diff --git a/.changeset/great-lemons-mix.md b/.changeset/great-lemons-mix.md
new file mode 100644
index 0000000000..2faeea4317
--- /dev/null
+++ b/.changeset/great-lemons-mix.md
@@ -0,0 +1,5 @@
+---
+'@backstage/plugin-catalog-backend': patch
+---
+
+Enabled live reload of locations configured in `catalog.locations`.
diff --git a/plugins/catalog-backend/src/next/ConfigLocationEntityProvider.test.ts b/plugins/catalog-backend/src/next/ConfigLocationEntityProvider.test.ts
index 32ce28dc1b..e97de4eea4 100644
--- a/plugins/catalog-backend/src/next/ConfigLocationEntityProvider.test.ts
+++ b/plugins/catalog-backend/src/next/ConfigLocationEntityProvider.test.ts
@@ -14,7 +14,10 @@
  * limitations under the License.
  */
 
-import { resolvePackagePath } from '@backstage/backend-common';
+import {
+  resolvePackagePath,
+  ObservableConfig,
+} from '@backstage/backend-common';
 import { ConfigReader } from '@backstage/config';
 import path from 'path';
 import { ConfigLocationEntityProvider } from './ConfigLocationEntityProvider';
@@ -70,4 +73,64 @@ describe('ConfigLocationEntityProvider', () => {
       ]),
     });
   });
+
+  it('should be able to observe the config', async () => {
+    // Grab the subscriber function and use mutable config data to mock a config file change
+    let subscriber: () => void;
+    const mutableConfigData = {
+      catalog: {
+        locations: [{ type: 'url', target: 'https://github.com/a/a' }],
+      },
+    };
+
+    const mockConfig: ObservableConfig = Object.assign(
+      new ConfigReader(mutableConfigData),
+      {
+        subscribe: (s: () => void) => {
+          subscriber = s;
+          return { unsubscribe: () => {} };
+        },
+      },
+    );
+
+    const mockConnection = {
+      applyMutation: jest.fn(),
+    } as unknown as EntityProviderConnection;
+    const locationProvider = new ConfigLocationEntityProvider(mockConfig);
+
+    await locationProvider.connect(mockConnection);
+
+    expect(mockConnection.applyMutation).toHaveBeenCalledWith({
+      type: 'full',
+      entities: [
+        {
+          entity: expect.objectContaining({
+            spec: {
+              target: 'https://github.com/a/a',
+              type: 'url',
+            },
+          }),
+          locationKey: 'url:https://github.com/a/a',
+        },
+      ],
+    });
+
+    mutableConfigData.catalog.locations[0].target = 'https://github.com/b/b';
+    subscriber!();
+
+    expect(mockConnection.applyMutation).toHaveBeenCalledWith({
+      type: 'full',
+      entities: [
+        {
+          entity: expect.objectContaining({
+            spec: {
+              target: 'https://github.com/b/b',
+              type: 'url',
+            },
+          }),
+          locationKey: 'url:https://github.com/b/b',
+        },
+      ],
+    });
+  });
 });
diff --git a/plugins/catalog-backend/src/next/ConfigLocationEntityProvider.ts b/plugins/catalog-backend/src/next/ConfigLocationEntityProvider.ts
index 71ec84dae7..3c148e808d 100644
--- a/plugins/catalog-backend/src/next/ConfigLocationEntityProvider.ts
+++ b/plugins/catalog-backend/src/next/ConfigLocationEntityProvider.ts
@@ -15,27 +15,49 @@
  */
 
 import { Config } from '@backstage/config';
+import { ObservableConfig } from '@backstage/backend-common';
 import path from 'path';
 import { getEntityLocationRef } from './processing/util';
 import { EntityProvider, EntityProviderConnection } from './types';
 import { locationSpecToLocationEntity } from './util';
 
 export class ConfigLocationEntityProvider implements EntityProvider {
-  private connection: EntityProviderConnection | undefined;
-
-  constructor(private readonly config: Config) {}
+  constructor(private readonly config: Config | ObservableConfig) {}
 
   getProviderName(): string {
     return 'ConfigLocationProvider';
   }
 
   async connect(connection: EntityProviderConnection): Promise<void> {
-    this.connection = connection;
+    const entities = this.getEntitiesFromConfig();
+    await connection.applyMutation({
+      type: 'full',
+      entities,
+    });
 
+    if ('subscribe' in this.config) {
+      let currentKey = JSON.stringify(entities);
+
+      this.config.subscribe(() => {
+        const newEntities = this.getEntitiesFromConfig();
+        const newKey = JSON.stringify(newEntities);
+
+        if (currentKey !== newKey) {
+          currentKey = newKey;
+          connection.applyMutation({
+            type: 'full',
+            entities: newEntities,
+          });
+        }
+      });
+    }
+  }
+
+  private getEntitiesFromConfig() {
     const locationConfigs =
       this.config.getOptionalConfigArray('catalog.locations') ?? [];
 
-    const entities = locationConfigs.map(location => {
+    return locationConfigs.map(location => {
       const type = location.getString('type');
       const target = location.getString('target');
       const entity = locationSpecToLocationEntity({
@@ -45,10 +67,5 @@ export class ConfigLocationEntityProvider implements EntityProvider {
       const locationKey = getEntityLocationRef(entity);
       return { entity, locationKey };
     });
-
-    await this.connection.applyMutation({
-      type: 'full',
-      entities,
-    });
   }
 }
diff --git a/plugins/catalog-backend/src/next/NextCatalogBuilder.ts b/plugins/catalog-backend/src/next/NextCatalogBuilder.ts
index fb12077508..8d796d442e 100644
--- a/plugins/catalog-backend/src/next/NextCatalogBuilder.ts
+++ b/plugins/catalog-backend/src/next/NextCatalogBuilder.ts
@@ -15,6 +15,7 @@
  */
 
 import {
+  ObservableConfig,
   PluginDatabaseManager,
   resolvePackagePath,
   UrlReader,
@@ -79,7 +80,7 @@ import { Stitcher } from './stitching/Stitcher';
 export type CatalogEnvironment = {
   logger: Logger;
   database: PluginDatabaseManager;
-  config: Config;
+  config: Config | ObservableConfig;
   reader: UrlReader;
 };