diff --git a/src/common/entity/compute_entity_name.ts b/src/common/entity/compute_entity_name.ts
index 846d7414a7..f395e01dd7 100644
--- a/src/common/entity/compute_entity_name.ts
+++ b/src/common/entity/compute_entity_name.ts
@@ -4,11 +4,14 @@ import type {
   EntityRegistryEntry,
 } from "../../data/entity/entity_registry";
 import type { HomeAssistant } from "../../types";
+import { computeDeviceName } from "./compute_device_name";
 import { computeStateName } from "./compute_state_name";
+import { stripPrefixFromEntityName } from "./strip_prefix_from_entity_name";
 
 export const computeEntityName = (
   stateObj: HassEntity,
-  entities: HomeAssistant["entities"]
+  entities: HomeAssistant["entities"],
+  devices: HomeAssistant["devices"]
 ): string | undefined => {
   const entry = entities[stateObj.entity_id] as
     | EntityRegistryDisplayEntry
@@ -18,22 +21,49 @@ export const computeEntityName = (
     // Fall back to state name if not in the entity registry (friendly name)
     return computeStateName(stateObj);
   }
-  return computeEntityEntryName(entry);
+  return computeEntityEntryName(entry, devices);
 };
 
 export const computeEntityEntryName = (
-  entry: EntityRegistryDisplayEntry | EntityRegistryEntry
+  entry: EntityRegistryDisplayEntry | EntityRegistryEntry,
+  devices: HomeAssistant["devices"],
+  fallbackStateObj?: HassEntity
 ): string | undefined => {
-  if (entry.name != null) {
-    return entry.name;
+  const name =
+    entry.name ||
+    ("original_name" in entry && entry.original_name != null
+      ? String(entry.original_name)
+      : undefined);
+
+  const device = entry.device_id ? devices[entry.device_id] : undefined;
+
+  if (!device) {
+    if (name) {
+      return name;
+    }
+    if (fallbackStateObj) {
+      return computeStateName(fallbackStateObj);
+    }
+    return undefined;
   }
-  if ("original_name" in entry && entry.original_name != null) {
-    return String(entry.original_name);
+
+  const deviceName = computeDeviceName(device);
+
+  // If the device name is the same as the entity name, consider empty entity name
+  if (deviceName === name) {
+    return undefined;
   }
-  return undefined;
+
+  // Remove the device name from the entity name if it starts with it
+  if (deviceName && name) {
+    return stripPrefixFromEntityName(name, deviceName) || name;
+  }
+
+  return name;
 };
 
 export const entityUseDeviceName = (
   stateObj: HassEntity,
-  entities: HomeAssistant["entities"]
-): boolean => !computeEntityName(stateObj, entities);
+  entities: HomeAssistant["entities"],
+  devices: HomeAssistant["devices"]
+): boolean => !computeEntityName(stateObj, entities, devices);
diff --git a/src/common/entity/compute_entity_name_display.ts b/src/common/entity/compute_entity_name_display.ts
index cda397a1cc..44717c2bfc 100644
--- a/src/common/entity/compute_entity_name_display.ts
+++ b/src/common/entity/compute_entity_name_display.ts
@@ -5,6 +5,7 @@ import { computeAreaName } from "./compute_area_name";
 import { computeDeviceName } from "./compute_device_name";
 import { computeEntityName, entityUseDeviceName } from "./compute_entity_name";
 import { computeFloorName } from "./compute_floor_name";
+import { computeStateName } from "./compute_state_name";
 import { getEntityContext } from "./context/get_entity_context";
 
 const DEFAULT_SEPARATOR = " ";
@@ -40,7 +41,12 @@ export const computeEntityNameDisplay = (
     return name;
   }
 
-  let items = ensureArray(name ?? DEFAULT_ENTITY_NAME);
+  // If no name config is provided, fall back to the friendly name
+  if (!name) {
+    return computeStateName(stateObj);
+  }
+
+  let items = ensureArray(name);
 
   const separator = options?.separator ?? DEFAULT_SEPARATOR;
 
@@ -49,7 +55,7 @@ export const computeEntityNameDisplay = (
     return items.map((item) => item.text).join(separator);
   }
 
-  const useDeviceName = entityUseDeviceName(stateObj, entities);
+  const useDeviceName = entityUseDeviceName(stateObj, entities, devices);
 
   // If entity uses device name, and device is not already included, replace it with device name
   if (useDeviceName) {
@@ -95,7 +101,7 @@ export const computeEntityNameList = (
   const names = name.map((item) => {
     switch (item.type) {
       case "entity":
-        return computeEntityName(stateObj, entities);
+        return computeEntityName(stateObj, entities, devices);
       case "device":
         return device ? computeDeviceName(device) : undefined;
       case "area":
diff --git a/src/components/entity/ha-entity-name-picker.ts b/src/components/entity/ha-entity-name-picker.ts
index e56e07ef4b..753ea0057d 100644
--- a/src/components/entity/ha-entity-name-picker.ts
+++ b/src/components/entity/ha-entity-name-picker.ts
@@ -7,10 +7,7 @@ import { repeat } from "lit/directives/repeat";
 import memoizeOne from "memoize-one";
 import { ensureArray } from "../../common/array/ensure-array";
 import { fireEvent } from "../../common/dom/fire_event";
-import {
-  DEFAULT_ENTITY_NAME,
-  type EntityNameItem,
-} from "../../common/entity/compute_entity_name_display";
+import type { EntityNameItem } from "../../common/entity/compute_entity_name_display";
 import { getEntityContext } from "../../common/entity/context/get_entity_context";
 import type { EntityNameType } from "../../common/translations/entity-state";
 import type { LocalizeKeys } from "../../common/translations/localize";
@@ -333,13 +330,13 @@ export class HaEntityNamePicker extends LitElement {
       }
       return [{ type: "text", text: value } satisfies EntityNameItem];
     }
-    return value ? ensureArray(value) : [...DEFAULT_ENTITY_NAME];
+    return value ? ensureArray(value) : [];
   });
 
   private _toValue = memoizeOne(
     (items: EntityNameItem[]): typeof this.value => {
       if (items.length === 0) {
-        return "";
+        return undefined;
       }
       if (items.length === 1) {
         const item = items[0];
diff --git a/src/components/target-picker/ha-target-picker-item-row.ts b/src/components/target-picker/ha-target-picker-item-row.ts
index da090a9b11..36bc2688d9 100644
--- a/src/components/target-picker/ha-target-picker-item-row.ts
+++ b/src/components/target-picker/ha-target-picker-item-row.ts
@@ -535,7 +535,7 @@ export class HaTargetPickerItemRow extends LitElement {
 
       const stateObject: HassEntity | undefined = this.hass.states[item];
       const entityName = stateObject
-        ? computeEntityName(stateObject, this.hass.entities)
+        ? computeEntityName(stateObject, this.hass.entities, this.hass.devices)
         : item;
       const { area, device } = stateObject
         ? getEntityContext(
diff --git a/src/dialogs/more-info/ha-more-info-dialog.ts b/src/dialogs/more-info/ha-more-info-dialog.ts
index d83056f09b..3dfd0e54ae 100644
--- a/src/dialogs/more-info/ha-more-info-dialog.ts
+++ b/src/dialogs/more-info/ha-more-info-dialog.ts
@@ -536,9 +536,9 @@ export class MoreInfoDialog extends ScrollableFadeMixin(LitElement) {
         : undefined;
 
     const entityName = stateObj
-      ? computeEntityName(stateObj, this.hass.entities)
+      ? computeEntityName(stateObj, this.hass.entities, this.hass.devices)
       : this._entry
-        ? computeEntityEntryName(this._entry)
+        ? computeEntityEntryName(this._entry, this.hass.devices)
         : entityId;
 
     const deviceName = context?.device
diff --git a/src/dialogs/more-info/more-info-content.ts b/src/dialogs/more-info/more-info-content.ts
index 34dd81bd1c..1ccd16b3a7 100644
--- a/src/dialogs/more-info/more-info-content.ts
+++ b/src/dialogs/more-info/more-info-content.ts
@@ -107,7 +107,11 @@ class MoreInfoContent extends LitElement {
         if (!stateObj) {
           return null;
         }
-        const entityName = computeEntityName(stateObj, hass.entities);
+        const entityName = computeEntityName(
+          stateObj,
+          hass.entities,
+          hass.devices
+        );
         const { area } = getEntityContext(
           stateObj,
           hass.entities,
diff --git a/src/panels/config/devices/device-detail/ha-device-entities-card.ts b/src/panels/config/devices/device-detail/ha-device-entities-card.ts
index 0306de54fd..ce9d89335b 100644
--- a/src/panels/config/devices/device-detail/ha-device-entities-card.ts
+++ b/src/panels/config/devices/device-detail/ha-device-entities-card.ts
@@ -18,7 +18,7 @@ import {
   computeSection,
 } from "../../../lovelace/common/generate-lovelace-config";
 import { addEntitiesToLovelaceView } from "../../../lovelace/editor/add-entities-to-view";
-import type { EntityRegistryEntryWithDisplayName } from "../ha-config-device-page";
+import type { EntityRegistryStateEntry } from "../ha-config-device-page";
 import { entityRowElement } from "../../../lovelace/entity-rows/entity-row-element-directive";
 
 @customElement("ha-device-entities-card")
@@ -30,7 +30,7 @@ export class HaDeviceEntitiesCard extends LitElement {
   @property({ attribute: false }) public hass!: HomeAssistant;
 
   @property({ attribute: false })
-  public entities!: EntityRegistryEntryWithDisplayName[];
+  public entities!: EntityRegistryStateEntry[];
 
   @property({ attribute: "show-hidden", type: Boolean })
   public showHidden = false;
@@ -115,10 +115,8 @@ export class HaDeviceEntitiesCard extends LitElement {
     this.showHidden = !this.showHidden;
   }
 
-  private _renderEntity(
-    entry: EntityRegistryEntryWithDisplayName
-  ): TemplateResult {
-    let name = entry.display_name || this.deviceName;
+  private _renderEntity(entry: EntityRegistryStateEntry): TemplateResult {
+    let name = entry.stateName || this.deviceName;
     if (entry.hidden_by) {
       name += ` (${this.hass.localize(
         "ui.panel.config.devices.entities.hidden"
@@ -130,9 +128,9 @@ export class HaDeviceEntitiesCard extends LitElement {
   }
 
   private _renderUnavailableEntity(
-    entry: EntityRegistryEntryWithDisplayName
+    entry: EntityRegistryStateEntry
   ): TemplateResult {
-    const name = entry.display_name || this.deviceName;
+    const name = entry.stateName || this.deviceName;
 
     const icon = until(entryIcon(this.hass, entry));
 
diff --git a/src/panels/config/devices/ha-config-device-page.ts b/src/panels/config/devices/ha-config-device-page.ts
index bd6ad01f01..47431d40f6 100644
--- a/src/panels/config/devices/ha-config-device-page.ts
+++ b/src/panels/config/devices/ha-config-device-page.ts
@@ -34,7 +34,6 @@ import "../../../components/entity/ha-battery-icon";
 import "../../../components/ha-alert";
 import "../../../components/ha-button";
 import "../../../components/ha-dropdown";
-import type { HaDropdownSelectEvent } from "../../../components/ha-dropdown";
 import "../../../components/ha-dropdown-item";
 import "../../../components/ha-icon-button";
 import "../../../components/ha-icon-next";
@@ -66,6 +65,7 @@ import type { EntityRegistryEntry } from "../../../data/entity/entity_registry";
 import {
   findBatteryChargingEntity,
   findBatteryEntity,
+  updateEntityRegistryEntry,
 } from "../../../data/entity/entity_registry";
 import type { IntegrationManifest } from "../../../data/integration";
 import { domainToName } from "../../../data/integration";
@@ -94,9 +94,10 @@ import {
   loadDeviceRegistryDetailDialog,
   showDeviceRegistryDetailDialog,
 } from "./device-registry-detail/show-dialog-device-registry-detail";
+import type { HaDropdownSelectEvent } from "../../../components/ha-dropdown";
 
-export interface EntityRegistryEntryWithDisplayName extends EntityRegistryEntry {
-  display_name?: string | null;
+export interface EntityRegistryStateEntry extends EntityRegistryEntry {
+  stateName?: string | null;
 }
 
 export interface DeviceAction {
@@ -176,17 +177,17 @@ export class HaConfigDevicePage extends LitElement {
     (
       deviceId: string,
       entities: EntityRegistryEntry[]
-    ): EntityRegistryEntry[] =>
+    ): EntityRegistryStateEntry[] =>
       entities
         .filter((entity) => entity.device_id === deviceId)
         .map((entity) => ({
           ...entity,
-          display_name: computeEntityEntryName(entity),
+          stateName: this._computeEntityName(entity),
         }))
         .sort((ent1, ent2) =>
           stringCompare(
-            ent1.display_name || "",
-            ent2.display_name || "",
+            ent1.stateName || `zzz${ent1.entity_id}`,
+            ent2.stateName || `zzz${ent2.entity_id}`,
             this.hass.locale.language
           )
         )
@@ -216,7 +217,7 @@ export class HaConfigDevicePage extends LitElement {
   private _deviceIdInList = memoizeOne((deviceId: string) => [deviceId]);
 
   private _entityIds = memoizeOne(
-    (entries: EntityRegistryEntryWithDisplayName[]): string[] =>
+    (entries: EntityRegistryStateEntry[]): string[] =>
       entries.map((entry) => entry.entity_id)
   );
 
@@ -249,7 +250,7 @@ export class HaConfigDevicePage extends LitElement {
         | "assist"
         | "notify"
         | NonNullable<EntityRegistryEntry["entity_category"]>,
-        EntityRegistryEntryWithDisplayName[]
+        EntityRegistryStateEntry[]
       >;
       for (const key of [
         "assist",
@@ -1270,6 +1271,14 @@ export class HaConfigDevicePage extends LitElement {
     }
   }
 
+  private _computeEntityName(entity: EntityRegistryEntry) {
+    const device = this.hass.devices[this.deviceId];
+    return (
+      computeEntityEntryName(entity, this.hass.devices) ||
+      computeDeviceNameDisplay(device, this.hass)
+    );
+  }
+
   private _onImageLoad(ev) {
     ev.target.style.display = "inline-block";
   }
@@ -1362,6 +1371,8 @@ export class HaConfigDevicePage extends LitElement {
     showDeviceRegistryDetailDialog(this, {
       device,
       updateEntry: async (updates) => {
+        const oldDeviceName = device.name_by_user || device.name;
+        const newDeviceName = updates.name_by_user;
         const disabled =
           updates.disabled_by === "user" && device.disabled_by !== "user";
 
@@ -1433,7 +1444,43 @@ export class HaConfigDevicePage extends LitElement {
             ),
             text: err.message,
           });
+          return;
         }
+
+        if (
+          !oldDeviceName ||
+          !newDeviceName ||
+          oldDeviceName === newDeviceName
+        ) {
+          return;
+        }
+        const entities = this._entities(this.deviceId, this._entityReg);
+
+        const updateProms = entities.map((entity) => {
+          const name = entity.name || entity.stateName;
+          let newName: string | null | undefined;
+
+          if (entity.has_entity_name && !entity.name) {
+            return undefined;
+          }
+
+          if (
+            entity.has_entity_name &&
+            (entity.name === oldDeviceName || entity.name === newDeviceName)
+          ) {
+            // clear name if it matches the device name and it uses the device name (entity naming)
+            newName = null;
+          } else if (name && name.includes(oldDeviceName)) {
+            newName = name.replace(oldDeviceName, newDeviceName);
+          } else {
+            return undefined;
+          }
+
+          return updateEntityRegistryEntry(this.hass!, entity.entity_id, {
+            name: newName,
+          });
+        });
+        await Promise.all(updateProms);
       },
     });
   };
diff --git a/src/panels/config/entities/dialogs/dialog-vacuum-segment-mapping.ts b/src/panels/config/entities/dialogs/dialog-vacuum-segment-mapping.ts
index 324985a043..11384d6962 100644
--- a/src/panels/config/entities/dialogs/dialog-vacuum-segment-mapping.ts
+++ b/src/panels/config/entities/dialogs/dialog-vacuum-segment-mapping.ts
@@ -140,9 +140,9 @@ export class DialogVacuumSegmentMapping
         : undefined;
 
     const entityName = stateObj
-      ? computeEntityName(stateObj, this.hass.entities)
+      ? computeEntityName(stateObj, this.hass.entities, this.hass.devices)
       : this._entry
-        ? computeEntityEntryName(this._entry)
+        ? computeEntityEntryName(this._entry, this.hass.devices)
         : this._params.entityId;
 
     const deviceName = context?.device
diff --git a/src/panels/config/entities/editor-tabs/settings/entity-settings-helper-tab.ts b/src/panels/config/entities/editor-tabs/settings/entity-settings-helper-tab.ts
index dca650e8ed..c836f2f50d 100644
--- a/src/panels/config/entities/editor-tabs/settings/entity-settings-helper-tab.ts
+++ b/src/panels/config/entities/editor-tabs/settings/entity-settings-helper-tab.ts
@@ -164,7 +164,7 @@ export class EntitySettingsHelperTab extends LitElement {
   }
 
   private async _confirmDeleteItem(): Promise<void> {
-    const name = computeEntityEntryName(this.entry);
+    const name = computeEntityEntryName(this.entry, this.hass.devices);
     const confirmationText = await getDeleteConfirmationText(
       this.hass,
       this.entry,
diff --git a/src/panels/config/entities/entity-registry-settings-editor.ts b/src/panels/config/entities/entity-registry-settings-editor.ts
index 13af1bd09f..314e7c9615 100644
--- a/src/panels/config/entities/entity-registry-settings-editor.ts
+++ b/src/panels/config/entities/entity-registry-settings-editor.ts
@@ -153,7 +153,7 @@ export class EntityRegistrySettingsEditor extends LitElement {
 
   @property({ attribute: false }) public helperConfigEntry?: ConfigEntry;
 
-  @state() private _name!: string | null;
+  @state() private _name!: string;
 
   @state() private _icon!: string;
 
@@ -218,7 +218,7 @@ export class EntityRegistrySettingsEditor extends LitElement {
       return;
     }
 
-    this._name = this.entry.name;
+    this._name = this.entry.name || "";
     this._icon = this.entry.icon || "";
     this._deviceClass =
       this.entry.device_class || this.entry.original_device_class;
@@ -388,27 +388,14 @@ export class EntityRegistrySettingsEditor extends LitElement {
       ${this.hideName
         ? nothing
         : html`<ha-textfield
-            class="name"
-            .value=${this._name ?? this.entry.original_name ?? ""}
+            .value=${this._name}
             .label=${this.hass.localize(
               "ui.dialogs.entity_registry.editor.name"
             )}
             .disabled=${this.disabled}
+            .placeholder=${this.entry.original_name}
             @input=${this._nameChanged}
-            .iconTrailing=${this._name !== null}
-          >
-            ${this._name !== null
-              ? html`<div class="layout horizontal" slot="trailingIcon">
-                  <ha-icon-button
-                    @click=${this._restoreName}
-                    .path=${mdiRestore}
-                    .label=${this.hass.localize(
-                      "ui.dialogs.entity_registry.editor.restore_name"
-                    )}
-                  ></ha-icon-button>
-                </div>`
-              : nothing}
-          </ha-textfield>`}
+          ></ha-textfield>`}
       ${this.hideIcon
         ? nothing
         : html`
@@ -1065,7 +1052,7 @@ export class EntityRegistrySettingsEditor extends LitElement {
     }
 
     const params: Partial<EntityRegistryEntryUpdateParams> = {
-      name: this._name?.trim() ?? null,
+      name: this._name.trim() || null,
       icon: this._icon.trim() || null,
       area_id: this._areaId || null,
       labels: this._labels || [],
@@ -1331,11 +1318,6 @@ export class EntityRegistrySettingsEditor extends LitElement {
     this._name = ev.target.value;
   }
 
-  private _restoreName(): void {
-    fireEvent(this, "change");
-    this._name = null;
-  }
-
   private _iconChanged(ev: CustomEvent): void {
     fireEvent(this, "change");
     this._icon = ev.detail.value;
@@ -1610,13 +1592,9 @@ export class EntityRegistrySettingsEditor extends LitElement {
         }
         ha-textfield.entityId {
           --text-field-prefix-padding-right: 0;
-        }
-        ha-textfield.entityId,
-        ha-textfield.name {
           --textfield-icon-trailing-padding: 0;
         }
-        ha-textfield.entityId ha-icon-button,
-        ha-textfield.name ha-icon-button {
+        ha-textfield.entityId ha-icon-button {
           position: relative;
           right: calc(var(--ha-space-2) * -1);
           --ha-icon-button-size: 36px;
diff --git a/src/panels/config/entities/entity-registry-settings.ts b/src/panels/config/entities/entity-registry-settings.ts
index 5e25787baf..4631089218 100644
--- a/src/panels/config/entities/entity-registry-settings.ts
+++ b/src/panels/config/entities/entity-registry-settings.ts
@@ -213,7 +213,7 @@ export class EntityRegistrySettings extends SubscribeMixin(LitElement) {
   }
 
   private async _confirmDeleteEntry(): Promise<void> {
-    let name = computeEntityEntryName(this.entry);
+    let name = computeEntityEntryName(this.entry, this.hass.devices);
     if (!name) {
       const { device } = getEntityEntryContext(
         this.entry,
diff --git a/src/panels/config/entities/ha-config-entities.ts b/src/panels/config/entities/ha-config-entities.ts
index d7cc6face6..396d3935b0 100644
--- a/src/panels/config/entities/ha-config-entities.ts
+++ b/src/panels/config/entities/ha-config-entities.ts
@@ -32,10 +32,7 @@ import {
   getDuplicatedDeviceNames,
 } from "../../../common/entity/compute_device_name";
 import { computeDomain } from "../../../common/entity/compute_domain";
-import {
-  computeEntityEntryName,
-  computeEntityName,
-} from "../../../common/entity/compute_entity_name";
+import { computeEntityEntryName } from "../../../common/entity/compute_entity_name";
 import { computeStateName } from "../../../common/entity/compute_state_name";
 import {
   deleteEntity,
@@ -693,9 +690,11 @@ export class HaConfigEntities extends LitElement {
           (lbl) => labelReg!.find((label) => label.label_id === lbl)!
         );
 
-        const entityName = entity
-          ? computeEntityName(entity, this.hass.entities)
-          : computeEntityEntryName(entry as EntityRegistryEntry);
+        const entityName = computeEntityEntryName(
+          entry as EntityRegistryEntry,
+          this.hass.devices,
+          entity
+        );
 
         const deviceName = device ? computeDeviceName(device) : undefined;
         const areaName = area ? computeAreaName(area) : undefined;
diff --git a/src/panels/config/integrations/integration-panels/zha/zha-device-card.ts b/src/panels/config/integrations/integration-panels/zha/zha-device-card.ts
index 67eb74e7f8..ed1ea3aad3 100644
--- a/src/panels/config/integrations/integration-panels/zha/zha-device-card.ts
+++ b/src/panels/config/integrations/integration-panels/zha/zha-device-card.ts
@@ -4,7 +4,7 @@ import { css, html, LitElement, nothing } from "lit";
 import { customElement, property, state } from "lit/decorators";
 import memoizeOne from "memoize-one";
 import { fireEvent } from "../../../../../common/dom/fire_event";
-import { computeEntityEntryName } from "../../../../../common/entity/compute_entity_name";
+import { computeStateName } from "../../../../../common/entity/compute_state_name";
 import { stringCompare } from "../../../../../common/string/compare";
 import "../../../../../components/entity/state-badge";
 import "../../../../../components/ha-area-picker";
@@ -12,13 +12,17 @@ import "../../../../../components/ha-card";
 import "../../../../../components/ha-textfield";
 import { updateDeviceRegistryEntry } from "../../../../../data/device/device_registry";
 import type { EntityRegistryEntry } from "../../../../../data/entity/entity_registry";
-import { subscribeEntityRegistry } from "../../../../../data/entity/entity_registry";
+import {
+  getAutomaticEntityIds,
+  subscribeEntityRegistry,
+  updateEntityRegistryEntry,
+} from "../../../../../data/entity/entity_registry";
 import type { ZHADevice } from "../../../../../data/zha";
 import { showAlertDialog } from "../../../../../dialogs/generic/show-dialog-box";
 import { SubscribeMixin } from "../../../../../mixins/subscribe-mixin";
 import { haStyle } from "../../../../../resources/styles";
 import type { HomeAssistant } from "../../../../../types";
-import type { EntityRegistryEntryWithDisplayName } from "../../../devices/ha-config-device-page";
+import type { EntityRegistryStateEntry } from "../../../devices/ha-config-device-page";
 
 @customElement("zha-device-card")
 class ZHADeviceCard extends SubscribeMixin(LitElement) {
@@ -34,17 +38,17 @@ class ZHADeviceCard extends SubscribeMixin(LitElement) {
     (
       deviceId: string,
       entities: EntityRegistryEntry[]
-    ): EntityRegistryEntryWithDisplayName[] =>
+    ): EntityRegistryStateEntry[] =>
       entities
         .filter((entity) => entity.device_id === deviceId)
         .map((entity) => ({
           ...entity,
-          display_name: computeEntityEntryName(entity),
+          stateName: this._computeEntityName(entity),
         }))
         .sort((ent1, ent2) =>
           stringCompare(
-            ent1.display_name || "",
-            ent2.display_name || "",
+            ent1.stateName || `zzz${ent1.entity_id}`,
+            ent2.stateName || `zzz${ent2.entity_id}`,
             this.hass.locale.language
           )
         )
@@ -85,7 +89,7 @@ class ZHADeviceCard extends SubscribeMixin(LitElement) {
                 ? html`
                     <state-badge
                       @click=${this._openMoreInfo}
-                      .title=${entity.display_name || ""}
+                      .title=${entity.stateName!}
                       .hass=${this.hass}
                       .stateObj=${this.hass!.states[entity.entity_id]}
                       slot="item-icon"
@@ -116,11 +120,52 @@ class ZHADeviceCard extends SubscribeMixin(LitElement) {
     if (!this.hass || !this.device) {
       return;
     }
+    const device = this.device;
+
+    const oldDeviceName = device.user_given_name || device.name;
     const newDeviceName = event.target.value;
     this.device.user_given_name = newDeviceName;
-    await updateDeviceRegistryEntry(this.hass, this.device.device_reg_id, {
+    await updateDeviceRegistryEntry(this.hass, device.device_reg_id, {
       name_by_user: newDeviceName,
     });
+
+    if (!oldDeviceName || !newDeviceName || oldDeviceName === newDeviceName) {
+      return;
+    }
+    const entities = this._deviceEntities(device.device_reg_id, this._entities);
+
+    const entityIdsMapping = await getAutomaticEntityIds(
+      this.hass,
+      entities.map((entity) => entity.entity_id)
+    );
+
+    const updateProms = entities.map((entity) => {
+      const name = entity.name;
+      const newEntityId = entityIdsMapping[entity.entity_id];
+      let newName: string | null | undefined;
+
+      if (entity.has_entity_name && !entity.name) {
+        newName = undefined;
+      } else if (
+        entity.has_entity_name &&
+        (entity.name === oldDeviceName || entity.name === newDeviceName)
+      ) {
+        // clear name if it matches the device name and it uses the device name (entity naming)
+        newName = null;
+      } else if (name && name.includes(oldDeviceName)) {
+        newName = name.replace(oldDeviceName, newDeviceName);
+      }
+
+      if (newName !== undefined && !newEntityId) {
+        return undefined;
+      }
+
+      return updateEntityRegistryEntry(this.hass!, entity.entity_id, {
+        name: newName,
+        new_entity_id: newEntityId || undefined,
+      });
+    });
+    await Promise.all(updateProms);
   }
 
   private _openMoreInfo(ev: MouseEvent): void {
@@ -129,6 +174,13 @@ class ZHADeviceCard extends SubscribeMixin(LitElement) {
     });
   }
 
+  private _computeEntityName(entity: EntityRegistryEntry): string | null {
+    if (this.hass.states[entity.entity_id]) {
+      return computeStateName(this.hass.states[entity.entity_id]);
+    }
+    return entity.name;
+  }
+
   private async _areaPicked(ev: CustomEvent) {
     const picker = ev.currentTarget as any;
 
diff --git a/src/panels/config/integrations/integration-panels/zwave_js/add-node/dialog-zwave_js-add-node.ts b/src/panels/config/integrations/integration-panels/zwave_js/add-node/dialog-zwave_js-add-node.ts
index 597e86ce0a..a64cbff91d 100644
--- a/src/panels/config/integrations/integration-panels/zwave_js/add-node/dialog-zwave_js-add-node.ts
+++ b/src/panels/config/integrations/integration-panels/zwave_js/add-node/dialog-zwave_js-add-node.ts
@@ -890,6 +890,8 @@ class DialogZWaveJSAddNode extends LitElement {
       this._step = "rename_device";
       const nameChanged = this._device.name !== this._deviceOptions?.name;
       if (nameChanged || this._deviceOptions?.area) {
+        const oldDeviceName = this._device.name;
+        const newDeviceName = this._deviceOptions!.name;
         try {
           await updateDeviceRegistryEntry(this.hass, this._device.id, {
             name_by_user: this._deviceOptions!.name,
@@ -897,6 +899,8 @@ class DialogZWaveJSAddNode extends LitElement {
           });
 
           if (nameChanged) {
+            // rename entities
+
             const entities = this._entities.filter(
               (entity) => entity.device_id === this._device!.id
             );
@@ -908,14 +912,33 @@ class DialogZWaveJSAddNode extends LitElement {
 
             await Promise.all(
               entities.map((entity) => {
+                const name = entity.name;
+                let newName: string | null | undefined;
                 const newEntityId = entityIdsMapping[entity.entity_id];
 
-                if (!newEntityId || newEntityId === entity.entity_id) {
+                if (entity.has_entity_name && !entity.name) {
+                  newName = undefined;
+                } else if (
+                  entity.has_entity_name &&
+                  (entity.name === oldDeviceName ||
+                    entity.name === newDeviceName)
+                ) {
+                  // clear name if it matches the device name and it uses the device name (entity naming)
+                  newName = null;
+                } else if (name && name.includes(oldDeviceName)) {
+                  newName = name.replace(oldDeviceName, newDeviceName);
+                }
+
+                if (
+                  (newName === undefined && !newEntityId) ||
+                  newEntityId === entity.entity_id
+                ) {
                   return undefined;
                 }
 
                 return updateEntityRegistryEntry(this.hass!, entity.entity_id, {
-                  new_entity_id: newEntityId,
+                  name: newName || name,
+                  new_entity_id: newEntityId || undefined,
                 });
               })
             );
diff --git a/src/panels/lovelace/components/hui-entity-editor.ts b/src/panels/lovelace/components/hui-entity-editor.ts
index cd5713ede0..ea3885f232 100644
--- a/src/panels/lovelace/components/hui-entity-editor.ts
+++ b/src/panels/lovelace/components/hui-entity-editor.ts
@@ -42,7 +42,8 @@ export class HuiEntityEditor extends LitElement {
     const stateObj = this.hass.states[item.entity];
 
     const useDeviceName =
-      stateObj && entityUseDeviceName(stateObj, this.hass.entities);
+      stateObj &&
+      entityUseDeviceName(stateObj, this.hass.entities, this.hass.devices);
 
     const isRTL = computeRTL(this.hass);
 
diff --git a/src/translations/en.json b/src/translations/en.json
index 6c795e7a8e..b35867ad3e 100644
--- a/src/translations/en.json
+++ b/src/translations/en.json
@@ -1764,7 +1764,6 @@
         "faq": "documentation",
         "editor": {
           "name": "Name",
-          "restore_name": "Restore default name",
           "icon": "Icon",
           "icon_error": "Icons should be in the format 'prefix:iconname', e.g. 'mdi:home'",
           "default_code": "Default code",
diff --git a/test/common/entity/compute_entity_name.test.ts b/test/common/entity/compute_entity_name.test.ts
index abe29c7208..fb420f0daf 100644
--- a/test/common/entity/compute_entity_name.test.ts
+++ b/test/common/entity/compute_entity_name.test.ts
@@ -1,9 +1,11 @@
 import { describe, expect, it, vi } from "vitest";
+import * as computeDeviceNameModule from "../../../src/common/entity/compute_device_name";
 import {
   computeEntityEntryName,
   computeEntityName,
 } from "../../../src/common/entity/compute_entity_name";
 import * as computeStateNameModule from "../../../src/common/entity/compute_state_name";
+import * as stripPrefixModule from "../../../src/common/entity/strip_prefix_from_entity_name";
 import type { HomeAssistant } from "../../../src/types";
 import {
   mockEntity,
@@ -23,8 +25,11 @@ describe("computeEntityName", () => {
     });
     const hass = {
       entities: {},
+      devices: {},
     } as unknown as HomeAssistant;
-    expect(computeEntityName(stateObj, hass.entities)).toBe("Kitchen Light");
+    expect(computeEntityName(stateObj, hass.entities, hass.devices)).toBe(
+      "Kitchen Light"
+    );
     vi.restoreAllMocks();
   });
 
@@ -42,47 +47,77 @@ describe("computeEntityName", () => {
           labels: [],
         },
       },
+      devices: {},
       states: {
         "light.kitchen": stateObj,
       },
     } as unknown as HomeAssistant;
-    expect(computeEntityName(stateObj, hass.entities)).toBe("Ceiling Light");
+    expect(computeEntityName(stateObj, hass.entities, hass.devices)).toBe(
+      "Ceiling Light"
+    );
   });
 });
 
 describe("computeEntityEntryName", () => {
-  it("returns entry.name if present", () => {
+  it("returns entry.name if no device", () => {
     const entry = mockEntity({
       entity_id: "light.kitchen",
       name: "Ceiling Light",
     });
-    expect(computeEntityEntryName(entry)).toBe("Ceiling Light");
+    const hass = { devices: {}, states: {} };
+    expect(computeEntityEntryName(entry, hass.devices)).toBe("Ceiling Light");
   });
 
-  it("returns entity name as-is when device present", () => {
+  it("returns device-stripped name if device present", () => {
+    vi.spyOn(computeDeviceNameModule, "computeDeviceName").mockReturnValue(
+      "Kitchen"
+    );
+    vi.spyOn(stripPrefixModule, "stripPrefixFromEntityName").mockImplementation(
+      (name, prefix) => name.replace(prefix + " ", "")
+    );
     const entry = mockEntity({
       entity_id: "light.kitchen",
-      name: "Light",
+      name: "Kitchen Light",
       device_id: "dev1",
     });
-    expect(computeEntityEntryName(entry)).toBe("Light");
+    const hass = {
+      devices: { dev1: {} },
+      states: {},
+    } as unknown as HomeAssistant;
+    expect(computeEntityEntryName(entry, hass.devices)).toBe("Light");
+    vi.restoreAllMocks();
   });
 
-  it("returns undefined if entity has no name (uses device name)", () => {
+  it("returns undefined if device name equals entity name", () => {
+    vi.spyOn(computeDeviceNameModule, "computeDeviceName").mockReturnValue(
+      "Kitchen Light"
+    );
     const entry = mockEntity({
       entity_id: "light.kitchen",
+      name: "Kitchen Light",
       device_id: "dev1",
     });
-    expect(computeEntityEntryName(entry)).toBeUndefined();
+    const hass = {
+      devices: { dev1: {} },
+      states: {},
+    } as unknown as HomeAssistant;
+    expect(computeEntityEntryName(entry, hass.devices)).toBeUndefined();
+    vi.restoreAllMocks();
   });
 
-  it("returns empty string if name is empty (does not fallback to original_name)", () => {
-    const entry = mockEntityEntry({
-      entity_id: "light.kitchen",
-      name: "",
-      original_name: "Old Name",
-    });
-    expect(computeEntityEntryName(entry)).toBe("");
+  it("falls back to state name if no name and no device", () => {
+    vi.spyOn(computeStateNameModule, "computeStateName").mockReturnValue(
+      "Fallback Name"
+    );
+    const entry = mockEntity({ entity_id: "light.kitchen" });
+    const hass = {
+      devices: {},
+    } as unknown as HomeAssistant;
+    const stateObj = mockStateObj({ entity_id: "light.kitchen" });
+    expect(computeEntityEntryName(entry, hass.devices, stateObj)).toBe(
+      "Fallback Name"
+    );
+    vi.restoreAllMocks();
   });
 
   it("returns original_name if present", () => {
@@ -90,15 +125,27 @@ describe("computeEntityEntryName", () => {
       entity_id: "light.kitchen",
       original_name: "Old Name",
     });
-    expect(computeEntityEntryName(entry)).toBe("Old Name");
+    const hass = {
+      devices: {},
+      states: {},
+    } as unknown as HomeAssistant;
+    expect(computeEntityEntryName(entry, hass.devices)).toBe("Old Name");
   });
 
-  it("returns undefined if no name or original_name", () => {
+  it("returns undefined if no name, original_name, or device", () => {
     const entry = mockEntity({ entity_id: "light.kitchen" });
-    expect(computeEntityEntryName(entry)).toBeUndefined();
+    const hass = {
+      devices: {},
+      states: {},
+    } as unknown as HomeAssistant;
+    expect(computeEntityEntryName(entry, hass.devices)).toBeUndefined();
   });
 
   it("handles entities with numeric original_name (real bug from issue #25363)", () => {
+    vi.spyOn(computeDeviceNameModule, "computeDeviceName").mockReturnValue(
+      "Texas Instruments CC2652"
+    );
+
     const entry = {
       entity_id: "sensor.texas_instruments_cc2652_2",
       name: null, // null name
@@ -106,21 +153,37 @@ describe("computeEntityEntryName", () => {
       device_id: "dev1",
       has_entity_name: true,
     };
+    const hass = {
+      devices: { dev1: {} },
+      states: {},
+    };
 
     // Should not throw an error and should return the stringified number
-    expect(() => computeEntityEntryName(entry as any)).not.toThrow();
-    expect(computeEntityEntryName(entry as any)).toBe("2");
+    expect(() =>
+      computeEntityEntryName(entry as any, hass as any)
+    ).not.toThrow();
+    expect(computeEntityEntryName(entry as any, hass as any)).toBe("2");
+    vi.restoreAllMocks();
   });
 
   it("returns undefined when entity has device but no name or original_name", () => {
+    vi.spyOn(computeDeviceNameModule, "computeDeviceName").mockReturnValue(
+      "Kitchen Device"
+    );
+
     const entry = {
       entity_id: "sensor.kitchen_sensor",
       // No name property
       // No original_name property
       device_id: "dev1",
     };
+    const hass = {
+      devices: { dev1: {} },
+      states: {},
+    };
 
     // Should return undefined to maintain function contract
-    expect(computeEntityEntryName(entry as any)).toBeUndefined();
+    expect(computeEntityEntryName(entry as any, hass as any)).toBeUndefined();
+    vi.restoreAllMocks();
   });
 });
diff --git a/test/common/entity/compute_entity_name_display.test.ts b/test/common/entity/compute_entity_name_display.test.ts
index 9aac451cf9..6e521e1d15 100644
--- a/test/common/entity/compute_entity_name_display.test.ts
+++ b/test/common/entity/compute_entity_name_display.test.ts
@@ -115,6 +115,7 @@ describe("computeEntityNameDisplay", () => {
       entities: {
         "light.kitchen": mockEntity({
           entity_id: "light.kitchen",
+          name: "Kitchen Device",
           device_id: "dev1",
         }),
       },
@@ -140,12 +141,13 @@ describe("computeEntityNameDisplay", () => {
     expect(result).toBe("Kitchen Device");
   });
 
-  it("does not duplicate device name when entity uses device name and device is included", () => {
+  it("does not replace entity with device when device is already included", () => {
     const stateObj = mockStateObj({ entity_id: "light.kitchen" });
     const hass = {
       entities: {
         "light.kitchen": mockEntity({
           entity_id: "light.kitchen",
+          name: "Kitchen Device",
           device_id: "dev1",
         }),
       },
@@ -168,8 +170,8 @@ describe("computeEntityNameDisplay", () => {
       hass.floors
     );
 
-    // Entity has no name (uses device name), device is already included
-    // So we only get the device name once
+    // Since entity name equals device name, entity returns undefined
+    // So we only get the device name
     expect(result).toBe("Kitchen Device");
   });