--- a/net/minecraft/world/item/NameTagItem.java
+++ b/net/minecraft/world/item/NameTagItem.java
@@ -1,5 +1,9 @@
 package net.minecraft.world.item;
 
+// Paper start
+import io.papermc.paper.adventure.PaperAdventure;
+import io.papermc.paper.event.player.PlayerNameEntityEvent;
+// Paper end
 import net.minecraft.world.InteractionHand;
 import net.minecraft.world.InteractionResult;
 import net.minecraft.world.entity.LivingEntity;
@@ -15,9 +19,14 @@
     public InteractionResult interactLivingEntity(ItemStack stack, Player user, LivingEntity entity, InteractionHand hand) {
         if (stack.hasCustomHoverName() && !(entity instanceof Player)) {
             if (!user.level.isClientSide && entity.isAlive()) {
-                entity.setCustomName(stack.getHoverName());
-                if (entity instanceof Mob) {
-                    ((Mob)entity).setPersistenceRequired();
+                // Paper start
+                PlayerNameEntityEvent event = new PlayerNameEntityEvent(((net.minecraft.server.level.ServerPlayer) user).getBukkitEntity(), entity.getBukkitLivingEntity(), PaperAdventure.asAdventure(stack.getHoverName()), true);
+                if (!event.callEvent()) return InteractionResult.PASS;
+                LivingEntity newEntityLiving = ((org.bukkit.craftbukkit.v1_19_R1.entity.CraftLivingEntity) event.getEntity()).getHandle();
+                newEntityLiving.setCustomName(event.getName() != null ? PaperAdventure.asVanilla(event.getName()) : null);
+                if (event.isPersistent() && newEntityLiving instanceof Mob) {
+                    ((Mob) newEntityLiving).setPersistenceRequired();
+                // Paper end
                 }
 
                 stack.shrink(1);
