diff --git a/esphome/components/api/custom_api_device.h b/esphome/components/api/custom_api_device.h
index d34ccfa0ce..43ea644f0c 100644
--- a/esphome/components/api/custom_api_device.h
+++ b/esphome/components/api/custom_api_device.h
@@ -9,11 +9,11 @@
 namespace esphome::api {
 
 #ifdef USE_API_SERVICES
-template<typename T, typename... Ts> class CustomAPIDeviceService : public UserServiceBase<Ts...> {
+template<typename T, typename... Ts> class CustomAPIDeviceService : public UserServiceDynamic<Ts...> {
  public:
   CustomAPIDeviceService(const std::string &name, const std::array<std::string, sizeof...(Ts)> &arg_names, T *obj,
                          void (T::*callback)(Ts...))
-      : UserServiceBase<Ts...>(name, arg_names), obj_(obj), callback_(callback) {}
+      : UserServiceDynamic<Ts...>(name, arg_names), obj_(obj), callback_(callback) {}
 
  protected:
   void execute(Ts... x) override { (this->obj_->*this->callback_)(x...); }  // NOLINT
diff --git a/esphome/components/api/user_services.h b/esphome/components/api/user_services.h
index 9ca5e1093e..4d980a148d 100644
--- a/esphome/components/api/user_services.h
+++ b/esphome/components/api/user_services.h
@@ -23,11 +23,13 @@ template<typename T> T get_execute_arg_value(const ExecuteServiceArgument &arg);
 
 template<typename T> enums::ServiceArgType to_service_arg_type();
 
+// Base class for YAML-defined services (most common case)
+// Stores only pointers to string literals in flash - no heap allocation
 template<typename... Ts> class UserServiceBase : public UserServiceDescriptor {
  public:
-  UserServiceBase(std::string name, const std::array<std::string, sizeof...(Ts)> &arg_names)
-      : name_(std::move(name)), arg_names_(arg_names) {
-    this->key_ = fnv1_hash(this->name_);
+  UserServiceBase(const char *name, const std::array<const char *, sizeof...(Ts)> &arg_names)
+      : name_(name), arg_names_(arg_names) {
+    this->key_ = fnv1_hash(name);
   }
 
   ListEntitiesServicesResponse encode_list_service_response() override {
@@ -47,7 +49,7 @@ template<typename... Ts> class UserServiceBase : public UserServiceDescriptor {
   bool execute_service(const ExecuteServiceRequest &req) override {
     if (req.key != this->key_)
       return false;
-    if (req.args.size() != this->arg_names_.size())
+    if (req.args.size() != sizeof...(Ts))
       return false;
     this->execute_(req.args, typename gens<sizeof...(Ts)>::type());
     return true;
@@ -59,14 +61,60 @@ template<typename... Ts> class UserServiceBase : public UserServiceDescriptor {
     this->execute((get_execute_arg_value<Ts>(args[S]))...);
   }
 
-  std::string name_;
+  // Pointers to string literals in flash - no heap allocation
+  const char *name_;
+  std::array<const char *, sizeof...(Ts)> arg_names_;
   uint32_t key_{0};
+};
+
+// Derived class for custom_api_device services (rare case)
+// Stores copies of runtime-generated names
+template<typename... Ts> class UserServiceDynamic : public UserServiceDescriptor {
+ public:
+  UserServiceDynamic(const std::string &name, const std::array<std::string, sizeof...(Ts)> &arg_names)
+      : name_(name), arg_names_(arg_names) {
+    this->key_ = fnv1_hash(this->name_.c_str());
+  }
+
+  ListEntitiesServicesResponse encode_list_service_response() override {
+    ListEntitiesServicesResponse msg;
+    msg.set_name(StringRef(this->name_));
+    msg.key = this->key_;
+    std::array<enums::ServiceArgType, sizeof...(Ts)> arg_types = {to_service_arg_type<Ts>()...};
+    msg.args.init(sizeof...(Ts));
+    for (size_t i = 0; i < sizeof...(Ts); i++) {
+      auto &arg = msg.args.emplace_back();
+      arg.type = arg_types[i];
+      arg.set_name(StringRef(this->arg_names_[i]));
+    }
+    return msg;
+  }
+
+  bool execute_service(const ExecuteServiceRequest &req) override {
+    if (req.key != this->key_)
+      return false;
+    if (req.args.size() != sizeof...(Ts))
+      return false;
+    this->execute_(req.args, typename gens<sizeof...(Ts)>::type());
+    return true;
+  }
+
+ protected:
+  virtual void execute(Ts... x) = 0;
+  template<typename ArgsContainer, int... S> void execute_(const ArgsContainer &args, seq<S...> type) {
+    this->execute((get_execute_arg_value<Ts>(args[S]))...);
+  }
+
+  // Heap-allocated strings for runtime-generated names
+  std::string name_;
   std::array<std::string, sizeof...(Ts)> arg_names_;
+  uint32_t key_{0};
 };
 
 template<typename... Ts> class UserServiceTrigger : public UserServiceBase<Ts...>, public Trigger<Ts...> {
  public:
-  UserServiceTrigger(const std::string &name, const std::array<std::string, sizeof...(Ts)> &arg_names)
+  // Constructor for static names (YAML-defined services - used by code generator)
+  UserServiceTrigger(const char *name, const std::array<const char *, sizeof...(Ts)> &arg_names)
       : UserServiceBase<Ts...>(name, arg_names) {}
 
  protected:
diff --git a/tests/integration/fixtures/api_user_services_union.yaml b/tests/integration/fixtures/api_user_services_union.yaml
new file mode 100644
index 0000000000..4fd9343772
--- /dev/null
+++ b/tests/integration/fixtures/api_user_services_union.yaml
@@ -0,0 +1,59 @@
+esphome:
+  name: test-user-services-union
+  friendly_name: Test User Services Union Storage
+
+esp32:
+  board: esp32dev
+  framework:
+    type: esp-idf
+
+logger:
+  level: DEBUG
+
+wifi:
+  ssid: "test"
+  password: "password"
+
+api:
+  actions:
+    # Test service with no arguments
+    - action: test_no_args
+      then:
+        - logger.log: "No args service called"
+
+    # Test service with one argument
+    - action: test_one_arg
+      variables:
+        value: int
+      then:
+        - logger.log:
+            format: "One arg service: %d"
+            args: [value]
+
+    # Test service with multiple arguments of different types
+    - action: test_multi_args
+      variables:
+        int_val: int
+        float_val: float
+        str_val: string
+        bool_val: bool
+      then:
+        - logger.log:
+            format: "Multi args: %d, %.2f, %s, %d"
+            args: [int_val, float_val, str_val.c_str(), bool_val]
+
+    # Test service with max typical arguments
+    - action: test_many_args
+      variables:
+        arg1: int
+        arg2: int
+        arg3: int
+        arg4: string
+        arg5: float
+      then:
+        - logger.log: "Many args service called"
+
+binary_sensor:
+  - platform: template
+    name: "Test Binary Sensor"
+    id: test_sensor