diff --git a/homeassistant/components/sensor/__init__.py b/homeassistant/components/sensor/__init__.py
index eece39c793b..c9e8568c638 100644
--- a/homeassistant/components/sensor/__init__.py
+++ b/homeassistant/components/sensor/__init__.py
@@ -8,7 +8,7 @@ from dataclasses import dataclass
 from datetime import date, datetime, timedelta, timezone
 from decimal import Decimal, InvalidOperation as DecimalInvalidOperation
 import logging
-from math import floor, log10
+from math import ceil, floor, log10
 import re
 from typing import Any, Final, cast, final
 
@@ -679,11 +679,40 @@ class SensorEntity(Entity):
         """Update suggested display precision stored in registry."""
         assert self.registry_entry
 
+        device_class = self.device_class
         display_precision = self.suggested_display_precision
+        default_unit_of_measurement = (
+            self.suggested_unit_of_measurement or self.native_unit_of_measurement
+        )
+        unit_of_measurement = self.unit_of_measurement
 
         if (
-            sensor_options := self.registry_entry.options.get(DOMAIN, {})
-        ) and sensor_options.get("suggested_display_precision") == display_precision:
+            display_precision is not None
+            and default_unit_of_measurement != unit_of_measurement
+            and device_class in UNIT_CONVERTERS
+        ):
+            converter = UNIT_CONVERTERS[device_class]
+
+            # Scale the precision when converting to a larger or smaller unit
+            # For example 1.1 Wh should be rendered as 0.0011 kWh, not 0.0 kWh
+            ratio_log = log10(
+                converter.get_unit_ratio(
+                    default_unit_of_measurement, unit_of_measurement
+                )
+            )
+            ratio_log = floor(ratio_log) if ratio_log > 0 else ceil(ratio_log)
+            display_precision = max(0, display_precision + ratio_log)
+
+        if display_precision is None and (
+            DOMAIN not in self.registry_entry.options
+            or "suggested_display_precision" not in self.registry_entry.options
+        ):
+            return
+        sensor_options = self.registry_entry.options.get(DOMAIN, {})
+        if (
+            "suggested_display_precision" in sensor_options
+            and sensor_options["suggested_display_precision"] == display_precision
+        ):
             return
 
         registry = er.async_get(self.hass)
@@ -716,6 +745,7 @@ class SensorEntity(Entity):
     def async_registry_entry_updated(self) -> None:
         """Run when the entity registry entry has been updated."""
         self._async_read_entity_options()
+        self._update_suggested_precision()
 
     @callback
     def _async_read_entity_options(self) -> None:
diff --git a/tests/components/sensor/test_init.py b/tests/components/sensor/test_init.py
index 769c73ca0bd..5a6429fffa4 100644
--- a/tests/components/sensor/test_init.py
+++ b/tests/components/sensor/test_init.py
@@ -1143,27 +1143,46 @@ async def test_unit_conversion_priority_suggested_unit_change(
 
 
 @pytest.mark.parametrize(
-    "native_unit, suggested_precision, native_value, device_class",
+    "unit_system, native_unit, integration_suggested_precision,"
+    "options_suggested_precision, native_value, device_class, extra_options",
     [
         # Distance
         (
+            METRIC_SYSTEM,
             UnitOfLength.KILOMETERS,
             4,
+            4,
             1000,
             SensorDeviceClass.DISTANCE,
+            {},
+        ),
+        # Air pressure
+        (
+            US_CUSTOMARY_SYSTEM,
+            UnitOfPressure.HPA,
+            0,
+            1,
+            1000,
+            SensorDeviceClass.ATMOSPHERIC_PRESSURE,
+            {"sensor.private": {"suggested_unit_of_measurement": "inHg"}},
         ),
     ],
 )
 async def test_suggested_precision_option(
     hass,
     enable_custom_integrations,
+    unit_system,
     native_unit,
-    suggested_precision,
+    integration_suggested_precision,
+    options_suggested_precision,
     native_value,
     device_class,
+    extra_options,
 ):
     """Test suggested precision is stored in the registry."""
 
+    hass.config.units = unit_system
+
     entity_registry = er.async_get(hass)
     platform = getattr(hass.components, "test.sensor")
     platform.init(empty=True)
@@ -1173,7 +1192,7 @@ async def test_suggested_precision_option(
         device_class=device_class,
         native_unit_of_measurement=native_unit,
         native_value=str(native_value),
-        suggested_display_precision=suggested_precision,
+        suggested_display_precision=integration_suggested_precision,
         unique_id="very_unique",
     )
     entity0 = platform.ENTITIES["0"]
@@ -1183,34 +1202,58 @@ async def test_suggested_precision_option(
 
     # Assert the suggested precision is stored in the registry
     entry = entity_registry.async_get(entity0.entity_id)
-    assert entry.options == {
-        "sensor": {"suggested_display_precision": suggested_precision}
+    assert entry.options == extra_options | {
+        "sensor": {"suggested_display_precision": options_suggested_precision}
     }
 
 
 @pytest.mark.parametrize(
-    "native_unit, old_precision, new_precision, native_value, device_class",
+    "unit_system, native_unit, suggested_unit, old_precision, new_precision,"
+    "opt_precision, native_value, device_class, extra_options",
     [
+        # Distance
         (
+            METRIC_SYSTEM,
+            UnitOfLength.KILOMETERS,
             UnitOfLength.KILOMETERS,
             4,
             1,
+            1,
             1000,
             SensorDeviceClass.DISTANCE,
+            {},
+        ),
+        # Air pressure
+        (
+            US_CUSTOMARY_SYSTEM,
+            UnitOfPressure.HPA,
+            UnitOfPressure.INHG,
+            1,
+            1,
+            2,
+            1000,
+            SensorDeviceClass.ATMOSPHERIC_PRESSURE,
+            {"sensor.private": {"suggested_unit_of_measurement": "inHg"}},
         ),
     ],
 )
 async def test_suggested_precision_option_update(
     hass,
     enable_custom_integrations,
+    unit_system,
     native_unit,
+    suggested_unit,
     old_precision,
     new_precision,
+    opt_precision,
     native_value,
     device_class,
+    extra_options,
 ):
     """Test suggested precision stored in the registry is updated."""
 
+    hass.config.units = unit_system
+
     entity_registry = er.async_get(hass)
     platform = getattr(hass.components, "test.sensor")
     platform.init(empty=True)
@@ -1228,7 +1271,7 @@ async def test_suggested_precision_option_update(
         entry.entity_id,
         "sensor.private",
         {
-            "suggested_unit_of_measurement": native_unit,
+            "suggested_unit_of_measurement": suggested_unit,
         },
     )
 
@@ -1249,10 +1292,10 @@ async def test_suggested_precision_option_update(
     entry = entity_registry.async_get(entity0.entity_id)
     assert entry.options == {
         "sensor": {
-            "suggested_display_precision": new_precision,
+            "suggested_display_precision": opt_precision,
         },
         "sensor.private": {
-            "suggested_unit_of_measurement": native_unit,
+            "suggested_unit_of_measurement": suggested_unit,
         },
     }