diff --git a/homeassistant/components/reolink/__init__.py b/homeassistant/components/reolink/__init__.py
index 7fa7ce5e961..9807739b790 100644
--- a/homeassistant/components/reolink/__init__.py
+++ b/homeassistant/components/reolink/__init__.py
@@ -85,6 +85,7 @@ async def async_setup_entry(hass: HomeAssistant, config_entry: ConfigEntry) -> b
             try:
                 await host.update_states()
             except CredentialsInvalidError as err:
+                await host.stop()
                 raise ConfigEntryAuthFailed(err) from err
             except ReolinkError as err:
                 raise UpdateFailed(str(err)) from err
diff --git a/tests/components/reolink/test_init.py b/tests/components/reolink/test_init.py
index 4ec02244c91..261f572bf2e 100644
--- a/tests/components/reolink/test_init.py
+++ b/tests/components/reolink/test_init.py
@@ -5,7 +5,7 @@ from typing import Any
 from unittest.mock import AsyncMock, MagicMock, Mock, patch
 
 import pytest
-from reolink_aio.exceptions import ReolinkError
+from reolink_aio.exceptions import CredentialsInvalidError, ReolinkError
 
 from homeassistant.components.reolink import FIRMWARE_UPDATE_INTERVAL, const
 from homeassistant.config import async_process_ha_core_config
@@ -50,6 +50,11 @@ pytestmark = pytest.mark.usefixtures("reolink_connect", "reolink_platforms")
             AsyncMock(side_effect=ReolinkError("Test error")),
             ConfigEntryState.SETUP_RETRY,
         ),
+        (
+            "get_states",
+            AsyncMock(side_effect=CredentialsInvalidError("Test error")),
+            ConfigEntryState.SETUP_ERROR,
+        ),
         (
             "supported",
             Mock(return_value=False),