diff --git a/homeassistant/components/esphome/dashboard.py b/homeassistant/components/esphome/dashboard.py
index 9e8911f7efe..ac7a5c43e79 100644
--- a/homeassistant/components/esphome/dashboard.py
+++ b/homeassistant/components/esphome/dashboard.py
@@ -59,6 +59,23 @@ class ESPHomeDashboard(DataUpdateCoordinator[dict[str, ConfiguredDevice]]):
         self.addon_slug = addon_slug
         self.api = ESPHomeDashboardAPI(url, session)
 
+    async def ensure_data(self) -> None:
+        """Ensure the update coordinator has data when this call finishes."""
+        if self.data:
+            return
+
+        if self._first_fetch_lock is not None:
+            async with self._first_fetch_lock:
+                # We know the data is fetched when lock is done
+                return
+
+        self._first_fetch_lock = asyncio.Lock()
+
+        async with self._first_fetch_lock:
+            await self.async_request_refresh()
+
+        self._first_fetch_lock = None
+
     async def _async_update_data(self) -> dict:
         """Fetch device data."""
         devices = await self.api.get_devices()
diff --git a/homeassistant/components/esphome/entry_data.py b/homeassistant/components/esphome/entry_data.py
index 959bf2f2877..ef18df33474 100644
--- a/homeassistant/components/esphome/entry_data.py
+++ b/homeassistant/components/esphome/entry_data.py
@@ -37,6 +37,8 @@ from homeassistant.core import HomeAssistant, callback
 from homeassistant.helpers.dispatcher import async_dispatcher_send
 from homeassistant.helpers.storage import Store
 
+from .dashboard import async_get_dashboard
+
 SAVE_DELAY = 120
 _LOGGER = logging.getLogger(__name__)
 
@@ -147,6 +149,10 @@ class RuntimeEntryData:
         """Distribute an update of static infos to all platforms."""
         # First, load all platforms
         needed_platforms = set()
+
+        if async_get_dashboard(hass):
+            needed_platforms.add("update")
+
         for info in infos:
             for info_type, platform in INFO_TYPE_TO_PLATFORM.items():
                 if isinstance(info, info_type):
diff --git a/homeassistant/components/esphome/update.py b/homeassistant/components/esphome/update.py
new file mode 100644
index 00000000000..1aa21623cb9
--- /dev/null
+++ b/homeassistant/components/esphome/update.py
@@ -0,0 +1,109 @@
+"""Update platform for ESPHome."""
+from __future__ import annotations
+
+from typing import cast
+
+from aioesphomeapi import DeviceInfo as ESPHomeDeviceInfo
+
+from homeassistant.components.update import (
+    UpdateDeviceClass,
+    UpdateEntity,
+    UpdateEntityFeature,
+)
+from homeassistant.config_entries import ConfigEntry
+from homeassistant.core import HomeAssistant
+from homeassistant.helpers import device_registry as dr
+from homeassistant.helpers.dispatcher import async_dispatcher_connect
+from homeassistant.helpers.entity import DeviceInfo
+from homeassistant.helpers.entity_platform import AddEntitiesCallback
+from homeassistant.helpers.update_coordinator import CoordinatorEntity
+
+from .dashboard import ESPHomeDashboard, async_get_dashboard
+from .domain_data import DomainData
+from .entry_data import RuntimeEntryData
+
+
+async def async_setup_entry(
+    hass: HomeAssistant,
+    entry: ConfigEntry,
+    async_add_entities: AddEntitiesCallback,
+) -> None:
+    """Set up ESPHome update based on a config entry."""
+    dashboard = async_get_dashboard(hass)
+
+    if dashboard is None:
+        return
+
+    entry_data = DomainData.get(hass).get_entry_data(entry)
+    unsub = None
+
+    async def setup_update_entity() -> None:
+        """Set up the update entity."""
+        nonlocal unsub
+
+        # Keep listening until device is available
+        if not entry_data.available:
+            return
+
+        if unsub is not None:
+            unsub()  # type: ignore[unreachable]
+
+        assert dashboard is not None
+        await dashboard.ensure_data()
+        async_add_entities([ESPHomeUpdateEntity(entry_data, dashboard)])
+
+    if entry_data.available:
+        await setup_update_entity()
+        return
+
+    signal = f"esphome_{entry_data.entry_id}_on_device_update"
+    unsub = async_dispatcher_connect(hass, signal, setup_update_entity)
+
+
+class ESPHomeUpdateEntity(CoordinatorEntity[ESPHomeDashboard], UpdateEntity):
+    """Defines an ESPHome update entity."""
+
+    _attr_has_entity_name = True
+    _attr_device_class = UpdateDeviceClass.FIRMWARE
+    _attr_supported_features = UpdateEntityFeature.SPECIFIC_VERSION
+    _attr_title = "ESPHome"
+    _attr_name = "Firmware"
+
+    _device_info: ESPHomeDeviceInfo
+
+    def __init__(
+        self, entry_data: RuntimeEntryData, coordinator: ESPHomeDashboard
+    ) -> None:
+        """Initialize the update entity."""
+        super().__init__(coordinator=coordinator)
+        assert entry_data.device_info is not None
+        self._device_info = entry_data.device_info
+        self._attr_unique_id = f"{entry_data.entry_id}_update"
+        self._attr_device_info = DeviceInfo(
+            connections={
+                (dr.CONNECTION_NETWORK_MAC, entry_data.device_info.mac_address)
+            }
+        )
+
+    @property
+    def available(self) -> bool:
+        """Return if update is available."""
+        return super().available and self._device_info.name in self.coordinator.data
+
+    @property
+    def installed_version(self) -> str | None:
+        """Version currently installed and in use."""
+        return self._device_info.esphome_version
+
+    @property
+    def latest_version(self) -> str | None:
+        """Latest version available for install."""
+        device = self.coordinator.data.get(self._device_info.name)
+        if device is None:
+            return None
+        return cast(str, device["current_version"])
+
+    @property
+    def release_url(self) -> str | None:
+        """URL to the full release notes of the latest version available."""
+        return "https://esphome.io/changelog/"
diff --git a/tests/components/esphome/conftest.py b/tests/components/esphome/conftest.py
index c3f7fdd281c..44915befdcb 100644
--- a/tests/components/esphome/conftest.py
+++ b/tests/components/esphome/conftest.py
@@ -40,6 +40,18 @@ def mock_config_entry() -> MockConfigEntry:
     )
 
 
+@pytest.fixture
+def mock_device_info() -> DeviceInfo:
+    """Return the default mocked device info."""
+    return DeviceInfo(
+        uses_password=False,
+        name="test",
+        bluetooth_proxy_version=0,
+        mac_address="11:22:33:44:55:aa",
+        esphome_version="1.0.0",
+    )
+
+
 @pytest.fixture
 async def init_integration(
     hass: HomeAssistant, mock_config_entry: MockConfigEntry
@@ -54,7 +66,7 @@ async def init_integration(
 
 
 @pytest.fixture
-def mock_client():
+def mock_client(mock_device_info):
     """Mock APIClient."""
     mock_client = Mock(spec=APIClient)
 
@@ -78,14 +90,7 @@ def mock_client():
         return mock_client
 
     mock_client.side_effect = mock_constructor
-    mock_client.device_info = AsyncMock(
-        return_value=DeviceInfo(
-            uses_password=False,
-            name="test",
-            bluetooth_proxy_version=0,
-            mac_address="11:22:33:44:55:aa",
-        )
-    )
+    mock_client.device_info = AsyncMock(return_value=mock_device_info)
     mock_client.connect = AsyncMock()
     mock_client.disconnect = AsyncMock()
 
diff --git a/tests/components/esphome/test_update.py b/tests/components/esphome/test_update.py
new file mode 100644
index 00000000000..3a01245de41
--- /dev/null
+++ b/tests/components/esphome/test_update.py
@@ -0,0 +1,64 @@
+"""Test ESPHome update entities."""
+from unittest.mock import Mock, patch
+
+import pytest
+
+from homeassistant.components.esphome.dashboard import async_set_dashboard_info
+
+
+@pytest.fixture(autouse=True)
+def stub_reconnect():
+    """Stub reconnect."""
+    with patch("homeassistant.components.esphome.ReconnectLogic.start"):
+        yield
+
+
+@pytest.mark.parametrize(
+    "devices_payload,expected_state,expected_attributes",
+    [
+        (
+            [{"name": "test", "current_version": "1.2.3"}],
+            "on",
+            {"latest_version": "1.2.3", "installed_version": "1.0.0"},
+        ),
+        (
+            [{"name": "test", "current_version": "1.0.0"}],
+            "off",
+            {"latest_version": "1.0.0", "installed_version": "1.0.0"},
+        ),
+        (
+            [],
+            "unavailable",
+            {},
+        ),
+    ],
+)
+async def test_update_entity(
+    hass,
+    mock_config_entry,
+    mock_device_info,
+    devices_payload,
+    expected_state,
+    expected_attributes,
+):
+    """Test ESPHome update entity."""
+    async_set_dashboard_info(hass, "mock-addon-slug", "mock-addon-host", 1234)
+
+    mock_config_entry.add_to_hass(hass)
+
+    with patch(
+        "homeassistant.components.esphome.update.DomainData.get_entry_data",
+        return_value=Mock(available=True, device_info=mock_device_info),
+    ), patch(
+        "homeassistant.components.esphome.dashboard.ESPHomeDashboardAPI.get_devices",
+        return_value={"configured": devices_payload},
+    ):
+        assert await hass.config_entries.async_forward_entry_setup(
+            mock_config_entry, "update"
+        )
+
+    state = hass.states.get("update.none_firmware")
+    assert state is not None
+    assert state.state == expected_state
+    for key, expected_value in expected_attributes.items():
+        assert state.attributes.get(key) == expected_value