diff --git a/homeassistant/components/folder_watcher/__init__.py b/homeassistant/components/folder_watcher/__init__.py
index d111fe03c5c..3f0b9e8f6da 100644
--- a/homeassistant/components/folder_watcher/__init__.py
+++ b/homeassistant/components/folder_watcher/__init__.py
@@ -4,7 +4,7 @@ from __future__ import annotations
 
 import logging
 import os
-from typing import cast
+from typing import Any, cast
 
 import voluptuous as vol
 from watchdog.events import (
@@ -19,17 +19,17 @@ from watchdog.events import (
 )
 from watchdog.observers import Observer
 
+from homeassistant.config_entries import SOURCE_IMPORT, ConfigEntry
 from homeassistant.const import EVENT_HOMEASSISTANT_START, EVENT_HOMEASSISTANT_STOP
 from homeassistant.core import Event, HomeAssistant
 import homeassistant.helpers.config_validation as cv
+from homeassistant.helpers.issue_registry import IssueSeverity, async_create_issue
 from homeassistant.helpers.typing import ConfigType
 
+from .const import CONF_FOLDER, CONF_PATTERNS, DEFAULT_PATTERN, DOMAIN
+
 _LOGGER = logging.getLogger(__name__)
 
-CONF_FOLDER = "folder"
-CONF_PATTERNS = "patterns"
-DEFAULT_PATTERN = "*"
-DOMAIN = "folder_watcher"
 
 CONFIG_SCHEMA = vol.Schema(
     {
@@ -51,20 +51,62 @@ CONFIG_SCHEMA = vol.Schema(
 )
 
 
-def setup(hass: HomeAssistant, config: ConfigType) -> bool:
+async def async_setup(hass: HomeAssistant, config: ConfigType) -> bool:
     """Set up the folder watcher."""
-    conf = config[DOMAIN]
-    for watcher in conf:
-        path: str = watcher[CONF_FOLDER]
-        patterns: list[str] = watcher[CONF_PATTERNS]
-        if not hass.config.is_allowed_path(path):
-            _LOGGER.error("Folder %s is not valid or allowed", path)
-            return False
-        Watcher(path, patterns, hass)
+    if DOMAIN in config:
+        conf: list[dict[str, Any]] = config[DOMAIN]
+        for watcher in conf:
+            path: str = watcher[CONF_FOLDER]
+            if not hass.config.is_allowed_path(path):
+                async_create_issue(
+                    hass,
+                    DOMAIN,
+                    f"import_failed_not_allowed_path_{path}",
+                    is_fixable=False,
+                    is_persistent=False,
+                    severity=IssueSeverity.ERROR,
+                    translation_key="import_failed_not_allowed_path",
+                    translation_placeholders={
+                        "path": path,
+                        "config_variable": "allowlist_external_dirs",
+                    },
+                )
+                continue
+            hass.async_create_task(
+                hass.config_entries.flow.async_init(
+                    DOMAIN, context={"source": SOURCE_IMPORT}, data=watcher
+                )
+            )
 
     return True
 
 
+async def async_setup_entry(hass: HomeAssistant, entry: ConfigEntry) -> bool:
+    """Set up Folder watcher from a config entry."""
+
+    path: str = entry.options[CONF_FOLDER]
+    patterns: list[str] = entry.options[CONF_PATTERNS]
+    if not hass.config.is_allowed_path(path):
+        _LOGGER.error("Folder %s is not valid or allowed", path)
+        async_create_issue(
+            hass,
+            DOMAIN,
+            f"setup_not_allowed_path_{path}",
+            is_fixable=False,
+            is_persistent=False,
+            severity=IssueSeverity.ERROR,
+            translation_key="setup_not_allowed_path",
+            translation_placeholders={
+                "path": path,
+                "config_variable": "allowlist_external_dirs",
+            },
+            learn_more_url="https://www.home-assistant.io/docs/configuration/basic/#allowlist_external_dirs",
+        )
+        return False
+    await hass.async_add_executor_job(Watcher, path, patterns, hass)
+    return True
+
+
 def create_event_handler(patterns: list[str], hass: HomeAssistant) -> EventHandler:
     """Return the Watchdog EventHandler object."""
 
diff --git a/homeassistant/components/folder_watcher/config_flow.py b/homeassistant/components/folder_watcher/config_flow.py
new file mode 100644
index 00000000000..50d198df3c3
--- /dev/null
+++ b/homeassistant/components/folder_watcher/config_flow.py
@@ -0,0 +1,116 @@
+"""Adds config flow for Folder watcher."""
+
+from __future__ import annotations
+
+from collections.abc import Mapping
+import os
+from typing import Any
+
+import voluptuous as vol
+
+from homeassistant.components.homeassistant import DOMAIN as HOMEASSISTANT_DOMAIN
+from homeassistant.config_entries import ConfigFlowResult
+from homeassistant.core import callback
+from homeassistant.helpers.issue_registry import IssueSeverity, async_create_issue
+from homeassistant.helpers.schema_config_entry_flow import (
+    SchemaCommonFlowHandler,
+    SchemaConfigFlowHandler,
+    SchemaFlowError,
+    SchemaFlowFormStep,
+)
+from homeassistant.helpers.selector import (
+    SelectSelector,
+    SelectSelectorConfig,
+    SelectSelectorMode,
+    TextSelector,
+)
+
+from .const import CONF_FOLDER, CONF_PATTERNS, DEFAULT_PATTERN, DOMAIN
+
+
+async def validate_setup(
+    handler: SchemaCommonFlowHandler, user_input: dict[str, Any]
+) -> dict[str, Any]:
+    """Check path is a folder."""
+    value: str = user_input[CONF_FOLDER]
+    dir_in = os.path.expanduser(str(value))
+    handler.parent_handler._async_abort_entries_match({CONF_FOLDER: value})  # pylint: disable=protected-access
+
+    if not os.path.isdir(dir_in):
+        raise SchemaFlowError("not_dir")
+    if not os.access(dir_in, os.R_OK):
+        raise SchemaFlowError("not_readable_dir")
+    if not handler.parent_handler.hass.config.is_allowed_path(value):
+        raise SchemaFlowError("not_allowed_dir")
+
+    return user_input
+
+
+async def validate_import_setup(
+    handler: SchemaCommonFlowHandler, user_input: dict[str, Any]
+) -> dict[str, Any]:
+    """Create issue on successful import."""
+    async_create_issue(
+        handler.parent_handler.hass,
+        HOMEASSISTANT_DOMAIN,
+        f"deprecated_yaml_{DOMAIN}",
+        breaks_in_ha_version="2024.11.0",
+        is_fixable=False,
+        is_persistent=False,
+        issue_domain=DOMAIN,
+        severity=IssueSeverity.WARNING,
+        translation_key="deprecated_yaml",
+        translation_placeholders={
+            "domain": DOMAIN,
+            "integration_title": "Folder Watcher",
+        },
+    )
+    return user_input
+
+
+OPTIONS_SCHEMA = vol.Schema(
+    {
+        vol.Optional(CONF_PATTERNS, default=[DEFAULT_PATTERN]): SelectSelector(
+            SelectSelectorConfig(
+                options=[DEFAULT_PATTERN],
+                multiple=True,
+                custom_value=True,
+                mode=SelectSelectorMode.DROPDOWN,
+            )
+        ),
+    }
+)
+DATA_SCHEMA = vol.Schema(
+    {
+        vol.Required(CONF_FOLDER): TextSelector(),
+    }
+).extend(OPTIONS_SCHEMA.schema)
+
+CONFIG_FLOW = {
+    "user": SchemaFlowFormStep(schema=DATA_SCHEMA, validate_user_input=validate_setup),
+    "import": SchemaFlowFormStep(
+        schema=DATA_SCHEMA, validate_user_input=validate_import_setup
+    ),
+}
+OPTIONS_FLOW = {
+    "init": SchemaFlowFormStep(schema=OPTIONS_SCHEMA),
+}
+
+
+class FolderWatcherConfigFlowHandler(SchemaConfigFlowHandler, domain=DOMAIN):
+    """Handle a config flow for Folder Watcher."""
+
+    config_flow = CONFIG_FLOW
+    options_flow = OPTIONS_FLOW
+
+    def async_config_entry_title(self, options: Mapping[str, Any]) -> str:
+        """Return config entry title."""
+        return f"Folder Watcher {options[CONF_FOLDER]}"
+
+    @callback
+    def async_create_entry(
+        self, data: Mapping[str, Any], **kwargs: Any
+    ) -> ConfigFlowResult:
+        """Finish config flow and create a config entry."""
+        self._async_abort_entries_match({CONF_FOLDER: data[CONF_FOLDER]})
+        return super().async_create_entry(data, **kwargs)
diff --git a/homeassistant/components/folder_watcher/const.py b/homeassistant/components/folder_watcher/const.py
new file mode 100644
index 00000000000..22dae3b9164
--- /dev/null
+++ b/homeassistant/components/folder_watcher/const.py
@@ -0,0 +1,6 @@
+"""Constants for Folder watcher."""
+
+CONF_FOLDER = "folder"
+CONF_PATTERNS = "patterns"
+DEFAULT_PATTERN = "*"
+DOMAIN = "folder_watcher"
diff --git a/homeassistant/components/folder_watcher/manifest.json b/homeassistant/components/folder_watcher/manifest.json
index 96decd0b8cf..7b471e08fcc 100644
--- a/homeassistant/components/folder_watcher/manifest.json
+++ b/homeassistant/components/folder_watcher/manifest.json
@@ -2,6 +2,7 @@
   "domain": "folder_watcher",
   "name": "Folder Watcher",
   "codeowners": [],
+  "config_flow": true,
   "documentation": "https://www.home-assistant.io/integrations/folder_watcher",
   "iot_class": "local_polling",
   "loggers": ["watchdog"],
diff --git a/homeassistant/components/folder_watcher/strings.json b/homeassistant/components/folder_watcher/strings.json
new file mode 100644
index 00000000000..bd1742b8ce3
--- /dev/null
+++ b/homeassistant/components/folder_watcher/strings.json
@@ -0,0 +1,46 @@
+{
+  "config": {
+    "abort": {
+      "already_configured": "[%key:common::config_flow::abort::already_configured_service%]"
+    },
+    "error": {
+      "not_dir": "Configured path is not a directory",
+      "not_readable_dir": "Configured path is not readable",
+      "not_allowed_dir": "Configured path is not in allowlist"
+    },
+    "step": {
+      "user": {
+        "data": {
+          "folder": "Path to the watched folder",
+          "patterns": "Pattern(s) to monitor"
+        },
+        "data_description": {
+          "folder": "Path needs to be from root, as example `/config`",
+          "patterns": "Example: `*.yaml` to only see yaml files"
+        }
+      }
+    }
+  },
+  "options": {
+    "step": {
+      "init": {
+        "data": {
+          "patterns": "[%key:component::folder_watcher::config::step::user::data::patterns%]"
+        },
+        "data_description": {
+          "patterns": "[%key:component::folder_watcher::config::step::user::data_description::patterns%]"
+        }
+      }
+    }
+  },
+  "issues": {
+    "import_failed_not_allowed_path": {
+      "title": "The Folder Watcher YAML configuration could not be imported",
+      "description": "Configuring Folder Watcher using YAML is being removed but your configuration could not be imported as the folder {path} is not in the configured allowlist.\n\nPlease add it to `{config_variable}` in config.yaml and restart Home Assistant to import it and fix this issue."
+    },
+    "setup_not_allowed_path": {
+      "title": "The Folder Watcher configuration for {path} could not start",
+      "description": "The path {path} is not accessible or not allowed to be accessed.\n\nPlease check the path is accessible and add it to `{config_variable}` in config.yaml and restart Home Assistant to fix this issue."
+    }
+  }
+}
diff --git a/homeassistant/generated/config_flows.py b/homeassistant/generated/config_flows.py
index e5d5f37ad5a..6f6ce237904 100644
--- a/homeassistant/generated/config_flows.py
+++ b/homeassistant/generated/config_flows.py
@@ -175,6 +175,7 @@ FLOWS = {
         "flo",
         "flume",
         "flux_led",
+        "folder_watcher",
         "forecast_solar",
         "forked_daapd",
         "foscam",
diff --git a/homeassistant/generated/integrations.json b/homeassistant/generated/integrations.json
index 0ee796d5376..e6a103989d1 100644
--- a/homeassistant/generated/integrations.json
+++ b/homeassistant/generated/integrations.json
@@ -1956,7 +1956,7 @@
     "folder_watcher": {
       "name": "Folder Watcher",
       "integration_type": "hub",
-      "config_flow": false,
+      "config_flow": true,
       "iot_class": "local_polling"
     },
     "foobot": {
diff --git a/tests/components/folder_watcher/conftest.py b/tests/components/folder_watcher/conftest.py
new file mode 100644
index 00000000000..06c0a41d49c
--- /dev/null
+++ b/tests/components/folder_watcher/conftest.py
@@ -0,0 +1,17 @@
+"""Fixtures for Folder Watcher integration tests."""
+
+from __future__ import annotations
+
+from collections.abc import Generator
+from unittest.mock import patch
+
+import pytest
+
+
+@pytest.fixture
+def mock_setup_entry() -> Generator[None, None, None]:
+    """Mock setting up a config entry."""
+    with patch(
+        "homeassistant.components.folder_watcher.async_setup_entry", return_value=True
+    ):
+        yield
diff --git a/tests/components/folder_watcher/test_config_flow.py b/tests/components/folder_watcher/test_config_flow.py
new file mode 100644
index 00000000000..745059717fb
--- /dev/null
+++ b/tests/components/folder_watcher/test_config_flow.py
@@ -0,0 +1,186 @@
+"""Test the Folder Watcher config flow."""
+
+from pathlib import Path
+from unittest.mock import patch
+
+import pytest
+
+from homeassistant import config_entries
+from homeassistant.components.folder_watcher.const import (
+    CONF_FOLDER,
+    CONF_PATTERNS,
+    DOMAIN,
+)
+from homeassistant.core import HomeAssistant
+from homeassistant.data_entry_flow import FlowResultType
+
+from tests.common import MockConfigEntry
+
+pytestmark = pytest.mark.usefixtures("mock_setup_entry")
+
+
+async def test_form(hass: HomeAssistant, tmp_path: Path) -> None:
+    """Test we get the form."""
+    path = tmp_path.as_posix()
+    hass.config.allowlist_external_dirs = {path}
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN, context={"source": config_entries.SOURCE_USER}
+    )
+    assert result["type"] == FlowResultType.FORM
+
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"],
+        {CONF_FOLDER: path},
+    )
+    await hass.async_block_till_done()
+
+    assert result["type"] == FlowResultType.CREATE_ENTRY
+    assert result["title"] == f"Folder Watcher {path}"
+    assert result["options"] == {CONF_FOLDER: path, CONF_PATTERNS: ["*"]}
+
+
+async def test_form_not_allowed_path(hass: HomeAssistant, tmp_path: Path) -> None:
+    """Test we handle not allowed path."""
+    path = tmp_path.as_posix()
+    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"],
+        {CONF_FOLDER: path},
+    )
+
+    assert result["type"] == FlowResultType.FORM
+    assert result["errors"] == {"base": "not_allowed_dir"}
+
+    hass.config.allowlist_external_dirs = {tmp_path}
+
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"],
+        {CONF_FOLDER: path},
+    )
+    await hass.async_block_till_done()
+
+    assert result["type"] == FlowResultType.CREATE_ENTRY
+    assert result["title"] == f"Folder Watcher {path}"
+    assert result["options"] == {CONF_FOLDER: path, CONF_PATTERNS: ["*"]}
+
+
+async def test_form_not_directory(hass: HomeAssistant, tmp_path: Path) -> None:
+    """Test we handle not a directory."""
+    path = tmp_path.as_posix()
+    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"],
+        {CONF_FOLDER: "not_a_directory"},
+    )
+
+    assert result["type"] == FlowResultType.FORM
+    assert result["errors"] == {"base": "not_dir"}
+
+    hass.config.allowlist_external_dirs = {path}
+
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"],
+        {CONF_FOLDER: path},
+    )
+    await hass.async_block_till_done()
+
+    assert result["type"] == FlowResultType.CREATE_ENTRY
+    assert result["title"] == f"Folder Watcher {path}"
+    assert result["options"] == {CONF_FOLDER: path, CONF_PATTERNS: ["*"]}
+
+
+async def test_form_not_readable_dir(hass: HomeAssistant, tmp_path: Path) -> None:
+    """Test we handle not able to read directory."""
+    path = tmp_path.as_posix()
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN, context={"source": config_entries.SOURCE_USER}
+    )
+
+    with patch("os.access", return_value=False):
+        result = await hass.config_entries.flow.async_configure(
+            result["flow_id"],
+            {CONF_FOLDER: path},
+        )
+        await hass.async_block_till_done()
+
+    assert result["type"] == FlowResultType.FORM
+    assert result["errors"] == {"base": "not_readable_dir"}
+
+    hass.config.allowlist_external_dirs = {path}
+
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"],
+        {CONF_FOLDER: path},
+    )
+    await hass.async_block_till_done()
+
+    assert result["type"] == FlowResultType.CREATE_ENTRY
+    assert result["title"] == f"Folder Watcher {path}"
+    assert result["options"] == {CONF_FOLDER: path, CONF_PATTERNS: ["*"]}
+
+
+async def test_form_already_configured(hass: HomeAssistant, tmp_path: Path) -> None:
+    """Test we abort when entry is already configured."""
+    path = tmp_path.as_posix()
+    hass.config.allowlist_external_dirs = {path}
+
+    entry = MockConfigEntry(
+        domain=DOMAIN,
+        title=f"Folder Watcher {path}",
+        data={CONF_FOLDER: path},
+    )
+    entry.add_to_hass(hass)
+
+    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"],
+        {CONF_FOLDER: path},
+    )
+
+    assert result["type"] == FlowResultType.ABORT
+    assert result["reason"] == "already_configured"
+
+
+async def test_import(hass: HomeAssistant, tmp_path: Path) -> None:
+    """Test import flow."""
+    path = tmp_path.as_posix()
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN,
+        context={"source": config_entries.SOURCE_IMPORT},
+        data={CONF_FOLDER: path, CONF_PATTERNS: ["*"]},
+    )
+    await hass.async_block_till_done()
+
+    assert result["type"] == FlowResultType.CREATE_ENTRY
+    assert result["title"] == f"Folder Watcher {path}"
+    assert result["options"] == {CONF_FOLDER: path, CONF_PATTERNS: ["*"]}
+
+
+async def test_import_already_configured(hass: HomeAssistant, tmp_path: Path) -> None:
+    """Test we abort import when entry is already configured."""
+    path = tmp_path.as_posix()
+
+    entry = MockConfigEntry(
+        domain=DOMAIN,
+        title=f"Folder Watcher {path}",
+        data={CONF_FOLDER: path},
+    )
+    entry.add_to_hass(hass)
+
+    result = await hass.config_entries.flow.async_init(
+        DOMAIN,
+        context={"source": config_entries.SOURCE_IMPORT},
+        data={CONF_FOLDER: path},
+    )
+
+    assert result["type"] == FlowResultType.ABORT
+    assert result["reason"] == "already_configured"