diff --git a/ui/src/components/IssueProperties.tsx b/ui/src/components/IssueProperties.tsx
index ffc3d7d6..04d6cd72 100644
--- a/ui/src/components/IssueProperties.tsx
+++ b/ui/src/components/IssueProperties.tsx
@@ -1,8 +1,9 @@
 import { useState } from "react";
 import { Link } from "react-router-dom";
 import type { Issue } from "@paperclip/shared";
-import { useQuery } from "@tanstack/react-query";
+import { useMutation, useQuery, useQueryClient } from "@tanstack/react-query";
 import { agentsApi } from "../api/agents";
+import { issuesApi } from "../api/issues";
 import { projectsApi } from "../api/projects";
 import { useCompany } from "../context/CompanyContext";
 import { queryKeys } from "../lib/queryKeys";
@@ -13,7 +14,7 @@ import { formatDate, cn } from "../lib/utils";
 import { timeAgo } from "../lib/timeAgo";
 import { Separator } from "@/components/ui/separator";
 import { Popover, PopoverContent, PopoverTrigger } from "@/components/ui/popover";
-import { User, Hexagon, ArrowUpRight } from "lucide-react";
+import { User, Hexagon, ArrowUpRight, Tag, Plus, Trash2 } from "lucide-react";
 import { AgentIcon } from "./AgentIconPicker";
 
 interface IssuePropertiesProps {
@@ -32,23 +33,61 @@ function PropertyRow({ label, children }: { label: string; children: React.React
 
 export function IssueProperties({ issue, onUpdate }: IssuePropertiesProps) {
   const { selectedCompanyId } = useCompany();
+  const queryClient = useQueryClient();
+  const companyId = issue.companyId ?? selectedCompanyId;
   const [assigneeOpen, setAssigneeOpen] = useState(false);
   const [assigneeSearch, setAssigneeSearch] = useState("");
   const [projectOpen, setProjectOpen] = useState(false);
   const [projectSearch, setProjectSearch] = useState("");
+  const [labelsOpen, setLabelsOpen] = useState(false);
+  const [labelSearch, setLabelSearch] = useState("");
+  const [newLabelName, setNewLabelName] = useState("");
+  const [newLabelColor, setNewLabelColor] = useState("#6366f1");
 
   const { data: agents } = useQuery({
-    queryKey: queryKeys.agents.list(selectedCompanyId!),
-    queryFn: () => agentsApi.list(selectedCompanyId!),
-    enabled: !!selectedCompanyId,
+    queryKey: queryKeys.agents.list(companyId!),
+    queryFn: () => agentsApi.list(companyId!),
+    enabled: !!companyId,
   });
 
   const { data: projects } = useQuery({
-    queryKey: queryKeys.projects.list(selectedCompanyId!),
-    queryFn: () => projectsApi.list(selectedCompanyId!),
-    enabled: !!selectedCompanyId,
+    queryKey: queryKeys.projects.list(companyId!),
+    queryFn: () => projectsApi.list(companyId!),
+    enabled: !!companyId,
   });
 
+  const { data: labels } = useQuery({
+    queryKey: queryKeys.issues.labels(companyId!),
+    queryFn: () => issuesApi.listLabels(companyId!),
+    enabled: !!companyId,
+  });
+
+  const createLabel = useMutation({
+    mutationFn: (data: { name: string; color: string }) => issuesApi.createLabel(companyId!, data),
+    onSuccess: async (created) => {
+      await queryClient.invalidateQueries({ queryKey: queryKeys.issues.labels(companyId!) });
+      onUpdate({ labelIds: [...(issue.labelIds ?? []), created.id] });
+      setNewLabelName("");
+    },
+  });
+
+  const deleteLabel = useMutation({
+    mutationFn: (labelId: string) => issuesApi.deleteLabel(labelId),
+    onSuccess: () => {
+      queryClient.invalidateQueries({ queryKey: queryKeys.issues.labels(companyId!) });
+      queryClient.invalidateQueries({ queryKey: queryKeys.issues.list(companyId!) });
+      queryClient.invalidateQueries({ queryKey: queryKeys.issues.detail(issue.id) });
+    },
+  });
+
+  const toggleLabel = (labelId: string) => {
+    const ids = issue.labelIds ?? [];
+    const next = ids.includes(labelId)
+      ? ids.filter((id) => id !== labelId)
+      : [...ids, labelId];
+    onUpdate({ labelIds: next });
+  };
+
   const agentName = (id: string | null) => {
     if (!id || !agents) return null;
     const agent = agents.find((a) => a.id === id);
@@ -84,6 +123,110 @@ export function IssueProperties({ issue, onUpdate }: IssuePropertiesProps) {
           />
         </PropertyRow>
 
+        <PropertyRow label="Labels">
+          <Popover open={labelsOpen} onOpenChange={(open) => { setLabelsOpen(open); if (!open) setLabelSearch(""); }}>
+            <PopoverTrigger asChild>
+              <button className="inline-flex items-center gap-1.5 cursor-pointer hover:bg-accent/50 rounded px-1 -mx-1 py-0.5 transition-colors min-w-0 max-w-full">
+                {(issue.labels ?? []).length > 0 ? (
+                  <div className="flex items-center gap-1 flex-wrap">
+                    {(issue.labels ?? []).slice(0, 3).map((label) => (
+                      <span
+                        key={label.id}
+                        className="inline-flex items-center rounded-full px-2 py-0.5 text-xs font-medium border"
+                        style={{
+                          borderColor: label.color,
+                          backgroundColor: `${label.color}22`,
+                          color: label.color,
+                        }}
+                      >
+                        {label.name}
+                      </span>
+                    ))}
+                    {(issue.labels ?? []).length > 3 && (
+                      <span className="text-xs text-muted-foreground">+{(issue.labels ?? []).length - 3}</span>
+                    )}
+                  </div>
+                ) : (
+                  <>
+                    <Tag className="h-3.5 w-3.5 text-muted-foreground" />
+                    <span className="text-sm text-muted-foreground">No labels</span>
+                  </>
+                )}
+              </button>
+            </PopoverTrigger>
+            <PopoverContent className="w-64 p-1" align="end">
+              <input
+                className="w-full px-2 py-1.5 text-xs bg-transparent outline-none border-b border-border mb-1 placeholder:text-muted-foreground/50"
+                placeholder="Search labels..."
+                value={labelSearch}
+                onChange={(e) => setLabelSearch(e.target.value)}
+                autoFocus
+              />
+              <div className="max-h-44 overflow-y-auto overscroll-contain space-y-0.5">
+                {(labels ?? [])
+                  .filter((label) => {
+                    if (!labelSearch.trim()) return true;
+                    return label.name.toLowerCase().includes(labelSearch.toLowerCase());
+                  })
+                  .map((label) => {
+                    const selected = (issue.labelIds ?? []).includes(label.id);
+                    return (
+                      <div key={label.id} className="flex items-center gap-1">
+                        <button
+                          className={cn(
+                            "flex items-center gap-2 flex-1 px-2 py-1.5 text-xs rounded hover:bg-accent/50 text-left",
+                            selected && "bg-accent"
+                          )}
+                          onClick={() => toggleLabel(label.id)}
+                        >
+                          <span className="h-2.5 w-2.5 rounded-full shrink-0" style={{ backgroundColor: label.color }} />
+                          <span className="truncate">{label.name}</span>
+                        </button>
+                        <button
+                          type="button"
+                          className="p-1 text-muted-foreground hover:text-destructive rounded"
+                          onClick={() => deleteLabel.mutate(label.id)}
+                          title={`Delete ${label.name}`}
+                        >
+                          <Trash2 className="h-3 w-3" />
+                        </button>
+                      </div>
+                    );
+                  })}
+              </div>
+              <div className="mt-2 border-t border-border pt-2 space-y-1">
+                <div className="flex items-center gap-1">
+                  <input
+                    className="h-7 w-7 p-0 rounded bg-transparent"
+                    type="color"
+                    value={newLabelColor}
+                    onChange={(e) => setNewLabelColor(e.target.value)}
+                  />
+                  <input
+                    className="flex-1 px-2 py-1.5 text-xs bg-transparent outline-none rounded placeholder:text-muted-foreground/50"
+                    placeholder="New label"
+                    value={newLabelName}
+                    onChange={(e) => setNewLabelName(e.target.value)}
+                  />
+                </div>
+                <button
+                  className="flex items-center justify-center gap-1.5 w-full px-2 py-1.5 text-xs rounded border border-border hover:bg-accent/50 disabled:opacity-50"
+                  disabled={!newLabelName.trim() || createLabel.isPending}
+                  onClick={() =>
+                    createLabel.mutate({
+                      name: newLabelName.trim(),
+                      color: newLabelColor,
+                    })
+                  }
+                >
+                  <Plus className="h-3 w-3" />
+                  {createLabel.isPending ? "Creating..." : "Create label"}
+                </button>
+              </div>
+            </PopoverContent>
+          </Popover>
+        </PropertyRow>
+
         <PropertyRow label="Assignee">
           <Popover open={assigneeOpen} onOpenChange={(open) => { setAssigneeOpen(open); if (!open) setAssigneeSearch(""); }}>
             <PopoverTrigger asChild>