diff --git a/homeassistant/components/smlight/__init__.py b/homeassistant/components/smlight/__init__.py
index 52db6c8770b..cbfb8162d63 100644
--- a/homeassistant/components/smlight/__init__.py
+++ b/homeassistant/components/smlight/__init__.py
@@ -36,7 +36,6 @@ type SmConfigEntry = ConfigEntry[SmlightData]
 async def async_setup_entry(hass: HomeAssistant, entry: SmConfigEntry) -> bool:
     """Set up SMLIGHT Zigbee from a config entry."""
     client = Api2(host=entry.data[CONF_HOST], session=async_get_clientsession(hass))
-    entry.async_create_background_task(hass, client.sse.client(), "smlight-sse-client")
 
     data_coordinator = SmDataUpdateCoordinator(hass, entry.data[CONF_HOST], client)
     firmware_coordinator = SmFirmwareUpdateCoordinator(
@@ -46,6 +45,11 @@ async def async_setup_entry(hass: HomeAssistant, entry: SmConfigEntry) -> bool:
     await data_coordinator.async_config_entry_first_refresh()
     await firmware_coordinator.async_config_entry_first_refresh()
 
+    if data_coordinator.data.info.legacy_api < 2:
+        entry.async_create_background_task(
+            hass, client.sse.client(), "smlight-sse-client"
+        )
+
     entry.runtime_data = SmlightData(
         data=data_coordinator, firmware=firmware_coordinator
     )
diff --git a/homeassistant/components/smlight/coordinator.py b/homeassistant/components/smlight/coordinator.py
index e5ef21bd531..5b38ec4a89e 100644
--- a/homeassistant/components/smlight/coordinator.py
+++ b/homeassistant/components/smlight/coordinator.py
@@ -80,9 +80,8 @@ class SmBaseDataUpdateCoordinator[_DataT](DataUpdateCoordinator[_DataT]):
 
         info = await self.client.get_info()
         self.unique_id = format_mac(info.MAC)
-
-        if info.legacy_api:
-            self.legacy_api = info.legacy_api
+        self.legacy_api = info.legacy_api
+        if info.legacy_api == 2:
             ir.async_create_issue(
                 self.hass,
                 DOMAIN,
diff --git a/homeassistant/components/smlight/update.py b/homeassistant/components/smlight/update.py
index e00499760b1..cb28a197860 100644
--- a/homeassistant/components/smlight/update.py
+++ b/homeassistant/components/smlight/update.py
@@ -102,6 +102,8 @@ class SmUpdateEntity(SmEntity, UpdateEntity):
     def latest_version(self) -> str | None:
         """Latest version available for install."""
         data = self.coordinator.data
+        if self.coordinator.legacy_api == 2:
+            return None
 
         fw = self.entity_description.fw_list(data)
 
@@ -126,6 +128,12 @@ class SmUpdateEntity(SmEntity, UpdateEntity):
                 SmEvents.FW_UPD_done, self._update_finished
             )
         )
+        if self.coordinator.legacy_api == 1:
+            self._unload.append(
+                self.coordinator.client.sse.register_callback(
+                    SmEvents.ESP_UPD_done, self._update_finished
+                )
+            )
         self._unload.append(
             self.coordinator.client.sse.register_callback(
                 SmEvents.ZB_FW_err, self._update_failed
diff --git a/tests/components/smlight/test_init.py b/tests/components/smlight/test_init.py
index eb7b6396d26..afc53932fb0 100644
--- a/tests/components/smlight/test_init.py
+++ b/tests/components/smlight/test_init.py
@@ -122,10 +122,10 @@ async def test_device_legacy_firmware(
     issue_registry: IssueRegistry,
 ) -> None:
     """Test device setup for old firmware version that dont support required API."""
-    LEGACY_VERSION = "v2.3.1"
+    LEGACY_VERSION = "v0.9.9"
     mock_smlight_client.get_sensors.side_effect = SmlightError
     mock_smlight_client.get_info.return_value = Info(
-        legacy_api=1, sw_version=LEGACY_VERSION, MAC="AA:BB:CC:DD:EE:FF"
+        legacy_api=2, sw_version=LEGACY_VERSION, MAC="AA:BB:CC:DD:EE:FF"
     )
     entry = await setup_integration(hass, mock_config_entry)
 
diff --git a/tests/components/smlight/test_update.py b/tests/components/smlight/test_update.py
index b8b8de8a09b..b0b8910ef9b 100644
--- a/tests/components/smlight/test_update.py
+++ b/tests/components/smlight/test_update.py
@@ -126,10 +126,7 @@ async def test_update_firmware(
         mock_smlight_client, SmEvents.ZB_FW_prgs
     )
 
-    async def _call_event_function(event: MessageEvent):
-        event_function(event)
-
-    await _call_event_function(MOCK_FIRMWARE_PROGRESS)
+    event_function(MOCK_FIRMWARE_PROGRESS)
     state = hass.states.get(entity_id)
     assert state.attributes[ATTR_IN_PROGRESS] == 50
 
@@ -137,7 +134,55 @@ async def test_update_firmware(
         mock_smlight_client, SmEvents.FW_UPD_done
     )
 
-    await _call_event_function(MOCK_FIRMWARE_DONE)
+    event_function(MOCK_FIRMWARE_DONE)
+
+    mock_smlight_client.get_info.return_value = Info(
+        sw_version="v2.5.2",
+    )
+
+    freezer.tick(SCAN_FIRMWARE_INTERVAL)
+    async_fire_time_changed(hass)
+    await hass.async_block_till_done()
+
+    state = hass.states.get(entity_id)
+    assert state.state == STATE_OFF
+    assert state.attributes[ATTR_INSTALLED_VERSION] == "v2.5.2"
+    assert state.attributes[ATTR_LATEST_VERSION] == "v2.5.2"
+
+
+async def test_update_legacy_firmware_v2(
+    hass: HomeAssistant,
+    freezer: FrozenDateTimeFactory,
+    mock_config_entry: MockConfigEntry,
+    mock_smlight_client: MagicMock,
+) -> None:
+    """Test firmware update for legacy v2 firmware."""
+    mock_smlight_client.get_info.return_value = Info(
+        sw_version="v2.0.18",
+        legacy_api=1,
+        MAC="AA:BB:CC:DD:EE:FF",
+    )
+    await setup_integration(hass, mock_config_entry)
+    entity_id = "update.mock_title_core_firmware"
+    state = hass.states.get(entity_id)
+    assert state.state == STATE_ON
+    assert state.attributes[ATTR_INSTALLED_VERSION] == "v2.0.18"
+    assert state.attributes[ATTR_LATEST_VERSION] == "v2.5.2"
+
+    await hass.services.async_call(
+        PLATFORM,
+        SERVICE_INSTALL,
+        {ATTR_ENTITY_ID: entity_id},
+        blocking=False,
+    )
+
+    assert len(mock_smlight_client.fw_update.mock_calls) == 1
+
+    event_function: Callable[[MessageEvent], None] = get_callback_function(
+        mock_smlight_client, SmEvents.ESP_UPD_done
+    )
+
+    event_function(MOCK_FIRMWARE_DONE)
 
     mock_smlight_client.get_info.return_value = Info(
         sw_version="v2.5.2",