diff --git a/homeassistant/config_entries.py b/homeassistant/config_entries.py
index a809ba1caed67..3ae3830a8d74a 100644
--- a/homeassistant/config_entries.py
+++ b/homeassistant/config_entries.py
@@ -718,36 +718,27 @@ def _async_setup_again(self, hass: HomeAssistant, *_: Any) -> None:
         # has started so we do not block shutdown
         if not hass.is_stopping:
             hass.async_create_background_task(
-                self._async_setup_again_locked(hass),
+                self.async_setup_locked(hass),
                 f"config entry retry {self.domain} {self.title}",
                 eager_start=True,
             )
 
-    async def _async_setup_again_locked(self, hass: HomeAssistant) -> None:
-        """Schedule setup again while holding the setup lock."""
+    async def async_setup_locked(
+        self, hass: HomeAssistant, integration: loader.Integration | None = None
+    ) -> None:
+        """Set up while holding the setup lock."""
         async with self.setup_lock:
-            if (state := self.state) in (
-                ConfigEntryState.LOADED,
-                ConfigEntryState.SETUP_IN_PROGRESS,
-            ):
-                # If something reloaded the config entry while
+            if self.state is ConfigEntryState.LOADED:
+                # If something loaded the config entry while
                 # we were waiting for the lock, we should not
                 # set it up again.
                 _LOGGER.debug(
-                    "Not setting up %s (%s %s) again, already %s",
+                    "Not setting up %s (%s %s) again, already loaded",
                     self.title,
                     self.domain,
                     self.entry_id,
-                    state,
                 )
                 return
-            await self.async_setup(hass)
-
-    async def async_setup_locked(
-        self, hass: HomeAssistant, integration: loader.Integration | None = None
-    ) -> None:
-        """Set up while holding the setup lock."""
-        async with self.setup_lock:
             await self.async_setup(hass, integration=integration)
 
     @callback
diff --git a/tests/test_config_entries.py b/tests/test_config_entries.py
index fbae1dbc516aa..cdce963004ae3 100644
--- a/tests/test_config_entries.py
+++ b/tests/test_config_entries.py
@@ -90,17 +90,29 @@ async def manager(hass: HomeAssistant) -> config_entries.ConfigEntries:
     return manager
 
 
-async def test_setup_retry_race(hass: HomeAssistant) -> None:
-    """Test handling setup retry when a config entry has been reloaded."""
+async def test_setup_race_only_setup_once(hass: HomeAssistant) -> None:
+    """Test ensure that config entries are only setup once."""
     attempts = 0
+    slow_config_entry_setup_future = hass.loop.create_future()
+    fast_config_entry_setup_future = hass.loop.create_future()
+    slow_setup_future = hass.loop.create_future()
+
+    async def async_setup(hass, config):
+        """Mock setup."""
+        await slow_setup_future
+        return True
 
     async def async_setup_entry(hass, entry):
         """Mock setup entry."""
+        slow = entry.data["slow"]
+        if slow:
+            await slow_config_entry_setup_future
+            return True
         nonlocal attempts
         attempts += 1
         if attempts == 1:
             raise ConfigEntryNotReady
-        await asyncio.sleep(0.1)
+        await fast_config_entry_setup_future
         return True
 
     async def async_unload_entry(hass, entry):
@@ -111,31 +123,54 @@ async def async_unload_entry(hass, entry):
         hass,
         MockModule(
             "comp",
+            async_setup=async_setup,
             async_setup_entry=async_setup_entry,
             async_unload_entry=async_unload_entry,
         ),
     )
     mock_platform(hass, "comp.config_flow", None)
 
-    entry = MockConfigEntry(domain="comp")
+    entry = MockConfigEntry(domain="comp", data={"slow": False})
     entry.add_to_hass(hass)
 
-    await hass.config_entries.async_setup(entry.entry_id)
-    assert entry.state is config_entries.ConfigEntryState.SETUP_RETRY
+    entry2 = MockConfigEntry(domain="comp", data={"slow": True})
+    entry2.add_to_hass(hass)
+    await entry2.setup_lock.acquire()
 
-    # Ensure setup retry has started, but do not block until its
-    # done so we can trigger a reload before its complete
-    async_fire_time_changed(hass, dt_util.utcnow() + timedelta(minutes=5))
-    assert entry.setup_lock.locked()
-    assert entry._async_cancel_retry_setup is None
+    async def _async_reload_entry(entry: MockConfigEntry):
+        async with entry.setup_lock:
+            await entry.async_unload(hass)
+            await entry.async_setup(hass)
 
-    hass.config_entries.async_schedule_reload(entry.entry_id)
-    assert entry.state is config_entries.ConfigEntryState.SETUP_IN_PROGRESS
+    hass.async_create_task(_async_reload_entry(entry2))
 
-    async_fire_time_changed(hass, dt_util.utcnow() + timedelta(minutes=10))
+    setup_task = hass.async_create_task(async_setup_component(hass, "comp", {}))
+    entry2.setup_lock.release()
+
+    assert entry.state is config_entries.ConfigEntryState.NOT_LOADED
+    assert entry2.state is config_entries.ConfigEntryState.NOT_LOADED
+
+    assert "comp" not in hass.config.components
+    slow_setup_future.set_result(None)
+    await asyncio.sleep(0)
+    assert "comp" in hass.config.components
+
+    assert entry.state is config_entries.ConfigEntryState.SETUP_RETRY
+    assert entry2.state is config_entries.ConfigEntryState.SETUP_IN_PROGRESS
+
+    fast_config_entry_setup_future.set_result(None)
+    # Make sure setup retry is started
+    async_fire_time_changed(hass, dt_util.utcnow() + timedelta(seconds=5))
+    slow_config_entry_setup_future.set_result(None)
     await hass.async_block_till_done()
 
     assert entry.state is config_entries.ConfigEntryState.LOADED
+    await hass.async_block_till_done()
+
+    assert attempts == 2
+    await hass.async_block_till_done()
+    assert setup_task.done()
+    assert entry2.state is config_entries.ConfigEntryState.LOADED
 
 
 async def test_call_setup_entry(hass: HomeAssistant) -> None: