, set_addon_options, start_addon
+):
+    """Test add-on already installed but not running on Supervisor."""
+    hass.config.components.add("mqtt")
+    await setup.async_setup_component(hass, "persistent_notification", {})
+
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN, context={"source": config_entries.SOURCE_USER}
+    )
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], {"use_addon": True}
+    )
+
+    with patch(
+        "homeassistant.components.ozw.async_setup", return_value=True
+    ) as mock_setup, patch(
+        "homeassistant.components.ozw.async_setup_entry",
+        return_value=True,
+    ) as mock_setup_entry:
+        result = await hass.config_entries.flow.async_configure(
+            result["flow_id"], {"usb_path": "/test", "network_key": "abc123"}
+        )
+        await hass.async_block_till_done()
+
+    assert result["type"] == "create_entry"
+    assert result["title"] == TITLE
+    assert result["data"] == {
+        "usb_path": "/test",
+        "network_key": "abc123",
+        "use_addon": True,
+        "integration_created_addon": False,
+    }
+    assert len(mock_setup.mock_calls) == 1
+    assert len(mock_setup_entry.mock_calls) == 1
+
+
+async def test_set_addon_config_failure(
+    hass, supervisor, addon_installed, addon_options, set_addon_options
+):
+    """Test add-on set config failure."""
+    hass.config.components.add("mqtt")
+    set_addon_options.side_effect = HassioAPIError()
+    await setup.async_setup_component(hass, "persistent_notification", {})
+
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN, context={"source": config_entries.SOURCE_USER}
+    )
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], {"use_addon": True}
+    )
+
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], {"usb_path": "/test", "network_key": "abc123"}
+    )
+
+    assert result["type"] == "abort"
+    assert result["reason"] == "addon_set_config_failed"
+
+
+async def test_start_addon_failure(
+    hass, supervisor, addon_installed, addon_options, set_addon_options, start_addon
+):
+    """Test add-on start failure."""
+    hass.config.components.add("mqtt")
+    start_addon.side_effect = HassioAPIError()
+    await setup.async_setup_component(hass, "persistent_notification", {})
+
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN, context={"source": config_entries.SOURCE_USER}
+    )
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], {"use_addon": True}
+    )
+
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], {"usb_path": "/test", "network_key": "abc123"}
+    )
+
+    assert result["type"] == "form"
+    assert result["errors"] == {"base": "addon_start_failed"}
+
+
+async def test_addon_not_installed(
+    hass,
+    supervisor,
+    addon_installed,
+    install_addon,
+    addon_options,
+    set_addon_options,
+    start_addon,
+):
+    """Test add-on not installed."""
+    hass.config.components.add("mqtt")
+    addon_installed.return_value["version"] = None
+    await setup.async_setup_component(hass, "persistent_notification", {})
+
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN, context={"source": config_entries.SOURCE_USER}
+    )
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], {"use_addon": True}
+    )
+
+    with patch(
+        "homeassistant.components.ozw.async_setup", return_value=True
+    ) as mock_setup, patch(
+        "homeassistant.components.ozw.async_setup_entry",
+        return_value=True,
+    ) as mock_setup_entry:
+        result = await hass.config_entries.flow.async_configure(
+            result["flow_id"], {"usb_path": "/test", "network_key": "abc123"}
+        )
+        await hass.async_block_till_done()
+
+    assert result["type"] == "create_entry"
+    assert result["title"] == TITLE
+    assert result["data"] == {
+        "usb_path": "/test",
+        "network_key": "abc123",
+        "use_addon": True,
+        "integration_created_addon": True,
+    }
+    assert len(mock_setup.mock_calls) == 1
+    assert len(mock_setup_entry.mock_calls) == 1
+
+
+async def test_install_addon_failure(hass, supervisor, addon_installed, install_addon):
+    """Test add-on install failure."""
+    hass.config.components.add("mqtt")
+    addon_installed.return_value["version"] = None
+    install_addon.side_effect = HassioAPIError()
+    await setup.async_setup_component(hass, "persistent_notification", {})
+
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN, context={"source": config_entries.SOURCE_USER}
+    )
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], {"use_addon": True}
+    )
+
+    assert result["type"] == "abort"
+    assert result["reason"] == "addon_install_failed"
diff --git a/tests/components/ozw/test_init.py b/tests/components/ozw/test_init.py
index 9a76b4906fa..bf1eefe866a 100644
--- a/tests/components/ozw/test_init.py
+++ b/tests/components/ozw/test_init.py
@@ -1,5 +1,6 @@
 """Test integration initialization."""
 from homeassistant import config_entries
+from homeassistant.components.hassio.handler import HassioAPIError
 from homeassistant.components.ozw import DOMAIN, PLATFORMS, const
 
 from .common import setup_ozw
@@ -60,3 +61,70 @@ async def test_unload_entry(hass, generic_data, switch_msg, caplog):
     assert len(hass.states.async_entity_ids("switch")) == 1
     for record in caplog.records:
         assert record.levelname != "ERROR"
+
+
+async def test_remove_entry(hass, stop_addon, uninstall_addon, caplog):
+    """Test remove the config entry."""
+    # test successful remove without created add-on
+    entry = MockConfigEntry(
+        domain=DOMAIN,
+        title="Z-Wave",
+        connection_class=config_entries.CONN_CLASS_LOCAL_PUSH,
+        data={"integration_created_addon": False},
+    )
+    entry.add_to_hass(hass)
+    assert entry.state == config_entries.ENTRY_STATE_NOT_LOADED
+    assert len(hass.config_entries.async_entries(DOMAIN)) == 1
+
+    await hass.config_entries.async_remove(entry.entry_id)
+
+    assert entry.state == config_entries.ENTRY_STATE_NOT_LOADED
+    assert len(hass.config_entries.async_entries(DOMAIN)) == 0
+
+    # test successful remove with created add-on
+    entry = MockConfigEntry(
+        domain=DOMAIN,
+        title="Z-Wave",
+        connection_class=config_entries.CONN_CLASS_LOCAL_PUSH,
+        data={"integration_created_addon": True},
+    )
+    entry.add_to_hass(hass)
+    assert len(hass.config_entries.async_entries(DOMAIN)) == 1
+
+    await hass.config_entries.async_remove(entry.entry_id)
+
+    stop_addon.call_count == 1
+    uninstall_addon.call_count == 1
+    assert entry.state == config_entries.ENTRY_STATE_NOT_LOADED
+    assert len(hass.config_entries.async_entries(DOMAIN)) == 0
+    stop_addon.reset_mock()
+    uninstall_addon.reset_mock()
+
+    # test add-on stop failure
+    entry.add_to_hass(hass)
+    assert len(hass.config_entries.async_entries(DOMAIN)) == 1
+    stop_addon.side_effect = HassioAPIError()
+
+    await hass.config_entries.async_remove(entry.entry_id)
+
+    stop_addon.call_count == 1
+    uninstall_addon.call_count == 0
+    assert entry.state == config_entries.ENTRY_STATE_NOT_LOADED
+    assert len(hass.config_entries.async_entries(DOMAIN)) == 0
+    assert "Failed to stop the OpenZWave add-on" in caplog.text
+    stop_addon.side_effect = None
+    stop_addon.reset_mock()
+    uninstall_addon.reset_mock()
+
+    # test add-on uninstall failure
+    entry.add_to_hass(hass)
+    assert len(hass.config_entries.async_entries(DOMAIN)) == 1
+    uninstall_addon.side_effect = HassioAPIError()
+
+    await hass.config_entries.async_remove(entry.entry_id)
+
+    stop_addon.call_count == 1
+    uninstall_addon.call_count == 1
+    assert entry.state == config_entries.ENTRY_STATE_NOT_LOADED
+    assert len(hass.config_entries.async_entries(DOMAIN)) == 0
+    assert "Failed to uninstall the OpenZWave add-on" in caplog.text