diff --git a/homeassistant/components/hue/v2/device.py b/homeassistant/components/hue/v2/device.py
index 64bdcc7a4f2..c3deee40023 100644
--- a/homeassistant/components/hue/v2/device.py
+++ b/homeassistant/components/hue/v2/device.py
@@ -81,6 +81,10 @@ async def async_setup_devices(bridge: "HueBridge"):
         dev_reg, entry.entry_id
     ):
         if device not in known_devices:
+            # handle case where a virtual device was created for a Hue group
+            hue_dev_id = next(x[1] for x in device.identifiers if x[0] == DOMAIN)
+            if hue_dev_id in api.groups:
+                continue
             dev_reg.async_remove_device(device.id)
 
     # add listener for updates on Hue devices controller