diff --git a/homeassistant/components/esphome/__init__.py b/homeassistant/components/esphome/__init__.py
index 47ef51087d2..e4dceb304b7 100644
--- a/homeassistant/components/esphome/__init__.py
+++ b/homeassistant/components/esphome/__init__.py
@@ -380,7 +380,7 @@ def _async_setup_device_registry(
         config_entry_id=entry.entry_id,
         configuration_url=configuration_url,
         connections={(dr.CONNECTION_NETWORK_MAC, device_info.mac_address)},
-        name=device_info.name,
+        name=device_info.friendly_name or device_info.name,
         manufacturer=manufacturer,
         model=model,
         sw_version=sw_version,
@@ -705,6 +705,8 @@ class EsphomeEntity(Entity, Generic[_InfoT, _StateT]):
         self._component_key = component_key
         self._key = key
         self._state_type = state_type
+        if entry_data.device_info is not None and entry_data.device_info.friendly_name:
+            self._attr_has_entity_name = True
 
     async def async_added_to_hass(self) -> None:
         """Register callbacks."""
diff --git a/homeassistant/components/esphome/config_flow.py b/homeassistant/components/esphome/config_flow.py
index 0108b723276..4b6e8ccb9ab 100644
--- a/homeassistant/components/esphome/config_flow.py
+++ b/homeassistant/components/esphome/config_flow.py
@@ -179,8 +179,10 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
         mac_address = format_mac(mac_address)
 
         # Hostname is format: livingroom.local.
-        self._name = discovery_info.hostname.removesuffix(".local.")
-        self._device_name = self._name
+        device_name = discovery_info.hostname.removesuffix(".local.")
+
+        self._name = discovery_info.properties.get("friendly_name", device_name)
+        self._device_name = device_name
         self._host = discovery_info.host
         self._port = discovery_info.port
 
@@ -306,7 +308,8 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
         finally:
             await cli.disconnect(force=True)
 
-        self._name = self._device_name = self._device_info.name
+        self._name = self._device_info.friendly_name or self._device_info.name
+        self._device_name = self._device_info.name
         await self.async_set_unique_id(
             self._device_info.mac_address, raise_on_progress=False
         )
diff --git a/homeassistant/components/esphome/entry_data.py b/homeassistant/components/esphome/entry_data.py
index c677effbcb0..24322fdac47 100644
--- a/homeassistant/components/esphome/entry_data.py
+++ b/homeassistant/components/esphome/entry_data.py
@@ -100,6 +100,13 @@ class RuntimeEntryData:
         """Return the name of the device."""
         return self.device_info.name if self.device_info else self.entry_id
 
+    @property
+    def friendly_name(self) -> str:
+        """Return the friendly name of the device."""
+        if self.device_info and self.device_info.friendly_name:
+            return self.device_info.friendly_name
+        return self.name
+
     @callback
     def async_update_ble_connection_limits(self, free: int, limit: int) -> None:
         """Update the BLE connection limits."""
diff --git a/homeassistant/components/esphome/manifest.json b/homeassistant/components/esphome/manifest.json
index 014b6d6d6e0..3e92f5a515c 100644
--- a/homeassistant/components/esphome/manifest.json
+++ b/homeassistant/components/esphome/manifest.json
@@ -3,7 +3,7 @@
   "name": "ESPHome",
   "config_flow": true,
   "documentation": "https://www.home-assistant.io/integrations/esphome",
-  "requirements": ["aioesphomeapi==13.0.4", "esphome-dashboard-api==1.1"],
+  "requirements": ["aioesphomeapi==13.1.0", "esphome-dashboard-api==1.1"],
   "zeroconf": ["_esphomelib._tcp.local."],
   "dhcp": [{ "registered_devices": true }],
   "codeowners": ["@OttoWinter", "@jesserockz"],
diff --git a/requirements_all.txt b/requirements_all.txt
index ddc84a9ca7a..5970eca0153 100644
--- a/requirements_all.txt
+++ b/requirements_all.txt
@@ -159,7 +159,7 @@ aioecowitt==2022.11.0
 aioemonitor==1.0.5
 
 # homeassistant.components.esphome
-aioesphomeapi==13.0.4
+aioesphomeapi==13.1.0
 
 # homeassistant.components.flo
 aioflo==2021.11.0
diff --git a/requirements_test_all.txt b/requirements_test_all.txt
index 8a00296fe9f..8c0d61eb173 100644
--- a/requirements_test_all.txt
+++ b/requirements_test_all.txt
@@ -146,7 +146,7 @@ aioecowitt==2022.11.0
 aioemonitor==1.0.5
 
 # homeassistant.components.esphome
-aioesphomeapi==13.0.4
+aioesphomeapi==13.1.0
 
 # homeassistant.components.flo
 aioflo==2021.11.0