diff --git a/frontend/src/lib/components/LabelsInput.svelte b/frontend/src/lib/components/LabelsInput.svelte
index cd1555d147..5b0e11f621 100644
--- a/frontend/src/lib/components/LabelsInput.svelte
+++ b/frontend/src/lib/components/LabelsInput.svelte
@@ -1,11 +1,10 @@
 <script lang="ts">
 	import Button from './common/button/Button.svelte'
-	import { Plus, Tag, X } from 'lucide-svelte'
-	import type { Label, LabelColor } from '$lib/gen'
+	import { Plus, Tag } from 'lucide-svelte'
+	import type { Label } from '$lib/gen'
 	import LabelBadge from './labels/LabelBadge.svelte'
-	import LabelColorPicker from './labels/LabelColorPicker.svelte'
-	import { labelCache, labelColorOf, loadLabels, setLabelColor } from './labels/labelStore'
-	import { LABEL_COLOR_SWATCHES } from './labels/labelColors'
+	import LabelPickerDropdown from './labels/LabelPickerDropdown.svelte'
+	import { loadLabels } from './labels/labelStore'
 
 	interface Props {
 		labels: string[] | undefined
@@ -22,29 +21,11 @@
 	let { labels = $bindable(), workspace, onchange, class: clazz = '' }: Props = $props()
 
 	let adding = $state(false)
-	let inputValue = $state('')
-	let inputEl: HTMLInputElement | undefined = $state()
 	let existingLabels: Label[] = $state([])
-	let selectedIdx = $state(-1)
+	let picker: LabelPickerDropdown | undefined = $state()
 
-	let suggestions = $derived(
-		existingLabels
-			.filter(
-				(l) =>
-					(!inputValue || l.name.toLowerCase().includes(inputValue.toLowerCase())) &&
-					!(labels ?? []).includes(l.name)
-			)
-			.slice(0, 8)
-	)
-	let trimmedInput = $derived(inputValue.trim())
-	let showCreateNew = $derived(
-		trimmedInput.length > 0 &&
-			!suggestions.some((s) => s.name.toLowerCase() === trimmedInput.toLowerCase()) &&
-			!(labels ?? []).includes(trimmedInput)
-	)
-
-	// The chips need colors before the suggestion list is ever opened, and
-	// `loadLabels` is cached per workspace, so this costs one request per workspace.
+	// The chips need colors before the picker is ever opened, and `loadLabels` is
+	// cached per workspace, so this costs one request per workspace.
 	$effect(() => {
 		if (workspace) {
 			loadLabels(workspace).catch(() => {})
@@ -61,25 +42,15 @@
 		} catch {}
 	}
 
-	async function pickColor(name: string, color: LabelColor | undefined) {
-		if (!workspace) return
-		existingLabels = await setLabelColor(workspace, name, color)
-	}
-
 	function startAdding() {
+		picker?.reset()
 		adding = true
-		inputValue = ''
-		selectedIdx = -1
 		loadExistingLabels()
-		setTimeout(() => inputEl?.focus(), 0)
 	}
 
-	function addLabel(value?: string) {
-		const v = (value ?? inputValue).trim().slice(0, 50)
-		if (!v) {
-			adding = false
-			return
-		}
+	function addLabel(value: string) {
+		const v = value.trim().slice(0, 50)
+		if (!v) return
 		if (!labels) {
 			labels = []
 		}
@@ -87,8 +58,6 @@
 			labels = [...labels, v]
 			onchange?.()
 		}
-		inputValue = ''
-		adding = false
 	}
 
 	function removeLabel(label: string) {
@@ -97,110 +66,24 @@
 			onchange?.()
 		}
 	}
-
-	function onKeydown(e: KeyboardEvent) {
-		if (e.key === 'Enter') {
-			e.preventDefault()
-			if (selectedIdx >= 0 && selectedIdx < suggestions.length) {
-				addLabel(suggestions[selectedIdx].name)
-			} else {
-				addLabel() // either "Create new" selected or free text
-			}
-		} else if (e.key === 'Escape') {
-			inputValue = ''
-			adding = false
-		} else if (e.key === 'ArrowDown') {
-			e.preventDefault()
-			const maxIdx = suggestions.length + (showCreateNew ? 1 : 0) - 1
-			selectedIdx = Math.min(selectedIdx + 1, maxIdx)
-		} else if (e.key === 'ArrowUp') {
-			e.preventDefault()
-			selectedIdx = Math.max(selectedIdx - 1, -1)
-		}
-	}
-
-	function onBlur() {
-		// Delay to allow click on suggestion
-		setTimeout(() => {
-			if (adding) addLabel()
-		}, 150)
-	}
 </script>
 
 <div class="inline-flex items-center gap-1 ml-0.5 h-5 {clazz}">
 	{#each labels ?? [] as label (label)}
-		<div class="inline-flex items-center">
-			<LabelColorPicker
-				color={labelColorOf($labelCache, workspace, label)}
-				onSelect={(c) => pickColor(label, c)}
-			>
-				{#snippet anchor()}
-					<LabelBadge
-						{label}
-						{workspace}
-						title="Pick a color for {label}"
-						class="rounded-r-none pr-0.5"
-					/>
-				{/snippet}
-			</LabelColorPicker>
-			<button
-				class="text-2xs rounded-r-md pl-0.5 pr-1 py-0.5 bg-surface-sunken hover:text-red-500"
-				aria-label="Remove label {label}"
-				onclick={() => removeLabel(label)}
-			>
-				<X size={10} />
-			</button>
-		</div>
+		<LabelBadge {label} {workspace} onRemove={removeLabel} />
 	{/each}
 	{#if adding}
-		<div class="relative">
-			<input
-				bind:this={inputEl}
-				bind:value={inputValue}
-				onkeydown={onKeydown}
-				onblur={onBlur}
-				class="text-2xs border border-blue-300 rounded px-1.5 py-0 h-5 max-w-32 outline-none focus:ring-1 focus:ring-blue-400"
-				placeholder="label"
+		<div class="w-40">
+			<LabelPickerDropdown
+				bind:this={picker}
+				bind:open={adding}
+				{workspace}
+				labels={existingLabels}
+				taken={labels ?? []}
+				onPick={addLabel}
+				onLabelsChanged={loadExistingLabels}
+				inputClass="!h-5 !min-h-0 !py-0 text-2xs"
 			/>
-			{#if suggestions.length > 0 || showCreateNew}
-				<div
-					class="absolute top-6 left-0 z-50 bg-surface border border-light rounded shadow-md max-h-32 overflow-y-auto min-w-32"
-				>
-					{#each suggestions as suggestion, i}
-						<button
-							class="w-full flex items-center gap-1.5 text-left text-2xs px-2 py-1 hover:bg-surface-hover {i ===
-							selectedIdx
-								? 'bg-surface-hover'
-								: ''}"
-							onmousedown={(e) => {
-								e.preventDefault()
-								addLabel(suggestion.name)
-							}}
-						>
-							<span
-								class="block w-2 h-2 rounded-full shrink-0 {LABEL_COLOR_SWATCHES[
-									suggestion.color ?? 'blue'
-								]}"
-							></span>
-							{suggestion.name}
-						</button>
-					{/each}
-					{#if showCreateNew}
-						<button
-							class="w-full text-left text-2xs px-2 py-1 hover:bg-surface-hover text-blue-600 {selectedIdx ===
-							suggestions.length
-								? 'bg-surface-hover'
-								: ''}"
-							onmousedown={(e) => {
-								e.preventDefault()
-								addLabel()
-							}}
-						>
-							+ Create "{trimmedInput}"
-						</button>
-					{/if}
-				</div>
-			{/if}
 		</div>
 	{:else}
 		<Button
@@ -210,7 +93,7 @@
 			endIcon={{ icon: Plus, props: { size: 8 } }}
 			btnClasses="!gap-0.5"
 			aria-label="Add label"
-			onclick={startAdding}
+			onClick={startAdding}
 		/>
 	{/if}
 </div>
diff --git a/frontend/src/lib/components/common/colorPicker/ColorSwatchGrid.svelte b/frontend/src/lib/components/common/colorPicker/ColorSwatchGrid.svelte
index e208553318..2d10255a75 100644
--- a/frontend/src/lib/components/common/colorPicker/ColorSwatchGrid.svelte
+++ b/frontend/src/lib/components/common/colorPicker/ColorSwatchGrid.svelte
@@ -16,17 +16,21 @@
 
 <div class="grid grid-cols-5 gap-1" style="min-width: 140px">
 	{#each colors as color (color)}
+		<!-- The colour lives on an inner span, not on the button: the button's own
+		     hover and focus-visible backgrounds would otherwise paint over it, and a
+		     just-clicked swatch would sit there showing the hover grey. -->
 		<Button
 			variant="subtle"
 			unifiedSize="2xs"
 			title={color.charAt(0).toUpperCase() + color.slice(1)}
 			aria-label={`Select ${color} color`}
-			onclick={() => onSelect(color)}
+			onClick={() => onSelect(color)}
 			btnClasses={twMerge(
 				'w-6 h-6 p-0 rounded-full hover:scale-110 transition-transform duration-100',
-				swatches[color],
-				selected === color ? 'ring-2 ring-accent' : 'dark:border-gray-600'
+				selected === color ? 'ring-2 ring-accent' : ''
 			)}
-		/>
+		>
+			<span class={twMerge('w-full h-full rounded-full', swatches[color])}></span>
+		</Button>
 	{/each}
 </div>
diff --git a/frontend/src/lib/components/home/ItemsList.svelte b/frontend/src/lib/components/home/ItemsList.svelte
index 1a039c8ca2..33ad2bb2fd 100644
--- a/frontend/src/lib/components/home/ItemsList.svelte
+++ b/frontend/src/lib/components/home/ItemsList.svelte
@@ -1,6 +1,5 @@
 <script lang="ts">
 	import CenteredPage from '$lib/components/CenteredPage.svelte'
-	import LabelManagerDrawer from '$lib/components/labels/LabelManagerDrawer.svelte'
 	import LabelBadge from '$lib/components/labels/LabelBadge.svelte'
 	import { PIPELINE_DRAFT_KIND, pipelineFolderFromBundlePath } from '$lib/pipelinePaths'
 	import { Button, Skeleton } from '$lib/components/common'
@@ -28,7 +27,6 @@
 		Code2,
 		LayoutDashboard,
 		ListFilterPlus,
-		Palette,
 		SearchCode
 	} from 'lucide-svelte'
 	import DropdownV2 from '$lib/components/DropdownV2.svelte'
@@ -1055,7 +1053,6 @@
 	function itemLabels(x: { labels?: string[]; inherited_labels?: string[] }): string[] {
 		return [...(x.labels ?? []), ...(x.inherited_labels ?? [])]
 	}
-	let labelManagerDrawer: LabelManagerDrawer | undefined = $state()
 
 	let allLabels = $derived(
 		Array.from(new Set(combinedItems?.flatMap((x) => itemLabels(x)) ?? [])).sort()
@@ -1604,14 +1601,6 @@
 						{#if label === labelFilter}&cross;{/if}
 					</LabelBadge>
 				{/each}
-				<Button
-					variant="subtle"
-					unifiedSize="2xs"
-					startIcon={{ icon: Palette }}
-					onclick={() => labelManagerDrawer?.open()}
-				>
-					Manage labels
-				</Button>
 			</div>
 		{/if}
 		{#if filteredItems?.length == 0}
@@ -1846,5 +1835,3 @@
 		onDone={reloadItemsAndCounts}
 	/>
 {/if}
-
-<LabelManagerDrawer bind:this={labelManagerDrawer} workspace={$workspaceStore} />
diff --git a/frontend/src/lib/components/labels/LabelBadge.svelte b/frontend/src/lib/components/labels/LabelBadge.svelte
index fd5d3184d8..ea51279f17 100644
--- a/frontend/src/lib/components/labels/LabelBadge.svelte
+++ b/frontend/src/lib/components/labels/LabelBadge.svelte
@@ -1,6 +1,6 @@
 <script lang="ts">
 	import type { Snippet } from 'svelte'
-	import { Folder, Tag } from 'lucide-svelte'
+	import { Folder, Tag, X } from 'lucide-svelte'
 	import { twMerge } from 'tailwind-merge'
 	import Badge from '$lib/components/common/badge/Badge.svelte'
 	import { labelBadgeColor } from './labelColors'
@@ -19,7 +19,13 @@
 		title?: string
 		class?: string
 		onclick?: (event: MouseEvent) => void
-		/** Trailing content inside the chip, e.g. a remove button. */
+		/**
+		 * Renders a remove cross inside the chip, so it carries the chip's own
+		 * colour instead of sitting next to it. Not combinable with `clickable`:
+		 * that renders the chip itself as a button, and a button cannot nest one.
+		 */
+		onRemove?: (label: string) => void
+		/** Trailing content inside the chip. */
 		children?: Snippet
 	}
 
@@ -34,6 +40,7 @@
 		title,
 		class: clazz = '',
 		onclick,
+		onRemove,
 		children
 	}: Props = $props()
 
@@ -58,4 +65,17 @@
 	{/if}
 	{label}
 	{@render children?.()}
+	{#if onRemove}
+		<button
+			type="button"
+			class="-mr-0.5 rounded-sm opacity-60 hover:opacity-100 hover:text-red-500"
+			aria-label="Remove label {label}"
+			onclick={(e) => {
+				e.stopPropagation()
+				onRemove?.(label)
+			}}
+		>
+			<X size={10} />
+		</button>
+	{/if}
 </Badge>
diff --git a/frontend/src/lib/components/labels/LabelColorPicker.svelte b/frontend/src/lib/components/labels/LabelColorPicker.svelte
deleted file mode 100644
index f5065c788e..0000000000
--- a/frontend/src/lib/components/labels/LabelColorPicker.svelte
+++ /dev/null
@@ -1,54 +0,0 @@
-<script lang="ts">
-	import type { Snippet } from 'svelte'
-	import Popover from '$lib/components/meltComponents/Popover.svelte'
-	import Button from '$lib/components/common/button/Button.svelte'
-	import ColorSwatchGrid from '$lib/components/common/colorPicker/ColorSwatchGrid.svelte'
-	import type { LabelColor } from '$lib/gen'
-	import { LABEL_COLORS, LABEL_COLOR_SWATCHES } from './labelColors'
-
-	interface Props {
-		color: LabelColor | undefined
-		/** `undefined` clears the color and drops the label's row. */
-		onSelect: (color: LabelColor | undefined) => void
-		anchor: Snippet
-	}
-
-	let { color, onSelect, anchor }: Props = $props()
-
-	let isOpen = $state(false)
-
-	function pick(next: LabelColor | undefined) {
-		isOpen = false
-		onSelect(next)
-	}
-</script>
-
-<Popover
-	placement="bottom"
-	contentClasses="p-2"
-	floatingConfig={{ strategy: 'absolute' }}
-	usePointerDownOutside
-	bind:isOpen
->
-	{#snippet trigger()}
-		{@render anchor()}
-	{/snippet}
-	{#snippet content()}
-		<ColorSwatchGrid
-			colors={LABEL_COLORS}
-			swatches={LABEL_COLOR_SWATCHES}
-			selected={color}
-			onSelect={pick}
-		/>
-		{#if color != undefined}
-			<Button
-				variant="subtle"
-				unifiedSize="xs"
-				btnClasses="w-full mt-2"
-				onclick={() => pick(undefined)}
-			>
-				Clear color
-			</Button>
-		{/if}
-	{/snippet}
-</Popover>
diff --git a/frontend/src/lib/components/labels/LabelEditor.svelte b/frontend/src/lib/components/labels/LabelEditor.svelte
new file mode 100644
index 0000000000..2cbbfd4c9d
--- /dev/null
+++ b/frontend/src/lib/components/labels/LabelEditor.svelte
@@ -0,0 +1,52 @@
+<script lang="ts">
+	import Modal2 from '$lib/components/common/modal/Modal2.svelte'
+	import type { Label } from '$lib/gen'
+	import LabelForm from './LabelForm.svelte'
+
+	interface Props {
+		/** The workspace the label belongs to — not necessarily the one being navigated. */
+		workspace: string | undefined
+		/** The name that was saved. */
+		onSave?: (name: string) => void
+	}
+
+	let { workspace, onSave }: Props = $props()
+
+	let isOpen = $state(false)
+	let existing: Label | undefined = $state()
+	// Bumped on every open so the form remounts with fresh fields rather than
+	// keeping what the previous label left in them.
+	let opened = $state(0)
+
+	export function initNew() {
+		existing = undefined
+		opened += 1
+		isOpen = true
+	}
+
+	export function initEdit(label: Label) {
+		existing = label
+		opened += 1
+		isOpen = true
+	}
+</script>
+
+<Modal2
+	bind:isOpen
+	formStyling
+	fixedWidth="sm"
+	fixedHeight="adaptive"
+	title={existing ? 'Edit label' : 'New label'}
+>
+	{#key opened}
+		<LabelForm
+			{workspace}
+			{existing}
+			autofocus={existing == undefined}
+			onSaved={(name) => {
+				isOpen = false
+				onSave?.(name)
+			}}
+		/>
+	{/key}
+</Modal2>
diff --git a/frontend/src/lib/components/labels/LabelForm.svelte b/frontend/src/lib/components/labels/LabelForm.svelte
new file mode 100644
index 0000000000..1c627359ca
--- /dev/null
+++ b/frontend/src/lib/components/labels/LabelForm.svelte
@@ -0,0 +1,121 @@
+<script lang="ts">
+	import Button from '$lib/components/common/button/Button.svelte'
+	import TextInput from '$lib/components/text_input/TextInput.svelte'
+	import ColorSwatchGrid from '$lib/components/common/colorPicker/ColorSwatchGrid.svelte'
+	import { sendUserToast } from '$lib/toast'
+	import type { Label, LabelColor } from '$lib/gen'
+	import { ArrowLeft } from 'lucide-svelte'
+	import { LABEL_COLORS, LABEL_COLOR_SWATCHES } from './labelColors'
+	import { setLabelColor } from './labelStore'
+
+	interface Props {
+		/** The workspace the label belongs to — not necessarily the one being navigated. */
+		workspace: string | undefined
+		/** The label being edited. Absent means the form creates one. */
+		existing?: Label
+		/** Prefills the name of a new label, e.g. with what was typed in the picker. */
+		initialName?: string
+		/** The name that was saved, so a caller can attach the label to the item it is editing. */
+		onSaved?: (name: string) => void
+		/** Renders the header with a back arrow. Absent means the surface has its own chrome. */
+		onBack?: () => void
+		autofocus?: boolean
+	}
+
+	let { workspace, existing, initialName = '', onSaved, onBack, autofocus }: Props = $props()
+
+	let name = $state(existing?.name ?? initialName)
+	let color: LabelColor | undefined = $state(
+		// A new label saved with no colour would write nothing, so a new form starts on
+		// the colour uncoloured labels already render as.
+		existing ? existing.color : 'blue'
+	)
+	let saving = $state(false)
+
+	let trimmedName = $derived(String(name).trim())
+
+	async function save() {
+		if (!workspace || !trimmedName) {
+			return
+		}
+		saving = true
+		try {
+			await setLabelColor(workspace, trimmedName, color)
+			onSaved?.(trimmedName)
+		} catch (err) {
+			sendUserToast(`Could not save label ${trimmedName}: ${err}`, true)
+		} finally {
+			saving = false
+		}
+	}
+</script>
+
+<div class="flex flex-col gap-3">
+	{#if onBack}
+		<div class="flex flex-row items-center justify-between gap-2">
+			<span class="text-xs font-semibold text-emphasis">
+				{existing ? 'Edit label' : 'New label'}
+			</span>
+			<Button
+				variant="subtle"
+				unifiedSize="2xs"
+				startIcon={{ icon: ArrowLeft }}
+				iconOnly
+				aria-label="Back to labels"
+				onClick={onBack}
+			/>
+		</div>
+	{/if}
+	<div class="flex flex-col gap-1">
+		<span class="text-xs text-secondary">Name</span>
+		<TextInput
+			bind:value={name}
+			size="sm"
+			{autofocus}
+			inputProps={{
+				placeholder: 'Label name',
+				// A label's name is the key of every `labels[]` entry that carries it and
+				// nothing rewrites those arrays, so an existing label's name is fixed.
+				disabled: existing != undefined,
+				maxlength: 50,
+				onkeydown: (e: KeyboardEvent) => {
+					if (e.key === 'Enter') {
+						e.preventDefault()
+						save()
+					}
+				}
+			}}
+		/>
+		{#if existing}
+			<span class="text-2xs text-hint">To rename a label, edit the items that carry it.</span>
+		{/if}
+	</div>
+	<div class="flex flex-col gap-2">
+		<span class="text-xs text-secondary">Color</span>
+		<ColorSwatchGrid
+			colors={LABEL_COLORS}
+			swatches={LABEL_COLOR_SWATCHES}
+			selected={color}
+			onSelect={(c) => (color = c)}
+		/>
+	</div>
+	<div class="flex flex-row justify-between items-center gap-2">
+		<Button
+			variant="subtle"
+			unifiedSize="sm"
+			disabled={color == undefined}
+			onClick={() => (color = undefined)}
+		>
+			Clear color
+		</Button>
+		<Button
+			variant="accent"
+			unifiedSize="sm"
+			disabled={!trimmedName}
+			loading={saving}
+			onClick={save}
+		>
+			Save
+		</Button>
+	</div>
+</div>
diff --git a/frontend/src/lib/components/labels/LabelManagerDrawer.svelte b/frontend/src/lib/components/labels/LabelManagerDrawer.svelte
deleted file mode 100644
index b10309ae47..0000000000
--- a/frontend/src/lib/components/labels/LabelManagerDrawer.svelte
+++ /dev/null
@@ -1,71 +0,0 @@
-<script lang="ts">
-	import { Drawer } from '$lib/components/common'
-	import DrawerContent from '$lib/components/common/drawer/DrawerContent.svelte'
-	import Skeleton from '$lib/components/common/skeleton/Skeleton.svelte'
-	import { sendUserToast } from '$lib/toast'
-	import type { Label, LabelColor } from '$lib/gen'
-	import LabelBadge from './LabelBadge.svelte'
-	import LabelColorPicker from './LabelColorPicker.svelte'
-	import { loadLabels, setLabelColor } from './labelStore'
-
-	interface Props {
-		workspace: string | undefined
-	}
-
-	let { workspace }: Props = $props()
-
-	let drawer: Drawer | undefined = $state()
-	let labels: Label[] | undefined = $state()
-
-	export async function open() {
-		labels = undefined
-		drawer?.openDrawer()
-		await refresh()
-	}
-
-	async function refresh() {
-		if (!workspace) return
-		labels = await loadLabels(workspace, true)
-	}
-
-	async function pick(name: string, color: LabelColor | undefined) {
-		if (!workspace) return
-		try {
-			labels = await setLabelColor(workspace, name, color)
-		} catch (err) {
-			sendUserToast(`Could not update label ${name}: ${err}`, true)
-		}
-	}
-</script>
-
-<Drawer bind:this={drawer} size="32rem">
-	<DrawerContent title="Labels" on:close={drawer?.closeDrawer}>
-		{#if labels == undefined}
-			<Skeleton layout={[[2], 1, [2], 1, [2]]} />
-		{:else if labels.length === 0}
-			<p class="text-sm text-secondary">
-				No labels yet. Labels appear here once you add one to a script, flow, app, resource,
-				variable, schedule or folder.
-			</p>
-		{:else}
-			<p class="text-xs text-secondary mb-4">
-				A color applies to the label everywhere it is used in this workspace.
-			</p>
-			<div class="flex flex-col divide-y">
-				{#each labels as label (label.name)}
-					<div class="flex items-center py-2">
-						<LabelColorPicker color={label.color} onSelect={(c) => pick(label.name, c)}>
-							{#snippet anchor()}
-								<LabelBadge
-									label={label.name}
-									{workspace}
-									title="Pick a color for {label.name}"
-								/>
-							{/snippet}
-						</LabelColorPicker>
-					</div>
-				{/each}
-			</div>
-		{/if}
-	</DrawerContent>
-</Drawer>
diff --git a/frontend/src/lib/components/labels/LabelPickerDropdown.svelte b/frontend/src/lib/components/labels/LabelPickerDropdown.svelte
new file mode 100644
index 0000000000..40a87b17ac
--- /dev/null
+++ b/frontend/src/lib/components/labels/LabelPickerDropdown.svelte
@@ -0,0 +1,224 @@
+<script lang="ts">
+	import Button from '$lib/components/common/button/Button.svelte'
+	import GenericDropdown from '$lib/components/select/GenericDropdown.svelte'
+	import {
+		inputBaseClass,
+		inputBorderClass,
+		inputSizeClasses
+	} from '$lib/components/text_input/TextInput.svelte'
+	import { clickOutside } from '$lib/utils'
+	import type { Label } from '$lib/gen'
+	import { Pen, Plus } from 'lucide-svelte'
+	import { twMerge } from 'tailwind-merge'
+	import LabelForm from './LabelForm.svelte'
+	import { LABEL_COLOR_SWATCHES } from './labelColors'
+
+	interface Props {
+		/** The workspace the labels belong to — not necessarily the one being navigated. */
+		workspace: string | undefined
+		/** Every label of the workspace, coloured or not. */
+		labels: Label[]
+		/** Names already on the item, filtered out of the choices. */
+		taken: string[]
+		open: boolean
+		/** A label was chosen or created — the caller attaches it to its item. */
+		onPick: (name: string) => void
+		/** The registry changed, so the caller can refresh its copy of `labels`. */
+		onLabelsChanged?: () => void
+		inputClass?: string
+	}
+
+	let {
+		workspace,
+		labels,
+		taken,
+		open = $bindable(),
+		onPick,
+		onLabelsChanged,
+		inputClass = ''
+	}: Props = $props()
+
+	type Page = { kind: 'list' } | { kind: 'form'; existing?: Label; initialName: string }
+
+	let page = $state<Page>({ kind: 'list' })
+	let filterText = $state('')
+	let inputEl: HTMLInputElement | undefined = $state()
+	let listHeight = $state(0)
+	let formHeight = $state(0)
+
+	let choices = $derived(
+		labels.filter(
+			(l) =>
+				!taken.includes(l.name) && l.name.toLowerCase().includes(filterText.trim().toLowerCase())
+		)
+	)
+	let trimmedFilter = $derived(filterText.trim())
+	let onForm = $derived(page.kind === 'form')
+
+	// The two pages are stacked, so the frame has to be told which one's height to
+	// take; GenericDropdown measures this element every frame and animates its own
+	// box to match, which is what makes the page change grow and shrink smoothly.
+	let frameHeight = $derived(onForm ? formHeight : listHeight)
+
+	export function reset() {
+		page = { kind: 'list' }
+		filterText = ''
+	}
+
+	export function focus() {
+		inputEl?.focus()
+	}
+
+	function openForm(existing?: Label) {
+		page = { kind: 'form', existing, initialName: existing ? '' : trimmedFilter }
+	}
+
+	function backToList() {
+		page = { kind: 'list' }
+		inputEl?.focus()
+	}
+
+	// Creating a label from the picker means the user wants it on the item, so the
+	// save attaches it. Editing one only recolours it — the pen was clicked to fix a
+	// colour, not to add the label — so it goes back to the list.
+	function onSaved(name: string) {
+		const wasCreating = page.kind === 'form' && page.existing == undefined
+		onLabelsChanged?.()
+		if (wasCreating) {
+			onPick(name)
+			open = false
+		} else {
+			backToList()
+		}
+	}
+
+	function pick(name: string) {
+		onPick(name)
+		open = false
+	}
+
+	function onKeydown(e: KeyboardEvent) {
+		if (e.key === 'Escape') {
+			e.preventDefault()
+			if (onForm) {
+				backToList()
+			} else {
+				open = false
+			}
+		} else if (e.key === 'Enter' && !onForm) {
+			e.preventDefault()
+			if (choices.length > 0) {
+				pick(choices[0].name)
+			} else if (trimmedFilter) {
+				openForm()
+			}
+		}
+	}
+</script>
+
+<div class="relative" use:clickOutside={{ onClickOutside: () => (open = false) }}>
+	<!-- svelte-ignore a11y_autofocus -->
+	<input
+		bind:this={inputEl}
+		bind:value={filterText}
+		autofocus
+		autocomplete="off"
+		type="text"
+		placeholder="label"
+		onkeydown={onKeydown}
+		onpointerdown={() => (open = true)}
+		class={twMerge(
+			inputBaseClass,
+			inputSizeClasses.sm,
+			inputBorderClass({ forceFocus: open }),
+			'w-full',
+			inputClass
+		)}
+	/>
+</div>
+
+<GenericDropdown
+	{open}
+	listAutoWidth={false}
+	getInputRect={inputEl && (() => inputEl!.getBoundingClientRect())}
+	innerClass="w-64"
+	maxHeight={400}
+>
+	<!-- Both pages stay mounted so the slide has something to slide; the frame clips
+	     them and only the active one contributes its height. -->
+	<div
+		class="relative overflow-hidden transition-[height] duration-200 ease-out"
+		style="height: {frameHeight}px"
+	>
+		<div
+			bind:clientHeight={listHeight}
+			class="absolute inset-x-0 top-0 transition-transform duration-200 ease-out"
+			style="transform: translateX({onForm ? '-100%' : '0'})"
+			aria-hidden={onForm}
+		>
+			<ul class="flex flex-col max-h-56 overflow-y-auto">
+				{#each choices as choice (choice.name)}
+					<li class="flex flex-row items-center gap-1 pr-1 hover:bg-surface-hover">
+						<button
+							class="flex flex-row items-center gap-2 min-w-0 flex-1 py-2 pl-4 text-left text-xs text-primary"
+							onclick={() => pick(choice.name)}
+						>
+							<span
+								class="block w-2 h-2 rounded-full shrink-0 {LABEL_COLOR_SWATCHES[
+									choice.color ?? 'blue'
+								]}"
+							></span>
+							<span class="truncate">{choice.name}</span>
+						</button>
+						<Button
+							variant="subtle"
+							unifiedSize="2xs"
+							startIcon={{ icon: Pen }}
+							iconOnly
+							aria-label="Edit label {choice.name}"
+							onClick={() => openForm(choice)}
+						/>
+					</li>
+				{/each}
+				{#if choices.length === 0}
+					<li class="py-6 px-4 text-center text-xs text-secondary">
+						{trimmedFilter ? 'No matching label' : 'No other label'}
+					</li>
+				{/if}
+			</ul>
+			<div class="flex border-t">
+				<Button
+					variant="default"
+					unifiedSize="sm"
+					wrapperClasses="flex-1"
+					btnClasses="rounded-none border-0"
+					startIcon={{ icon: Plus }}
+					onClick={() => openForm()}
+				>
+					New label
+				</Button>
+			</div>
+		</div>
+		<div
+			bind:clientHeight={formHeight}
+			class="absolute inset-x-0 top-0 transition-transform duration-200 ease-out"
+			style="transform: translateX({onForm ? '0' : '100%'})"
+			aria-hidden={!onForm}
+		>
+			{#if page.kind === 'form'}
+				{#key `${page.existing?.name ?? ''}:${page.initialName}`}
+					<div class="p-3">
+						<LabelForm
+							{workspace}
+							existing={page.existing}
+							initialName={page.initialName}
+							autofocus={page.existing == undefined}
+							onBack={backToList}
+							{onSaved}
+						/>
+					</div>
+				{/key}
+			{/if}
+		</div>
+	</div>
+</GenericDropdown>
diff --git a/frontend/src/lib/components/workspaceSettings/LabelSettings.svelte b/frontend/src/lib/components/workspaceSettings/LabelSettings.svelte
new file mode 100644
index 0000000000..c1eb03f799
--- /dev/null
+++ b/frontend/src/lib/components/workspaceSettings/LabelSettings.svelte
@@ -0,0 +1,72 @@
+<script lang="ts">
+	import Button from '$lib/components/common/button/Button.svelte'
+	import Skeleton from '$lib/components/common/skeleton/Skeleton.svelte'
+	import SettingsPageHeader from '$lib/components/settings/SettingsPageHeader.svelte'
+	import LabelBadge from '$lib/components/labels/LabelBadge.svelte'
+	import LabelEditor from '$lib/components/labels/LabelEditor.svelte'
+	import { loadLabels } from '$lib/components/labels/labelStore'
+	import type { Label } from '$lib/gen'
+	import { workspaceStore } from '$lib/stores'
+	import { Pen, Plus } from 'lucide-svelte'
+
+	let labels: Label[] | undefined = $state()
+	let labelEditor: LabelEditor | undefined = $state()
+
+	$effect(() => {
+		const workspace = $workspaceStore
+		if (workspace) {
+			refresh(workspace)
+		}
+	})
+
+	async function refresh(workspace: string) {
+		labels = await loadLabels(workspace, true)
+	}
+</script>
+
+<LabelEditor
+	bind:this={labelEditor}
+	workspace={$workspaceStore}
+	onSave={() => $workspaceStore && refresh($workspaceStore)}
+/>
+
+<SettingsPageHeader
+	title="Labels"
+	description="Labels group scripts, flows, apps, resources, variables, schedules and folders. A color applies to the label everywhere it is used in this workspace."
+>
+	{#snippet actions()}
+		<Button
+			variant="accent"
+			unifiedSize="sm"
+			startIcon={{ icon: Plus }}
+			onClick={() => labelEditor?.initNew()}
+		>
+			New label
+		</Button>
+	{/snippet}
+</SettingsPageHeader>
+
+{#if labels == undefined}
+	<Skeleton layout={[[2], 1, [2], 1, [2]]} />
+{:else if labels.length === 0}
+	<p class="text-sm text-secondary">
+		No labels yet. Create one here, or add one to a script, flow, app, resource, variable, schedule
+		or folder.
+	</p>
+{:else}
+	<div class="flex flex-col divide-y border-t border-b">
+		{#each labels as label (label.name)}
+			<div class="flex flex-row items-center justify-between gap-2 py-2">
+				<LabelBadge label={label.name} workspace={$workspaceStore} />
+				<Button
+					variant="subtle"
+					unifiedSize="xs"
+					startIcon={{ icon: Pen }}
+					iconOnly
+					aria-label="Edit label {label.name}"
+					onClick={() => labelEditor?.initEdit(label)}
+				/>
+			</div>
+		{/each}
+	</div>
+{/if}
diff --git a/frontend/src/routes/(root)/(logged)/workspace_settings/+page.svelte b/frontend/src/routes/(root)/(logged)/workspace_settings/+page.svelte
index 782da1bb2c..a5faf306ec 100644
--- a/frontend/src/routes/(root)/(logged)/workspace_settings/+page.svelte
+++ b/frontend/src/routes/(root)/(logged)/workspace_settings/+page.svelte
@@ -43,6 +43,7 @@
 	import { downloadViaClient, shouldDownloadViaClient } from '$lib/utils/downloadFile'
 	import { Slack, Target } from 'lucide-svelte'
 	import SidebarNavigation from '$lib/components/common/sidebar/SidebarNavigation.svelte'
+	import LabelSettings from '$lib/components/workspaceSettings/LabelSettings.svelte'
 
 	import PremiumInfo from '$lib/components/settings/PremiumInfo.svelte'
 	import Toggle from '$lib/components/Toggle.svelte'
@@ -374,6 +375,7 @@
 			| 'teams'
 			| 'premium'
 			| 'general'
+			| 'labels'
 			| 'webhook'
 			| 'deploy_to'
 			| 'dev_workspace'
@@ -1193,6 +1195,12 @@
 					aiId: 'workspace-settings-ai',
 					aiDescription: 'Windmill AI workspace settings'
 				},
+				{
+					id: 'labels',
+					label: 'Labels',
+					aiId: 'workspace-settings-labels',
+					aiDescription: 'Colors for the labels used across this workspace'
+				},
 				{
 					id: 'premium',
 					label: 'Premium plans',
@@ -2190,6 +2198,8 @@ export async function main(
 							/>
 						{:else if tab == 'shared_ui'}
 							<SharedUiSettings />
+						{:else if tab == 'labels'}
+							<LabelSettings />
 						{:else if tab == 'trashbin'}
 							<SettingsPageHeader
 								title="Trashbin"