diff --git a/homeassistant/components/reolink/__init__.py b/homeassistant/components/reolink/__init__.py
index 2489133841a..99ca91c5bdf 100644
--- a/homeassistant/components/reolink/__init__.py
+++ b/homeassistant/components/reolink/__init__.py
@@ -67,9 +67,7 @@ async def async_setup_entry(
     hass: HomeAssistant, config_entry: ReolinkConfigEntry
 ) -> bool:
     """Set up Reolink from a config entry."""
-    host = ReolinkHost(
-        hass, config_entry.data, config_entry.options, config_entry.entry_id
-    )
+    host = ReolinkHost(hass, config_entry.data, config_entry.options, config_entry)
 
     try:
         await host.async_init()
diff --git a/homeassistant/components/reolink/host.py b/homeassistant/components/reolink/host.py
index 53061500e32..a027177f1fc 100644
--- a/homeassistant/components/reolink/host.py
+++ b/homeassistant/components/reolink/host.py
@@ -41,7 +41,7 @@ from .exceptions import (
     ReolinkWebhookException,
     UserNotAdmin,
 )
-from .util import get_store
+from .util import ReolinkConfigEntry, get_store
 
 DEFAULT_TIMEOUT = 30
 FIRST_TCP_PUSH_TIMEOUT = 10
@@ -67,11 +67,11 @@ class ReolinkHost:
         hass: HomeAssistant,
         config: Mapping[str, Any],
         options: Mapping[str, Any],
-        config_entry_id: str | None = None,
+        config_entry: ReolinkConfigEntry | None = None,
     ) -> None:
         """Initialize Reolink Host. Could be either NVR, or Camera."""
         self._hass: HomeAssistant = hass
-        self._config_entry_id = config_entry_id
+        self._config_entry = config_entry
         self._config = config
         self._unique_id: str = ""
 
@@ -151,15 +151,33 @@ class ReolinkHost:
     async def async_init(self) -> None:
         """Connect to Reolink host."""
         if not self._api.valid_password():
+            if (
+                len(self._config[CONF_PASSWORD]) >= 32
+                and self._config_entry is not None
+            ):
+                ir.async_create_issue(
+                    self._hass,
+                    DOMAIN,
+                    f"password_too_long_{self._config_entry.entry_id}",
+                    is_fixable=True,
+                    severity=ir.IssueSeverity.ERROR,
+                    translation_key="password_too_long",
+                    translation_placeholders={"name": self._config_entry.title},
+                )
+
             raise PasswordIncompatible(
-                "Reolink password contains incompatible special character, "
-                "please change the password to only contain characters: "
-                f"a-z, A-Z, 0-9 or {ALLOWED_SPECIAL_CHARS}"
+                "Reolink password contains incompatible special character or "
+                "is too long, please change the password to only contain characters: "
+                f"a-z, A-Z, 0-9 or {ALLOWED_SPECIAL_CHARS} "
+                "and not be longer than 31 characters"
             )
 
         store: Store[str] | None = None
-        if self._config_entry_id is not None:
-            store = get_store(self._hass, self._config_entry_id)
+        if self._config_entry is not None:
+            ir.async_delete_issue(
+                self._hass, DOMAIN, f"password_too_long_{self._config_entry.entry_id}"
+            )
+            store = get_store(self._hass, self._config_entry.entry_id)
             if self._config.get(CONF_SUPPORTS_PRIVACY_MODE) and (
                 data := await store.async_load()
             ):
diff --git a/homeassistant/components/reolink/manifest.json b/homeassistant/components/reolink/manifest.json
index 0cb5eb3e13c..41cfe1f9ae3 100644
--- a/homeassistant/components/reolink/manifest.json
+++ b/homeassistant/components/reolink/manifest.json
@@ -19,5 +19,5 @@
   "iot_class": "local_push",
   "loggers": ["reolink_aio"],
   "quality_scale": "platinum",
-  "requirements": ["reolink-aio==0.12.3b1"]
+  "requirements": ["reolink-aio==0.12.3"]
 }
diff --git a/homeassistant/components/reolink/strings.json b/homeassistant/components/reolink/strings.json
index 53df658239c..74823c4bd32 100644
--- a/homeassistant/components/reolink/strings.json
+++ b/homeassistant/components/reolink/strings.json
@@ -31,7 +31,7 @@
       "cannot_connect": "Failed to connect, check the IP address of the camera",
       "invalid_auth": "[%key:common::config_flow::error::invalid_auth%]",
       "not_admin": "User needs to be admin, user \"{username}\" has authorisation level \"{userlevel}\"",
-      "password_incompatible": "Password contains incompatible special character, only these characters are allowed: a-z, A-Z, 0-9 or {special_chars}",
+      "password_incompatible": "Password contains incompatible special character or is too long, maximum 31 characters and only these characters are allowed: a-z, A-Z, 0-9 or {special_chars}",
       "unknown": "[%key:common::config_flow::error::unknown%]",
       "update_needed": "Failed to login because of outdated firmware, please update the firmware to version {needed_firmware} using the Reolink Download Center: {download_center_url}, currently version {current_firmware} is installed",
       "webhook_exception": "Home Assistant URL is not available, go to Settings > System > Network > Home Assistant URL and correct the URLs, see {more_info}"
@@ -129,6 +129,10 @@
     "hub_switch_deprecated": {
       "title": "Reolink Home Hub switches deprecated",
       "description": "The redundant 'Record', 'Email on event', 'FTP upload', 'Push notifications', and 'Buzzer on event' switches on the Reolink Home Hub are deprecated since the new firmware no longer supports these. Please use the equally named switches under each of the camera devices connected to the Home Hub instead. To remove this issue, please adjust automations accordingly and disable the switch entities mentioned."
+    },
+    "password_too_long": {
+      "title": "Reolink password too long",
+      "description": "The password for \"{name}\" is more than 31 characters long, this is no longer compatible with the Reolink API. Please change the password using the Reolink app/client to a password with is shorter than 32 characters. After changing the password, fill in the new password in the Reolink Re-authentication flow to continue using this integration. The latest version of the Reolink app/client also has a password limit of 31 characters."
     }
   },
   "services": {
diff --git a/requirements_all.txt b/requirements_all.txt
index f4e20f563a1..9848158a10e 100644
--- a/requirements_all.txt
+++ b/requirements_all.txt
@@ -2622,7 +2622,7 @@ renault-api==0.2.9
 renson-endura-delta==1.7.2
 
 # homeassistant.components.reolink
-reolink-aio==0.12.3b1
+reolink-aio==0.12.3
 
 # homeassistant.components.idteck_prox
 rfk101py==0.0.1
diff --git a/requirements_test_all.txt b/requirements_test_all.txt
index b4435e22827..cc2b8acc214 100644
--- a/requirements_test_all.txt
+++ b/requirements_test_all.txt
@@ -2122,7 +2122,7 @@ renault-api==0.2.9
 renson-endura-delta==1.7.2
 
 # homeassistant.components.reolink
-reolink-aio==0.12.3b1
+reolink-aio==0.12.3
 
 # homeassistant.components.rflink
 rflink==0.0.66
diff --git a/tests/components/reolink/test_init.py b/tests/components/reolink/test_init.py
index ad7f5540b04..4c4908dca6f 100644
--- a/tests/components/reolink/test_init.py
+++ b/tests/components/reolink/test_init.py
@@ -22,7 +22,11 @@ from homeassistant.components.reolink import (
 from homeassistant.components.reolink.const import CONF_BC_PORT, DOMAIN
 from homeassistant.config_entries import ConfigEntryState
 from homeassistant.const import (
+    CONF_HOST,
+    CONF_PASSWORD,
     CONF_PORT,
+    CONF_PROTOCOL,
+    CONF_USERNAME,
     STATE_OFF,
     STATE_ON,
     STATE_UNAVAILABLE,
@@ -35,17 +39,25 @@ from homeassistant.helpers import (
     entity_registry as er,
     issue_registry as ir,
 )
+from homeassistant.helpers.device_registry import format_mac
 from homeassistant.setup import async_setup_component
 
 from .conftest import (
+    CONF_SUPPORTS_PRIVACY_MODE,
+    CONF_USE_HTTPS,
+    DEFAULT_PROTOCOL,
     TEST_BC_PORT,
     TEST_CAM_MODEL,
+    TEST_HOST,
     TEST_HOST_MODEL,
     TEST_MAC,
     TEST_NVR_NAME,
     TEST_PORT,
+    TEST_PRIVACY,
     TEST_UID,
     TEST_UID_CAM,
+    TEST_USE_HTTPS,
+    TEST_USERNAME,
 )
 
 from tests.common import MockConfigEntry, async_fire_time_changed
@@ -723,6 +735,41 @@ async def test_firmware_repair_issue(
     await hass.async_block_till_done()
 
     assert (DOMAIN, "firmware_update_host") in issue_registry.issues
+    reolink_connect.camera_sw_version_update_required.return_value = False
+
+
+async def test_password_too_long_repair_issue(
+    hass: HomeAssistant,
+    reolink_connect: MagicMock,
+    issue_registry: ir.IssueRegistry,
+) -> None:
+    """Test password too long issue is raised."""
+    reolink_connect.valid_password.return_value = False
+    config_entry = MockConfigEntry(
+        domain=DOMAIN,
+        unique_id=format_mac(TEST_MAC),
+        data={
+            CONF_HOST: TEST_HOST,
+            CONF_USERNAME: TEST_USERNAME,
+            CONF_PASSWORD: "too_longgggggggggggggggggggggggggggggggggggggggggggggggggg",
+            CONF_PORT: TEST_PORT,
+            CONF_USE_HTTPS: TEST_USE_HTTPS,
+            CONF_SUPPORTS_PRIVACY_MODE: TEST_PRIVACY,
+        },
+        options={
+            CONF_PROTOCOL: DEFAULT_PROTOCOL,
+        },
+        title=TEST_NVR_NAME,
+    )
+    config_entry.add_to_hass(hass)
+    assert not await hass.config_entries.async_setup(config_entry.entry_id)
+    await hass.async_block_till_done()
+
+    assert (
+        DOMAIN,
+        f"password_too_long_{config_entry.entry_id}",
+    ) in issue_registry.issues
+    reolink_connect.valid_password.return_value = True
 
 
 async def test_new_device_discovered(