diff --git a/homeassistant/components/steam_online/config_flow.py b/homeassistant/components/steam_online/config_flow.py
index 91965685969..338b0a80fb6 100644
--- a/homeassistant/components/steam_online/config_flow.py
+++ b/homeassistant/components/steam_online/config_flow.py
@@ -174,11 +174,14 @@ class SteamOptionsFlowHandler(config_entries.OptionsFlow):
             }
             await self.hass.config_entries.async_reload(self.entry.entry_id)
             return self.async_create_entry(title="", data=channel_data)
+        error = None
         try:
             users = {
                 name["steamid"]: name["personaname"]
                 for name in await self.hass.async_add_executor_job(self.get_accounts)
             }
+            if not users:
+                error = {"base": "unauthorized"}
 
         except steam.api.HTTPTimeoutError:
             users = self.options[CONF_ACCOUNTS]
@@ -191,12 +194,17 @@ class SteamOptionsFlowHandler(config_entries.OptionsFlow):
         }
         self.options[CONF_ACCOUNTS] = users | self.options[CONF_ACCOUNTS]
 
-        return self.async_show_form(step_id="init", data_schema=vol.Schema(options))
+        return self.async_show_form(
+            step_id="init", data_schema=vol.Schema(options), errors=error
+        )
 
     def get_accounts(self) -> list[dict[str, str | int]]:
         """Get accounts."""
         interface = steam.api.interface("ISteamUser")
-        friends = interface.GetFriendList(steamid=self.entry.data[CONF_ACCOUNT])
-        _users_str = [user["steamid"] for user in friends["friendslist"]["friends"]]
+        try:
+            friends = interface.GetFriendList(steamid=self.entry.data[CONF_ACCOUNT])
+            _users_str = [user["steamid"] for user in friends["friendslist"]["friends"]]
+        except steam.api.HTTPError:
+            return []
         names = interface.GetPlayerSummaries(steamids=_users_str)
         return names["response"]["players"]["player"]
diff --git a/homeassistant/components/steam_online/strings.json b/homeassistant/components/steam_online/strings.json
index 6d80bb77f1b..1b431795ea4 100644
--- a/homeassistant/components/steam_online/strings.json
+++ b/homeassistant/components/steam_online/strings.json
@@ -31,6 +31,9 @@
           "accounts": "Names of accounts to be monitored"
         }
       }
+    },
+    "error": {
+      "unauthorized": "Friends list restricted: Please refer to the documentation on how to see all other friends"
     }
   }
 }
diff --git a/homeassistant/components/steam_online/translations/en.json b/homeassistant/components/steam_online/translations/en.json
index 990a33dbeff..f93a517b241 100644
--- a/homeassistant/components/steam_online/translations/en.json
+++ b/homeassistant/components/steam_online/translations/en.json
@@ -31,6 +31,9 @@
                     "accounts": "Names of accounts to be monitored"
                 }
             }
+        },
+        "error": {
+            "unauthorized": "Friends list restricted: Please refer to the documentation on how to see all other friends"
         }
     }
 }
\ No newline at end of file
diff --git a/tests/components/steam_online/__init__.py b/tests/components/steam_online/__init__.py
index 27958b76576..4c8c398502f 100644
--- a/tests/components/steam_online/__init__.py
+++ b/tests/components/steam_online/__init__.py
@@ -1,6 +1,8 @@
 """Tests for Steam integration."""
 from unittest.mock import patch
 
+import steam
+
 from homeassistant.components.steam_online import DOMAIN
 from homeassistant.components.steam_online.const import CONF_ACCOUNT, CONF_ACCOUNTS
 from homeassistant.const import CONF_API_KEY
@@ -96,11 +98,24 @@ class MockedInterface(dict):
         return {"response": {"player_level": 10}}
 
 
+class MockedInterfacePrivate(MockedInterface):
+    """Mocked interface for private friends list."""
+
+    def GetFriendList(self, steamid: str) -> None:
+        """Get friend list."""
+        raise steam.api.HTTPError
+
+
 def patch_interface() -> MockedInterface:
     """Patch interface."""
     return patch("steam.api.interface", return_value=MockedInterface())
 
 
+def patch_interface_private() -> MockedInterfacePrivate:
+    """Patch interface for private friends list."""
+    return patch("steam.api.interface", return_value=MockedInterfacePrivate())
+
+
 def patch_user_interface_null() -> MockedUserInterfaceNull:
     """Patch player interface with no players."""
     return patch("steam.api.interface", return_value=MockedUserInterfaceNull())
diff --git a/tests/components/steam_online/test_config_flow.py b/tests/components/steam_online/test_config_flow.py
index 6d8a16f35f7..c4504bf1641 100644
--- a/tests/components/steam_online/test_config_flow.py
+++ b/tests/components/steam_online/test_config_flow.py
@@ -21,6 +21,7 @@ from . import (
     CONF_OPTIONS_2,
     create_entry,
     patch_interface,
+    patch_interface_private,
     patch_user_interface_null,
 )
 
@@ -225,3 +226,22 @@ async def test_options_flow_timeout(hass: HomeAssistant) -> None:
 
     assert result["type"] == data_entry_flow.RESULT_TYPE_CREATE_ENTRY
     assert result["data"] == CONF_OPTIONS
+
+
+async def test_options_flow_unauthorized(hass: HomeAssistant) -> None:
+    """Test updating options when user's friends list is not public."""
+    entry = create_entry(hass)
+    with patch_interface_private():
+        result = await hass.config_entries.options.async_init(entry.entry_id)
+
+        assert result["type"] == data_entry_flow.RESULT_TYPE_FORM
+        assert result["step_id"] == "init"
+
+        result = await hass.config_entries.options.async_configure(
+            result["flow_id"],
+            user_input={CONF_ACCOUNTS: [ACCOUNT_1]},
+        )
+    await hass.async_block_till_done()
+
+    assert result["type"] == data_entry_flow.RESULT_TYPE_CREATE_ENTRY
+    assert result["data"] == CONF_OPTIONS