diff --git a/app/controllers/api/v1/accounts/labels_controller.rb b/app/controllers/api/v1/accounts/labels_controller.rb
index 54455943b..6889d30a4 100644
--- a/app/controllers/api/v1/accounts/labels_controller.rb
+++ b/app/controllers/api/v1/accounts/labels_controller.rb
@@ -18,7 +18,16 @@ class Api::V1::Accounts::LabelsController < Api::V1::Accounts::BaseController
   end
 
   def destroy
+    label_title = @label.title
+    account_id = Current.account.id
+    label_deleted_at = Time.current
+
     @label.destroy!
+    Labels::RemoveAssociationsJob.perform_later(
+      label_title: label_title,
+      account_id: account_id,
+      label_deleted_at: label_deleted_at
+    )
     head :ok
   end
 
diff --git a/app/jobs/labels/remove_associations_job.rb b/app/jobs/labels/remove_associations_job.rb
new file mode 100644
index 000000000..502d9339e
--- /dev/null
+++ b/app/jobs/labels/remove_associations_job.rb
@@ -0,0 +1,11 @@
+class Labels::RemoveAssociationsJob < ApplicationJob
+  queue_as :default
+
+  def perform(label_title:, account_id:, label_deleted_at:)
+    Labels::DestroyService.new(
+      label_title: label_title,
+      account_id: account_id,
+      label_deleted_at: label_deleted_at
+    ).perform
+  end
+end
diff --git a/app/services/labels/destroy_service.rb b/app/services/labels/destroy_service.rb
new file mode 100644
index 000000000..080e708e7
--- /dev/null
+++ b/app/services/labels/destroy_service.rb
@@ -0,0 +1,60 @@
+class Labels::DestroyService
+  pattr_initialize [:label_title!, :account_id!, :label_deleted_at!]
+
+  def perform
+    remove_conversation_labels
+    remove_contact_labels
+  end
+
+  private
+
+  def remove_conversation_labels
+    tagged_conversations.find_in_batches do |conversation_batch|
+      conversation_batch.each do |conversation|
+        update_conversation_cached_labels(conversation)
+      end
+      delete_label_taggings('Conversation', conversation_batch.map(&:id))
+    end
+  end
+
+  def remove_contact_labels
+    contact_label_taggings.in_batches do |tagging_batch|
+      ActsAsTaggableOn::Tagging.where(id: tagging_batch.select(:id)).delete_all
+    end
+  end
+
+  def update_conversation_cached_labels(conversation)
+    label_list = conversation.label_list.dup
+    label_list.remove(label_title)
+
+    # We only want the acts-as-taggable-on cache effect here, not Conversation callbacks/events.
+    # rubocop:disable Rails/SkipsModelValidations
+    conversation.update_column(:cached_label_list, label_list.join("#{ActsAsTaggableOn.delimiter} "))
+    # rubocop:enable Rails/SkipsModelValidations
+  end
+
+  def tagged_conversations
+    account.conversations.where(id: label_taggings_for('Conversation').select(:taggable_id))
+  end
+
+  def contact_label_taggings
+    label_taggings_for('Contact').where(taggable_id: account.contacts.select(:id))
+  end
+
+  def delete_label_taggings(taggable_type, taggable_ids)
+    ActsAsTaggableOn::Tagging
+      .where(id: label_taggings_for(taggable_type).where(taggable_id: taggable_ids).select(:id))
+      .delete_all
+  end
+
+  def label_taggings_for(taggable_type)
+    ActsAsTaggableOn::Tagging
+      .joins(:tag)
+      .where(context: 'labels', taggable_type: taggable_type, tags: { name: label_title })
+      .where('taggings.created_at <= ?', label_deleted_at)
+  end
+
+  def account
+    @account ||= Account.find(account_id)
+  end
+end
diff --git a/spec/controllers/api/v1/accounts/labels_controller_spec.rb b/spec/controllers/api/v1/accounts/labels_controller_spec.rb
index 61751ad68..657b53796 100644
--- a/spec/controllers/api/v1/accounts/labels_controller_spec.rb
+++ b/spec/controllers/api/v1/accounts/labels_controller_spec.rb
@@ -3,6 +3,7 @@ require 'rails_helper'
 RSpec.describe 'Label API', type: :request do
   let!(:account) { create(:account) }
   let!(:label) { create(:label, account: account) }
+  let!(:conversation) { create(:conversation, account: account) }
 
   describe 'GET /api/v1/accounts/{account.id}/labels' do
     context 'when it is an unauthenticated user' do
@@ -101,4 +102,39 @@ RSpec.describe 'Label API', type: :request do
       end
     end
   end
+
+  describe 'DELETE /api/v1/accounts/{account.id}/labels/:id' do
+    context 'when it is an unauthenticated user' do
+      it 'returns unauthorized' do
+        delete "/api/v1/accounts/#{account.id}/labels/#{label.id}"
+
+        expect(response).to have_http_status(:unauthorized)
+      end
+    end
+
+    context 'when it is an authenticated user' do
+      let(:admin) { create(:user, account: account, role: :administrator) }
+
+      it 'deletes the label and enqueues label cleanup' do
+        label_deleted_at = Time.zone.parse('2026-05-07 10:00:00 UTC')
+        conversation.label_list.add(label.title)
+        conversation.save!
+
+        clear_enqueued_jobs
+
+        travel_to(label_deleted_at) do
+          expect do
+            delete "/api/v1/accounts/#{account.id}/labels/#{label.id}", headers: admin.create_new_auth_token, as: :json
+          end.to have_enqueued_job(Labels::RemoveAssociationsJob).with(
+            label_title: label.title,
+            account_id: account.id,
+            label_deleted_at: label_deleted_at
+          )
+        end
+
+        expect(response).to have_http_status(:ok)
+        expect(Label.exists?(label.id)).to be(false)
+      end
+    end
+  end
 end
diff --git a/spec/jobs/labels/remove_associations_job_spec.rb b/spec/jobs/labels/remove_associations_job_spec.rb
new file mode 100644
index 000000000..0b608630f
--- /dev/null
+++ b/spec/jobs/labels/remove_associations_job_spec.rb
@@ -0,0 +1,21 @@
+require 'rails_helper'
+
+RSpec.describe Labels::RemoveAssociationsJob do
+  subject(:job) do
+    described_class.perform_later(
+      label_title: label_title,
+      account_id: account_id,
+      label_deleted_at: label_deleted_at
+    )
+  end
+
+  let(:label_title) { 'billing' }
+  let(:account_id) { 1 }
+  let(:label_deleted_at) { Time.current }
+
+  it 'queues the job' do
+    expect { job }.to have_enqueued_job(described_class)
+      .with(label_title: label_title, account_id: account_id, label_deleted_at: label_deleted_at)
+      .on_queue('default')
+  end
+end
diff --git a/spec/services/labels/destroy_service_spec.rb b/spec/services/labels/destroy_service_spec.rb
new file mode 100644
index 000000000..7d06b72d0
--- /dev/null
+++ b/spec/services/labels/destroy_service_spec.rb
@@ -0,0 +1,102 @@
+require 'rails_helper'
+
+describe Labels::DestroyService do
+  let(:account) { create(:account) }
+  let(:conversation) { create(:conversation, account: account) }
+  let(:label) { create(:label, account: account) }
+  let(:contact) { conversation.contact }
+  let(:label_deleted_at) { Time.zone.parse('2026-05-07 10:00:00 UTC') }
+
+  before do
+    conversation.label_list.add(label.title)
+    conversation.label_list.add('billing')
+    conversation.save!
+
+    contact.label_list.add(label.title)
+    contact.label_list.add('vip')
+    contact.save!
+
+    set_label_tagging_created_at(conversation, label_deleted_at - 1.minute)
+    set_label_tagging_created_at(contact, label_deleted_at - 1.minute)
+  end
+
+  describe '#perform' do
+    it 'removes label from associated conversations and contacts' do
+      described_class.new(
+        label_title: label.title,
+        account_id: account.id,
+        label_deleted_at: label_deleted_at
+      ).perform
+
+      expect(conversation.reload.label_list).to eq(['billing'])
+      expect(conversation.cached_label_list).to eq('billing')
+      expect(contact.reload.label_list).to eq(['vip'])
+    end
+
+    it 'removes label associations after the label record is destroyed' do
+      label_title = label.title
+      label.destroy!
+
+      described_class.new(
+        label_title: label_title,
+        account_id: account.id,
+        label_deleted_at: label_deleted_at
+      ).perform
+
+      expect(conversation.reload.label_list).to eq(['billing'])
+      expect(conversation.cached_label_list).to eq('billing')
+      expect(contact.reload.label_list).to eq(['vip'])
+    end
+
+    it 'does not remove labels from other accounts' do
+      other_account = create(:account)
+      other_conversation = create(:conversation, account: other_account)
+      other_conversation.label_list.add(label.title)
+      other_conversation.save!
+      set_label_tagging_created_at(other_conversation, label_deleted_at - 1.minute)
+
+      described_class.new(
+        label_title: label.title,
+        account_id: account.id,
+        label_deleted_at: label_deleted_at
+      ).perform
+
+      expect(other_conversation.reload.label_list).to eq([label.title])
+    end
+
+    it 'does not dispatch conversation or contact update events' do
+      expect(Rails.configuration.dispatcher).not_to receive(:dispatch)
+
+      described_class.new(
+        label_title: label.title,
+        account_id: account.id,
+        label_deleted_at: label_deleted_at
+      ).perform
+    end
+
+    it 'does not remove label associations created after the label was deleted' do
+      other_conversation = create(:conversation, account: account)
+      other_conversation.label_list.add(label.title)
+      other_conversation.save!
+      set_label_tagging_created_at(other_conversation, label_deleted_at + 1.minute)
+
+      described_class.new(
+        label_title: label.title,
+        account_id: account.id,
+        label_deleted_at: label_deleted_at
+      ).perform
+
+      expect(conversation.reload.label_list).to eq(['billing'])
+      expect(conversation.cached_label_list).to eq('billing')
+      expect(contact.reload.label_list).to eq(['vip'])
+      expect(other_conversation.reload.label_list).to eq([label.title])
+    end
+  end
+
+  def set_label_tagging_created_at(record, created_at)
+    ActsAsTaggableOn::Tagging
+      .joins(:tag)
+      .find_by!(context: 'labels', taggable: record, tags: { name: label.title })
+      .update!(created_at: created_at)
+  end
+end