diff --git a/homeassistant/components/iaqualink/coordinator.py b/homeassistant/components/iaqualink/coordinator.py
index 8f50d30e949c2..ade0dec0b2f4f 100644
--- a/homeassistant/components/iaqualink/coordinator.py
+++ b/homeassistant/components/iaqualink/coordinator.py
@@ -6,6 +6,7 @@
 import httpx
 from iaqualink.exception import (
     AqualinkServiceException,
+    AqualinkServiceThrottledException,
     AqualinkServiceUnauthorizedException,
 )
 
@@ -44,6 +45,12 @@ async def _async_update_data(self) -> None:
             await self.system.update()
         except AqualinkServiceUnauthorizedException as err:
             raise ConfigEntryAuthFailed("Invalid credentials for iAquaLink") from err
+        except AqualinkServiceThrottledException:
+            _LOGGER.warning(
+                "Rate limited by iAquaLink system %s, will retry later",
+                self.system.serial,
+            )
+            return
         except (AqualinkServiceException, httpx.HTTPError) as err:
             raise UpdateFailed(
                 f"Unable to update iAquaLink system {self.system.serial}: {err}"
diff --git a/tests/components/iaqualink/test_init.py b/tests/components/iaqualink/test_init.py
index 57d205c9caaf8..fe4058fa5e558 100644
--- a/tests/components/iaqualink/test_init.py
+++ b/tests/components/iaqualink/test_init.py
@@ -6,6 +6,7 @@
 from iaqualink.client import AqualinkClient
 from iaqualink.exception import (
     AqualinkServiceException,
+    AqualinkServiceThrottledException,
     AqualinkServiceUnauthorizedException,
 )
 from iaqualink.systems.iaqua.device import (
@@ -16,6 +17,7 @@
     IaquaThermostat,
 )
 from iaqualink.systems.iaqua.system import IaquaSystem
+import pytest
 
 from homeassistant.components.binary_sensor import DOMAIN as BINARY_SENSOR_DOMAIN
 from homeassistant.components.climate import DOMAIN as CLIMATE_DOMAIN
@@ -46,7 +48,9 @@ async def _advance_coordinator_time(
     hass: HomeAssistant, freezer: FrozenDateTimeFactory
 ) -> None:
     """Advance time to trigger coordinator update interval."""
-    freezer.tick(delta=UPDATE_INTERVAL_BY_SYSTEM_TYPE["iaqua"])
+    update_interval = UPDATE_INTERVAL_BY_SYSTEM_TYPE["iaqua"]
+
+    freezer.tick(delta=update_interval)
     async_fire_time_changed(hass, dt_util.utcnow())
     await hass.async_block_till_done(wait_background_tasks=True)
 
@@ -104,6 +108,57 @@ async def fail_update() -> None:
     assert state.state == STATE_UNAVAILABLE
 
 
+async def test_system_rate_limited_keeps_entities_available(
+    hass: HomeAssistant,
+    config_entry: MockConfigEntry,
+    client: AqualinkClient,
+    freezer: FrozenDateTimeFactory,
+    caplog: pytest.LogCaptureFixture,
+) -> None:
+    """Test a rate-limited update keeps entities at their last known state."""
+    config_entry.add_to_hass(hass)
+
+    system = get_aqualink_system(client, cls=IaquaSystem)
+    system.online = True
+    system.update = AsyncMock()
+    systems = {system.serial: system}
+    light = get_aqualink_device(
+        system, name="aux_1", cls=IaquaLightSwitch, data={"state": "1"}
+    )
+    devices = {light.name: light}
+    system.get_devices = AsyncMock(return_value=devices)
+
+    with (
+        patch(
+            "homeassistant.components.iaqualink.AqualinkClient.login",
+            return_value=None,
+        ),
+        patch(
+            "homeassistant.components.iaqualink.AqualinkClient.get_systems",
+            return_value=systems,
+        ),
+    ):
+        await hass.config_entries.async_setup(config_entry.entry_id)
+        await hass.async_block_till_done()
+
+    entity_ids = hass.states.async_entity_ids(LIGHT_DOMAIN)
+    assert len(entity_ids) == 1
+    entity_id = entity_ids[0]
+
+    state = hass.states.get(entity_id)
+    assert state is not None
+    assert state.state == STATE_ON
+
+    system.update = AsyncMock(side_effect=AqualinkServiceThrottledException)
+
+    await _advance_coordinator_time(hass, freezer)
+
+    state = hass.states.get(entity_id)
+    assert state is not None
+    assert state.state == STATE_ON
+    assert "Rate limited by iAquaLink" in caplog.text
+
+
 async def test_light_service_calls_update_entity_state(
     hass: HomeAssistant,
     config_entry: MockConfigEntry,