diff --git a/homeassistant/components/sleepiq/__init__.py b/homeassistant/components/sleepiq/__init__.py
index 235df79b976ef5..8bfb19979862f9 100644
--- a/homeassistant/components/sleepiq/__init__.py
+++ b/homeassistant/components/sleepiq/__init__.py
@@ -29,6 +29,7 @@
     SleepIQPauseUpdateCoordinator,
     SleepIQSleepDataCoordinator,
 )
+from .helpers import is_invalid_auth
 
 _LOGGER = logging.getLogger(__name__)
 
@@ -51,8 +52,6 @@
     },
     extra=vol.ALLOW_EXTRA,
 )
-
-
 async def async_setup(hass: HomeAssistant, config: ConfigType) -> bool:
     """Set up sleepiq component."""
     if DOMAIN in config:
@@ -78,8 +77,12 @@ async def async_setup_entry(hass: HomeAssistant, entry: SleepIQConfigEntry) -> b
     try:
         await gateway.login(email, password)
     except SleepIQLoginException as err:
-        _LOGGER.error("Could not authenticate with SleepIQ server")
-        raise ConfigEntryAuthFailed(err) from err
+        if is_invalid_auth(err):
+            _LOGGER.error("Could not authenticate with SleepIQ server")
+            raise ConfigEntryAuthFailed(err) from err
+        raise ConfigEntryNotReady(
+            str(err) or "Retryable SleepIQ login failure"
+        ) from err
     except SleepIQTimeoutException as err:
         raise ConfigEntryNotReady(
             str(err) or "Timed out during authentication"
diff --git a/homeassistant/components/sleepiq/config_flow.py b/homeassistant/components/sleepiq/config_flow.py
index 0a473404eb92e1..e4256680e1e651 100644
--- a/homeassistant/components/sleepiq/config_flow.py
+++ b/homeassistant/components/sleepiq/config_flow.py
@@ -15,6 +15,7 @@
 from homeassistant.helpers.aiohttp_client import async_get_clientsession
 
 from .const import DOMAIN
+from .helpers import is_invalid_auth
 
 _LOGGER = logging.getLogger(__name__)
 
@@ -117,8 +118,10 @@ async def try_connection(hass: HomeAssistant, user_input: dict[str, Any]) -> str
     gateway = AsyncSleepIQ(client_session=client_session)
     try:
         await gateway.login(user_input[CONF_USERNAME], user_input[CONF_PASSWORD])
-    except SleepIQLoginException:
-        return "invalid_auth"
+    except SleepIQLoginException as err:
+        if is_invalid_auth(err):
+            return "invalid_auth"
+        return "cannot_connect"
     except SleepIQTimeoutException:
         return "cannot_connect"
 
diff --git a/homeassistant/components/sleepiq/helpers.py b/homeassistant/components/sleepiq/helpers.py
new file mode 100644
index 00000000000000..27ae40510f4697
--- /dev/null
+++ b/homeassistant/components/sleepiq/helpers.py
@@ -0,0 +1,12 @@
+"""Helpers for the SleepIQ integration."""
+
+from __future__ import annotations
+
+from asyncsleepiq import SleepIQLoginException
+
+INVALID_AUTH_ERROR = "incorrect username or password"
+
+
+def is_invalid_auth(err: SleepIQLoginException) -> bool:
+    """Return if a SleepIQ login exception indicates invalid credentials."""
+    return INVALID_AUTH_ERROR in str(err).lower()
diff --git a/tests/components/sleepiq/test_config_flow.py b/tests/components/sleepiq/test_config_flow.py
index 26007d42e7dad8..f6d19ad0c13374 100644
--- a/tests/components/sleepiq/test_config_flow.py
+++ b/tests/components/sleepiq/test_config_flow.py
@@ -57,7 +57,14 @@ async def test_show_set_form(hass: HomeAssistant) -> None:
 @pytest.mark.parametrize(
     ("side_effect", "error"),
     [
-        (SleepIQLoginException, "invalid_auth"),
+        (
+            SleepIQLoginException("Incorrect username or password"),
+            "invalid_auth",
+        ),
+        (
+            SleepIQLoginException("Connection failure: Cannot connect to host"),
+            "cannot_connect",
+        ),
         (SleepIQTimeoutException, "cannot_connect"),
     ],
 )
@@ -115,3 +122,38 @@ async def test_reauth_password(hass: HomeAssistant) -> None:
 
     assert result2["type"] is FlowResultType.ABORT
     assert result2["reason"] == "reauth_successful"
+
+
+@pytest.mark.parametrize(
+    ("side_effect", "error"),
+    [
+        (
+            SleepIQLoginException("Incorrect username or password"),
+            "invalid_auth",
+        ),
+        (
+            SleepIQLoginException("Connection failure: Cannot connect to host"),
+            "cannot_connect",
+        ),
+        (SleepIQTimeoutException, "cannot_connect"),
+    ],
+)
+async def test_reauth_failure(hass: HomeAssistant, side_effect, error) -> None:
+    """Test reauth form errors on login failure."""
+
+    entry = await setup_platform(hass)
+    result = await entry.start_reauth_flow(hass)
+
+    with patch(
+        "homeassistant.components.sleepiq.config_flow.AsyncSleepIQ.login",
+        side_effect=side_effect,
+    ):
+        result2 = await hass.config_entries.flow.async_configure(
+            result["flow_id"],
+            {"password": "password"},
+        )
+        await hass.async_block_till_done()
+
+    assert result2["type"] is FlowResultType.FORM
+    assert result2["step_id"] == "reauth_confirm"
+    assert result2["errors"] == {"base": error}
diff --git a/tests/components/sleepiq/test_init.py b/tests/components/sleepiq/test_init.py
index 65e9e63a372e5e..cd3ff775e00162 100644
--- a/tests/components/sleepiq/test_init.py
+++ b/tests/components/sleepiq/test_init.py
@@ -55,9 +55,24 @@ async def test_unload_entry(hass: HomeAssistant, mock_asyncsleepiq) -> None:
 
 async def test_entry_setup_login_error(hass: HomeAssistant, mock_asyncsleepiq) -> None:
     """Test when sleepiq client is unable to login."""
-    mock_asyncsleepiq.login.side_effect = SleepIQLoginException
+    mock_asyncsleepiq.login.side_effect = SleepIQLoginException(
+        "Incorrect username or password"
+    )
+    entry = await setup_platform(hass, None)
+    assert not await hass.config_entries.async_setup(entry.entry_id)
+    assert entry.state is ConfigEntryState.SETUP_ERROR
+
+
+async def test_entry_setup_retryable_login_error(
+    hass: HomeAssistant, mock_asyncsleepiq
+) -> None:
+    """Test when sleepiq client cannot connect during login."""
+    mock_asyncsleepiq.login.side_effect = SleepIQLoginException(
+        "Connection failure: Cannot connect to host"
+    )
     entry = await setup_platform(hass, None)
     assert not await hass.config_entries.async_setup(entry.entry_id)
+    assert entry.state is ConfigEntryState.SETUP_RETRY
 
 
 async def test_entry_setup_timeout_error(
@@ -67,6 +82,7 @@ async def test_entry_setup_timeout_error(
     mock_asyncsleepiq.login.side_effect = SleepIQTimeoutException
     entry = await setup_platform(hass, None)
     assert not await hass.config_entries.async_setup(entry.entry_id)
+    assert entry.state is ConfigEntryState.SETUP_RETRY
 
 
 async def test_update_interval(hass: HomeAssistant, mock_asyncsleepiq) -> None: