diff --git a/homeassistant/helpers/entity_registry.py b/homeassistant/helpers/entity_registry.py
index 9665e884a5dc..1bcf61a3cf94 100644
--- a/homeassistant/helpers/entity_registry.py
+++ b/homeassistant/helpers/entity_registry.py
@@ -458,6 +458,27 @@ class RegistryEntry:
         hass.states.async_set(self.entity_id, STATE_UNAVAILABLE, attrs)
 
 
+@callback
+def async_get_unprefixed_name(hass: HomeAssistant, entry: RegistryEntry) -> str:
+    """Get the entity name with device name prefix stripped, if applicable."""
+    name = entry.name
+    if name is not None:
+        if (
+            entry.device_id is not None
+            and (device := dr.async_get(hass).async_get(entry.device_id)) is not None
+        ):
+            device_name = device.name_by_user or device.name
+            unprefixed_name = _async_strip_prefix_from_entity_name(name, device_name)
+            if unprefixed_name is not None:
+                return unprefixed_name
+        return name
+
+    if entry.original_name_unprefixed is not None:
+        return entry.original_name_unprefixed
+
+    return entry.original_name or ""
+
+
 @callback
 def _async_get_full_entity_name(
     hass: HomeAssistant,
diff --git a/homeassistant/helpers/template/__init__.py b/homeassistant/helpers/template/__init__.py
index df033135460a..22a476fb941e 100644
--- a/homeassistant/helpers/template/__init__.py
+++ b/homeassistant/helpers/template/__init__.py
@@ -1409,7 +1409,7 @@ def entity_name(hass: HomeAssistant, entity_id: str) -> str | None:
     """Get the name of an entity from its entity ID."""
     ent_reg = er.async_get(hass)
     if (entry := ent_reg.async_get(entity_id)) is not None:
-        return entry.name if entry.name is not None else entry.original_name
+        return er.async_get_unprefixed_name(hass, entry)
 
     # Fall back to state for entities without a unique_id (not in the registry)
     if (state := hass.states.get(entity_id)) is not None:
diff --git a/tests/helpers/template/test_init.py b/tests/helpers/template/test_init.py
index 0b24953ea586..30846eef202a 100644
--- a/tests/helpers/template/test_init.py
+++ b/tests/helpers/template/test_init.py
@@ -33,7 +33,13 @@ from homeassistant.const import (
 )
 from homeassistant.core import HomeAssistant
 from homeassistant.exceptions import TemplateError
-from homeassistant.helpers import entity, entity_registry as er, template, translation
+from homeassistant.helpers import (
+    device_registry as dr,
+    entity,
+    entity_registry as er,
+    template,
+    translation,
+)
 from homeassistant.helpers.entity_platform import EntityPlatform
 from homeassistant.helpers.json import json_dumps
 from homeassistant.helpers.template.render_info import (
@@ -810,6 +816,7 @@ def test_if_state_exists(hass: HomeAssistant) -> None:
 def test_entity_name(
     hass: HomeAssistant,
     entity_registry: er.EntityRegistry,
+    device_registry: dr.DeviceRegistry,
 ) -> None:
     """Test entity_name method."""
     assert render(hass, "{{ entity_name('sensor.fake') }}") is None
@@ -837,6 +844,34 @@ def test_entity_name(
         "No Unique ID Light"
     )
 
+    config_entry = MockConfigEntry(domain="test")
+    config_entry.add_to_hass(hass)
+    device_entry = device_registry.async_get_or_create(
+        config_entry_id=config_entry.entry_id,
+        connections={(dr.CONNECTION_NETWORK_MAC, "12:34:56:AB:CD:EF")},
+        name="My Device",
+    )
+    entry2 = entity_registry.async_get_or_create(
+        "sensor",
+        "test",
+        "unique_2",
+        config_entry=config_entry,
+        device_id=device_entry.id,
+        has_entity_name=True,
+        original_name="Temperature",
+    )
+    assert render(hass, f"{{{{ entity_name('{entry2.entity_id}') }}}}") == (
+        "Temperature"
+    )
+
+    # Strips device name prefix
+    entity_registry.async_update_entity(
+        entry2.entity_id, name="My Device Custom Sensor"
+    )
+    assert render(hass, f"{{{{ entity_name('{entry2.entity_id}') }}}}") == (
+        "Custom Sensor"
+    )
+
 
 def test_is_hidden_entity(
     hass: HomeAssistant,