diff --git a/homeassistant/components/dnsip/sensor.py b/homeassistant/components/dnsip/sensor.py
index ebe5216ab69..a4b0d34b339 100644
--- a/homeassistant/components/dnsip/sensor.py
+++ b/homeassistant/components/dnsip/sensor.py
@@ -23,6 +23,8 @@ from .const import (
     DOMAIN,
 )
 
+DEFAULT_RETRIES = 2
+
 _LOGGER = logging.getLogger(__name__)
 
 SCAN_INTERVAL = timedelta(seconds=120)
@@ -67,6 +69,7 @@ class WanIpSensor(SensorEntity):
         self.resolver = aiodns.DNSResolver()
         self.resolver.nameservers = [resolver]
         self.querytype = "AAAA" if ipv6 else "A"
+        self._retries = DEFAULT_RETRIES
         self._attr_extra_state_attributes = {
             "Resolver": resolver,
             "Querytype": self.querytype,
@@ -90,5 +93,8 @@ class WanIpSensor(SensorEntity):
         if response:
             self._attr_native_value = response[0].host
             self._attr_available = True
+            self._retries = DEFAULT_RETRIES
+        elif self._retries > 0:
+            self._retries -= 1
         else:
             self._attr_available = False
diff --git a/tests/components/dnsip/test_sensor.py b/tests/components/dnsip/test_sensor.py
index 1282cddc5e6..6fd24ad9b13 100644
--- a/tests/components/dnsip/test_sensor.py
+++ b/tests/components/dnsip/test_sensor.py
@@ -5,6 +5,7 @@ from datetime import timedelta
 from unittest.mock import patch
 
 from aiodns.error import DNSError
+from freezegun.api import FrozenDateTimeFactory
 
 from homeassistant.components.dnsip.const import (
     CONF_HOSTNAME,
@@ -14,10 +15,10 @@ from homeassistant.components.dnsip.const import (
     CONF_RESOLVER_IPV6,
     DOMAIN,
 )
+from homeassistant.components.dnsip.sensor import SCAN_INTERVAL
 from homeassistant.config_entries import SOURCE_USER
 from homeassistant.const import CONF_NAME, STATE_UNAVAILABLE
 from homeassistant.core import HomeAssistant
-from homeassistant.util import dt as dt_util
 
 from . import RetrieveDNS
 
@@ -58,7 +59,9 @@ async def test_sensor(hass: HomeAssistant) -> None:
     assert state2.state == "1.2.3.4"
 
 
-async def test_sensor_no_response(hass: HomeAssistant) -> None:
+async def test_sensor_no_response(
+    hass: HomeAssistant, freezer: FrozenDateTimeFactory
+) -> None:
     """Test the DNS IP sensor with DNS error."""
     entry = MockConfigEntry(
         domain=DOMAIN,
@@ -95,10 +98,18 @@ async def test_sensor_no_response(hass: HomeAssistant) -> None:
         "homeassistant.components.dnsip.sensor.aiodns.DNSResolver",
         return_value=dns_mock,
     ):
-        async_fire_time_changed(
-            hass,
-            dt_util.utcnow() + timedelta(minutes=10),
-        )
+        freezer.tick(timedelta(seconds=SCAN_INTERVAL.seconds))
+        async_fire_time_changed(hass)
+        freezer.tick(timedelta(seconds=SCAN_INTERVAL.seconds))
+        async_fire_time_changed(hass)
+        await hass.async_block_till_done()
+
+        # Allows 2 retries before going unavailable
+        state = hass.states.get("sensor.home_assistant_io")
+        assert state.state == "1.2.3.4"
+
+        freezer.tick(timedelta(seconds=SCAN_INTERVAL.seconds))
+        async_fire_time_changed(hass)
         await hass.async_block_till_done()
 
     state = hass.states.get("sensor.home_assistant_io")