diff --git a/include/bluetooth/bluetooth.h b/include/bluetooth/bluetooth.h
index 2ffe38a0124..58393faf18e 100644
--- a/include/bluetooth/bluetooth.h
+++ b/include/bluetooth/bluetooth.h
@@ -136,6 +136,10 @@ int bt_enable(bt_ready_cb_t cb);
  *
  * Set Bluetooth GAP Device Name.
  *
+ * When advertising with device name in the advertising data the name should
+ * be updated by calling @ref bt_le_adv_update_data or
+ * @ref bt_le_ext_adv_set_data.
+ *
  * @param name New name
  *
  * @return Zero on success or (negative) error code otherwise.
@@ -368,7 +372,23 @@ enum {
 	 */
 	BT_LE_ADV_OPT_USE_IDENTITY = BIT(2),
 
-	/** Advertise using GAP device name */
+	/** Advertise using GAP device name.
+	 *
+	 *  Include the GAP device name automatically when advertising.
+	 *  By default the GAP device name is put at the end of the scan
+	 *  response data.
+	 *  When advertising using @ref BT_LE_ADV_OPT_EXT_ADV and not
+	 *  @ref BT_LE_ADV_OPT_SCANNABLE then it will be put at the end of the
+	 *  advertising data.
+	 *  If the GAP device name does not fit into advertising data it will be
+	 *  converted to a shortened name if possible.
+	 *
+	 *  The application can set the device name itself by including the
+	 *  following in the advertising data.
+	 *  @code
+	 *  BT_DATA(BT_DATA_NAME_COMPLETE, name, strlen(name))
+	 *  @endcode
+	 */
 	BT_LE_ADV_OPT_USE_NAME = BIT(3),
 
 	/**
diff --git a/subsys/bluetooth/host/hci_core.c b/subsys/bluetooth/host/hci_core.c
index 78c44709b8a..ab105578b31 100644
--- a/subsys/bluetooth/host/hci_core.c
+++ b/subsys/bluetooth/host/hci_core.c
@@ -6664,7 +6664,6 @@ static int set_sd(struct bt_le_ext_adv *adv, const struct bt_ad *sd,
 int bt_set_name(const char *name)
 {
 #if defined(CONFIG_BT_DEVICE_NAME_DYNAMIC)
-	struct bt_le_ext_adv *adv = bt_adv_lookup_legacy();
 	size_t len = strlen(name);
 	int err;
 
@@ -6679,15 +6678,6 @@ int bt_set_name(const char *name)
 	strncpy(bt_dev.name, name, len);
 	bt_dev.name[len] = '\0';
 
-	/* Update advertising name if in use */
-	if (adv && atomic_test_bit(adv->flags, BT_ADV_INCLUDE_NAME)) {
-		struct bt_data data[] = { BT_DATA(BT_DATA_NAME_COMPLETE, name,
-						len) };
-		struct bt_ad sd = { data, ARRAY_SIZE(data) };
-
-		set_sd(adv, &sd, 1);
-	}
-
 	if (IS_ENABLED(CONFIG_BT_SETTINGS)) {
 		err = settings_save_one("bt/name", bt_dev.name, len);
 		if (err) {