diff --git a/esphome/components/template/water_heater/template_water_heater.cpp b/esphome/components/template/water_heater/template_water_heater.cpp
index 092df6fdca3..9d6a3523d28 100644
--- a/esphome/components/template/water_heater/template_water_heater.cpp
+++ b/esphome/components/template/water_heater/template_water_heater.cpp
@@ -1,6 +1,8 @@
 #include "template_water_heater.h"
 #include "esphome/core/log.h"
 
+#include <cmath>
+
 namespace esphome::template_ {
 
 static const char *const TAG = "template.water_heater";
@@ -45,9 +47,12 @@ water_heater::WaterHeaterTraits TemplateWaterHeater::traits() {
 void TemplateWaterHeater::loop() {
   bool changed = false;
 
+  // NAN is passed through so a source that has no value yet shows as unknown, but NAN never
+  // equals NAN, so an already-NAN value must not count as a change or it would republish forever.
   auto curr_temp = this->current_temperature_f_.call();
   if (curr_temp.has_value()) {
-    if (*curr_temp != this->current_temperature_) {
+    if (*curr_temp != this->current_temperature_ &&
+        !(std::isnan(*curr_temp) && std::isnan(this->current_temperature_))) {
       this->current_temperature_ = *curr_temp;
       changed = true;
     }
@@ -55,7 +60,8 @@ void TemplateWaterHeater::loop() {
 
   auto target_temp = this->target_temperature_f_.call();
   if (target_temp.has_value()) {
-    if (*target_temp != this->target_temperature_) {
+    if (*target_temp != this->target_temperature_ &&
+        !(std::isnan(*target_temp) && std::isnan(this->target_temperature_))) {
       this->target_temperature_ = *target_temp;
       changed = true;
     }
diff --git a/tests/integration/fixtures/water_heater_template_unknown_temperature.yaml b/tests/integration/fixtures/water_heater_template_unknown_temperature.yaml
new file mode 100644
index 00000000000..a70ed25bd7f
--- /dev/null
+++ b/tests/integration/fixtures/water_heater_template_unknown_temperature.yaml
@@ -0,0 +1,16 @@
+esphome:
+  name: wh-template-unknown-test
+host:
+api:
+logger:
+
+water_heater:
+  - platform: template
+    id: unknown_boiler
+    name: Unknown Boiler
+    # Both temperatures stay unknown, as they do before an upstream component reports a value.
+    current_temperature: !lambda "return NAN;"
+    target_temperature: !lambda "return NAN;"
+    supported_modes:
+      - "off"
+      - eco
diff --git a/tests/integration/test_water_heater_template.py b/tests/integration/test_water_heater_template.py
index d63d1d69845..3d7f8851605 100644
--- a/tests/integration/test_water_heater_template.py
+++ b/tests/integration/test_water_heater_template.py
@@ -155,3 +155,36 @@ async def test_water_heater_template(
         client.water_heater_command(test_water_heater.key, mode=WaterHeaterMode.ECO)
         eco_state = await wait_for_state()
         assert eco_state.mode == WaterHeaterMode.ECO
+
+
+@pytest.mark.asyncio
+async def test_water_heater_template_unknown_temperature(
+    yaml_config: str,
+    run_compiled: RunCompiledFunction,
+    api_client_connected: APIClientConnectedFactory,
+) -> None:
+    """Test a template water heater whose temperature lambdas stay unknown.
+
+    NAN never compares equal to itself, so a lambda that keeps returning NAN must not be
+    mistaken for a changed value and republish the state on every loop iteration.
+    """
+    async with run_compiled(yaml_config), api_client_connected() as client:
+        state_count = 0
+
+        def on_state(state: aioesphomeapi.EntityState) -> None:
+            nonlocal state_count
+            if isinstance(state, WaterHeaterState):
+                state_count += 1
+
+        entities, _ = await client.list_entities_services()
+        water_heater_infos = [e for e in entities if isinstance(e, WaterHeaterInfo)]
+        assert len(water_heater_infos) == 1
+
+        client.subscribe_states(on_state)
+
+        # Let the device run for a while; only the single initial state may arrive.
+        await asyncio.sleep(1.0)
+        assert state_count <= 1, (
+            f"Expected at most 1 state publish, got {state_count} - "
+            "an unknown (NAN) temperature is republishing every loop"
+        )