diff --git a/src/data/entity_registry.ts b/src/data/entity_registry.ts
index cbc5459b3b..7b6a34a1d3 100644
--- a/src/data/entity_registry.ts
+++ b/src/data/entity_registry.ts
@@ -30,6 +30,7 @@ export interface ExtEntityRegistryEntry extends EntityRegistryEntry {
   device_class?: string;
   original_device_class?: string;
   aliases: string[];
+  options: EntityRegistryOptions | null;
 }
 
 export interface UpdateEntityRegistryEntryResult {
@@ -39,6 +40,7 @@ export interface UpdateEntityRegistryEntryResult {
 }
 
 export interface SensorEntityOptions {
+  precision?: number | null;
   unit_of_measurement?: string | null;
 }
 
@@ -54,6 +56,12 @@ export interface WeatherEntityOptions {
   wind_speed_unit?: string | null;
 }
 
+export interface EntityRegistryOptions {
+  number?: NumberEntityOptions;
+  sensor?: SensorEntityOptions;
+  weather?: WeatherEntityOptions;
+}
+
 export interface EntityRegistryEntryUpdateParams {
   name?: string | null;
   icon?: string | null;
diff --git a/src/panels/config/entities/entity-registry-settings.ts b/src/panels/config/entities/entity-registry-settings.ts
index 0abb81988c..f6897d1f43 100644
--- a/src/panels/config/entities/entity-registry-settings.ts
+++ b/src/panels/config/entities/entity-registry-settings.ts
@@ -62,6 +62,7 @@ import {
   EntityRegistryEntry,
   EntityRegistryEntryUpdateParams,
   ExtEntityRegistryEntry,
+  SensorEntityOptions,
   fetchEntityRegistry,
   removeEntityRegistryEntry,
   updateEntityRegistryEntry,
@@ -125,6 +126,16 @@ const OVERRIDE_WEATHER_UNITS = {
 
 const SWITCH_AS_DOMAINS = ["cover", "fan", "light", "lock", "siren"];
 
+const PRECISIONS = [0, 1, 2, 3, 4, 5, 6];
+
+function precisionLabel(precision: number, _state?: string) {
+  const state_float =
+    _state === undefined || isNaN(parseFloat(_state))
+      ? 0.0
+      : parseFloat(_state);
+  return state_float.toFixed(precision);
+}
+
 @customElement("entity-registry-settings")
 export class EntityRegistrySettings extends SubscribeMixin(LitElement) {
   @property({ attribute: false }) public hass!: HomeAssistant;
@@ -153,6 +164,8 @@ export class EntityRegistrySettings extends SubscribeMixin(LitElement) {
 
   @state() private _unit_of_measurement?: string | null;
 
+  @state() private _precision?: number | null;
+
   @state() private _precipitation_unit?: string | null;
 
   @state() private _pressure_unit?: string | null;
@@ -250,6 +263,10 @@ export class EntityRegistrySettings extends SubscribeMixin(LitElement) {
       this._unit_of_measurement = stateObj?.attributes?.unit_of_measurement;
     }
 
+    if (domain === "sensor") {
+      this._precision = this.entry.options?.sensor?.precision;
+    }
+
     if (domain === "weather") {
       const stateObj: HassEntity | undefined =
         this.hass.states[this.entry.entity_id];
@@ -467,6 +484,44 @@ export class EntityRegistrySettings extends SubscribeMixin(LitElement) {
               </ha-select>
             `
           : ""}
+        ${domain === "sensor" &&
+        // Allow customizing the precision for a sensor with numerical device class,
+        // a unit of measurement or state class
+        ((this._deviceClass &&
+          !["date", "enum", "timestamp"].includes(this._deviceClass)) ||
+          stateObj?.attributes.unit_of_measurement ||
+          stateObj?.attributes.state_class)
+          ? html`
+              <ha-select
+                .label=${this.hass.localize(
+                  "ui.dialogs.entity_registry.editor.precision"
+                )}
+                .value=${this._precision == null
+                  ? "default"
+                  : this._precision.toString()}
+                naturalMenuWidth
+                fixedMenuPosition
+                @selected=${this._precisionChanged}
+                @closed=${stopPropagation}
+              >
+                <mwc-list-item .value=${"default"}
+                  >${this.hass.localize(
+                    "ui.dialogs.entity_registry.editor.precision_default"
+                  )}</mwc-list-item
+                >
+                ${PRECISIONS.map(
+                  (precision) => html`
+                    <mwc-list-item .value=${precision.toString()}>
+                      ${precisionLabel(
+                        precision,
+                        this.hass.states[this.entry.entity_id]?.state
+                      )}
+                    </mwc-list-item>
+                  `
+                )}
+              </ha-select>
+            `
+          : ""}
         ${domain === "weather"
           ? html`
               <ha-select
@@ -892,6 +947,12 @@ export class EntityRegistrySettings extends SubscribeMixin(LitElement) {
     this._precipitation_unit = ev.target.value;
   }
 
+  private _precisionChanged(ev): void {
+    this._error = undefined;
+    this._precision =
+      ev.target.value === "default" ? null : Number(ev.target.value);
+  }
+
   private _pressureUnitChanged(ev): void {
     this._error = undefined;
     this._pressure_unit = ev.target.value;
@@ -1081,7 +1142,16 @@ export class EntityRegistrySettings extends SubscribeMixin(LitElement) {
       stateObj?.attributes?.unit_of_measurement !== this._unit_of_measurement
     ) {
       params.options_domain = domain;
-      params.options = { unit_of_measurement: this._unit_of_measurement };
+      params.options = this.entry.options?.[domain] || {};
+      params.options.unit_of_measurement = this._unit_of_measurement;
+    }
+    if (
+      domain === "sensor" &&
+      this.entry.options?.[domain]?.precision !== this._precision
+    ) {
+      params.options_domain = domain;
+      params.options = params.options || this.entry.options?.[domain] || {};
+      (params.options as SensorEntityOptions).precision = this._precision;
     }
     if (
       domain === "weather" &&
diff --git a/src/translations/en.json b/src/translations/en.json
index 422347be55..8821a06204 100755
--- a/src/translations/en.json
+++ b/src/translations/en.json
@@ -905,6 +905,8 @@
           "entity_id": "Entity ID",
           "unit_of_measurement": "Unit of Measurement",
           "precipitation_unit": "Precipitation unit",
+          "precision": "Precision",
+          "precision_default": "Use default",
           "pressure_unit": "Barometric pressure unit",
           "temperature_unit": "Temperature unit",
           "visibility_unit": "Visibility unit",