diff --git a/.github/workflows/campaign-generator.lock.yml b/.github/workflows/campaign-generator.lock.yml
index ff29806712f..9e17f015198 100644
--- a/.github/workflows/campaign-generator.lock.yml
+++ b/.github/workflows/campaign-generator.lock.yml
@@ -7522,7 +7522,7 @@ jobs:
           };
           
           EOF_4d21ccbd
-          cat > /tmp/gh-aw/scripts/update_runner.cjs << 'EOF_006d32d7'
+          cat > /tmp/gh-aw/scripts/update_runner.cjs << 'EOF_60283df2'
           // @ts-check
           /// <reference types="@actions/github-script" />
           
@@ -7607,11 +7607,12 @@ jobs:
            * @param {boolean} params.canUpdateStatus - Whether status updates are allowed
            * @param {boolean} params.canUpdateTitle - Whether title updates are allowed
            * @param {boolean} params.canUpdateBody - Whether body updates are allowed
+           * @param {boolean} [params.canUpdateLabels] - Whether label updates are allowed
            * @param {boolean} params.supportsStatus - Whether this type supports status
            * @returns {{hasUpdates: boolean, updateData: any, logMessages: string[]}}
            */
           function buildUpdateData(params) {
-            const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, supportsStatus } = params;
+            const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, canUpdateLabels, supportsStatus } = params;
           
             /** @type {any} */
             const updateData = {};
@@ -7661,6 +7662,17 @@ jobs:
               }
             }
           
+            // Handle labels update
+            if (canUpdateLabels && item.labels !== undefined) {
+              if (Array.isArray(item.labels)) {
+                updateData.labels = item.labels;
+                hasUpdates = true;
+                logMessages.push(`Will update labels to: ${item.labels.join(", ")}`);
+              } else {
+                logMessages.push("Invalid labels value: must be an array");
+              }
+            }
+          
             return { hasUpdates, updateData, logMessages };
           }
           
@@ -7705,12 +7717,13 @@ jobs:
             const canUpdateStatus = process.env.GH_AW_UPDATE_STATUS === "true";
             const canUpdateTitle = process.env.GH_AW_UPDATE_TITLE === "true";
             const canUpdateBody = process.env.GH_AW_UPDATE_BODY === "true";
+            const canUpdateLabels = process.env.GH_AW_UPDATE_LABELS === "true";
           
             core.info(`Update target configuration: ${updateTarget}`);
             if (supportsStatus) {
-              core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+              core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
             } else {
-              core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+              core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
             }
           
             // Check context validity
@@ -7754,6 +7767,7 @@ jobs:
                 canUpdateStatus,
                 canUpdateTitle,
                 canUpdateBody,
+                canUpdateLabels,
                 supportsStatus,
               });
           
@@ -7875,7 +7889,7 @@ jobs:
             createGetSummaryLine,
           };
           
-          EOF_006d32d7
+          EOF_60283df2
       - name: Assign To Agent
         id: assign_to_agent
         if: ((!cancelled()) && (needs.agent.result != 'skipped')) && (contains(needs.agent.outputs.output_types, 'assign_to_agent'))
diff --git a/.github/workflows/changeset.lock.yml b/.github/workflows/changeset.lock.yml
index a11cbf99991..5778d0a4d89 100644
--- a/.github/workflows/changeset.lock.yml
+++ b/.github/workflows/changeset.lock.yml
@@ -8269,7 +8269,7 @@ jobs:
           };
           
           EOF_d0693c3b
-          cat > /tmp/gh-aw/scripts/update_runner.cjs << 'EOF_006d32d7'
+          cat > /tmp/gh-aw/scripts/update_runner.cjs << 'EOF_60283df2'
           // @ts-check
           /// <reference types="@actions/github-script" />
           
@@ -8354,11 +8354,12 @@ jobs:
            * @param {boolean} params.canUpdateStatus - Whether status updates are allowed
            * @param {boolean} params.canUpdateTitle - Whether title updates are allowed
            * @param {boolean} params.canUpdateBody - Whether body updates are allowed
+           * @param {boolean} [params.canUpdateLabels] - Whether label updates are allowed
            * @param {boolean} params.supportsStatus - Whether this type supports status
            * @returns {{hasUpdates: boolean, updateData: any, logMessages: string[]}}
            */
           function buildUpdateData(params) {
-            const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, supportsStatus } = params;
+            const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, canUpdateLabels, supportsStatus } = params;
           
             /** @type {any} */
             const updateData = {};
@@ -8408,6 +8409,17 @@ jobs:
               }
             }
           
+            // Handle labels update
+            if (canUpdateLabels && item.labels !== undefined) {
+              if (Array.isArray(item.labels)) {
+                updateData.labels = item.labels;
+                hasUpdates = true;
+                logMessages.push(`Will update labels to: ${item.labels.join(", ")}`);
+              } else {
+                logMessages.push("Invalid labels value: must be an array");
+              }
+            }
+          
             return { hasUpdates, updateData, logMessages };
           }
           
@@ -8452,12 +8464,13 @@ jobs:
             const canUpdateStatus = process.env.GH_AW_UPDATE_STATUS === "true";
             const canUpdateTitle = process.env.GH_AW_UPDATE_TITLE === "true";
             const canUpdateBody = process.env.GH_AW_UPDATE_BODY === "true";
+            const canUpdateLabels = process.env.GH_AW_UPDATE_LABELS === "true";
           
             core.info(`Update target configuration: ${updateTarget}`);
             if (supportsStatus) {
-              core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+              core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
             } else {
-              core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+              core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
             }
           
             // Check context validity
@@ -8501,6 +8514,7 @@ jobs:
                 canUpdateStatus,
                 canUpdateTitle,
                 canUpdateBody,
+                canUpdateLabels,
                 supportsStatus,
               });
           
@@ -8622,7 +8636,7 @@ jobs:
             createGetSummaryLine,
           };
           
-          EOF_006d32d7
+          EOF_60283df2
       - name: Update Pull Request
         id: update_pull_request
         if: ((!cancelled()) && (needs.agent.result != 'skipped')) && (contains(needs.agent.outputs.output_types, 'update_pull_request'))
diff --git a/.github/workflows/dev.lock.yml b/.github/workflows/dev.lock.yml
index 27f005a58f6..db50ba0729a 100644
--- a/.github/workflows/dev.lock.yml
+++ b/.github/workflows/dev.lock.yml
@@ -8404,7 +8404,7 @@ jobs:
           };
           
           EOF_4d21ccbd
-          cat > /tmp/gh-aw/scripts/update_runner.cjs << 'EOF_006d32d7'
+          cat > /tmp/gh-aw/scripts/update_runner.cjs << 'EOF_60283df2'
           // @ts-check
           /// <reference types="@actions/github-script" />
           
@@ -8489,11 +8489,12 @@ jobs:
            * @param {boolean} params.canUpdateStatus - Whether status updates are allowed
            * @param {boolean} params.canUpdateTitle - Whether title updates are allowed
            * @param {boolean} params.canUpdateBody - Whether body updates are allowed
+           * @param {boolean} [params.canUpdateLabels] - Whether label updates are allowed
            * @param {boolean} params.supportsStatus - Whether this type supports status
            * @returns {{hasUpdates: boolean, updateData: any, logMessages: string[]}}
            */
           function buildUpdateData(params) {
-            const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, supportsStatus } = params;
+            const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, canUpdateLabels, supportsStatus } = params;
           
             /** @type {any} */
             const updateData = {};
@@ -8543,6 +8544,17 @@ jobs:
               }
             }
           
+            // Handle labels update
+            if (canUpdateLabels && item.labels !== undefined) {
+              if (Array.isArray(item.labels)) {
+                updateData.labels = item.labels;
+                hasUpdates = true;
+                logMessages.push(`Will update labels to: ${item.labels.join(", ")}`);
+              } else {
+                logMessages.push("Invalid labels value: must be an array");
+              }
+            }
+          
             return { hasUpdates, updateData, logMessages };
           }
           
@@ -8587,12 +8599,13 @@ jobs:
             const canUpdateStatus = process.env.GH_AW_UPDATE_STATUS === "true";
             const canUpdateTitle = process.env.GH_AW_UPDATE_TITLE === "true";
             const canUpdateBody = process.env.GH_AW_UPDATE_BODY === "true";
+            const canUpdateLabels = process.env.GH_AW_UPDATE_LABELS === "true";
           
             core.info(`Update target configuration: ${updateTarget}`);
             if (supportsStatus) {
-              core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+              core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
             } else {
-              core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+              core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
             }
           
             // Check context validity
@@ -8636,6 +8649,7 @@ jobs:
                 canUpdateStatus,
                 canUpdateTitle,
                 canUpdateBody,
+                canUpdateLabels,
                 supportsStatus,
               });
           
@@ -8757,7 +8771,7 @@ jobs:
             createGetSummaryLine,
           };
           
-          EOF_006d32d7
+          EOF_60283df2
       - name: Update Discussion
         id: update_discussion
         if: ((!cancelled()) && (needs.agent.result != 'skipped')) && (contains(needs.agent.outputs.output_types, 'update_discussion'))
@@ -8788,8 +8802,28 @@ jobs:
               includeOperation: false,
             });
             async function executeDiscussionUpdate(github, context, discussionNumber, updateData) {
-              const { _operation, _rawBody, ...fieldsToUpdate } = updateData;
-              const getDiscussionQuery = `
+              const { _operation, _rawBody, labels, ...fieldsToUpdate } = updateData;
+              const shouldUpdateLabels = process.env.GH_AW_UPDATE_LABELS === "true" && labels !== undefined;
+              const getDiscussionQuery = shouldUpdateLabels
+                ? `
+                query($owner: String!, $repo: String!, $number: Int!) {
+                  repository(owner: $owner, name: $repo) {
+                    discussion(number: $number) {
+                      id
+                      title
+                      body
+                      url
+                      labels(first: 100) {
+                        nodes {
+                          id
+                          name
+                        }
+                      }
+                    }
+                  }
+                }
+              `
+                : `
                 query($owner: String!, $repo: String!, $number: Int!) {
                   repository(owner: $owner, name: $repo) {
                     discussion(number: $number) {
@@ -8809,9 +8843,11 @@ jobs:
               if (!queryResult?.repository?.discussion) {
                 throw new Error(`Discussion #${discussionNumber} not found`);
               }
-              const discussionId = queryResult.repository.discussion.id;
-              if (fieldsToUpdate.title === undefined && fieldsToUpdate.body === undefined) {
-                throw new Error("At least one field (title or body) must be provided for update");
+              const discussion = queryResult.repository.discussion;
+              const discussionId = discussion.id;
+              const currentLabels = shouldUpdateLabels ? discussion.labels?.nodes || [] : [];
+              if (fieldsToUpdate.title === undefined && fieldsToUpdate.body === undefined && !shouldUpdateLabels) {
+                throw new Error("At least one field (title, body, or labels) must be provided for update");
               }
               if (fieldsToUpdate.body !== undefined) {
                 const workflowName = process.env.GH_AW_WORKFLOW_NAME || "Workflow";
@@ -8826,22 +8862,130 @@ jobs:
                 const footer = generateFooterWithMessages(workflowName, runUrl, workflowSource, workflowSourceURL, triggeringIssueNumber, triggeringPRNumber, triggeringDiscussionNumber);
                 fieldsToUpdate.body = fieldsToUpdate.body + footer;
               }
-              const mutationFields = [];
-              if (fieldsToUpdate.title !== undefined) {
-                mutationFields.push("title: $title");
+              if (fieldsToUpdate.title !== undefined || fieldsToUpdate.body !== undefined) {
+                const mutationFields = [];
+                if (fieldsToUpdate.title !== undefined) {
+                  mutationFields.push("title: $title");
+                }
+                if (fieldsToUpdate.body !== undefined) {
+                  mutationFields.push("body: $body");
+                }
+                const updateDiscussionMutation = `
+                  mutation($discussionId: ID!${fieldsToUpdate.title !== undefined ? ", $title: String!" : ""}${fieldsToUpdate.body !== undefined ? ", $body: String!" : ""}) {
+                    updateDiscussion(input: {
+                      discussionId: $discussionId
+                      ${mutationFields.join("\n          ")}
+                    }) {
+                      discussion {
+                        id
+                        number
+                        title
+                        body
+                        url
+                      }
+                    }
+                  }
+                `;
+                const variables = {
+                  discussionId: discussionId,
+                };
+                if (fieldsToUpdate.title !== undefined) {
+                  variables.title = fieldsToUpdate.title;
+                }
+                if (fieldsToUpdate.body !== undefined) {
+                  variables.body = fieldsToUpdate.body;
+                }
+                const mutationResult = await github.graphql(updateDiscussionMutation, variables);
+                if (!mutationResult?.updateDiscussion?.discussion) {
+                  throw new Error("Failed to update discussion");
+                }
               }
-              if (fieldsToUpdate.body !== undefined) {
-                mutationFields.push("body: $body");
-              }
-              const updateDiscussionMutation = `
-                mutation($discussionId: ID!${fieldsToUpdate.title !== undefined ? ", $title: String!" : ""}${fieldsToUpdate.body !== undefined ? ", $body: String!" : ""}) {
-                  updateDiscussion(input: {
-                    discussionId: $discussionId
-                    ${mutationFields.join("\n        ")}
-                  }) {
-                    discussion {
+              if (shouldUpdateLabels && Array.isArray(labels)) {
+                const repoQuery = `
+                  query($owner: String!, $repo: String!) {
+                    repository(owner: $owner, name: $repo) {
+                      id
+                      labels(first: 100) {
+                        nodes {
+                          id
+                          name
+                        }
+                      }
+                    }
+                  }
+                `;
+                const repoResult = await github.graphql(repoQuery, {
+                  owner: context.repo.owner,
+                  repo: context.repo.repo,
+                });
+                if (!repoResult?.repository) {
+                  throw new Error(`Repository ${context.repo.owner}/${context.repo.repo} not found`);
+                }
+                const repoLabels = repoResult.repository.labels?.nodes || [];
+                const labelIds = labels.map(labelName => {
+                  const label = repoLabels.find(l => l.name === labelName);
+                  if (!label) {
+                    throw new Error(`Label "${labelName}" not found in repository`);
+                  }
+                  return label.id;
+                });
+                if (currentLabels.length > 0) {
+                  const removeLabelsMutation = `
+                    mutation($labelableId: ID!, $labelIds: [ID!]!) {
+                      removeLabelsFromLabelable(input: {
+                        labelableId: $labelableId
+                        labelIds: $labelIds
+                      }) {
+                        clientMutationId
+                      }
+                    }
+                  `;
+                  await github.graphql(removeLabelsMutation, {
+                    labelableId: discussionId,
+                    labelIds: currentLabels.map(l => l.id),
+                  });
+                }
+                if (labelIds.length > 0) {
+                  const addLabelsMutation = `
+                    mutation($labelableId: ID!, $labelIds: [ID!]!) {
+                      addLabelsToLabelable(input: {
+                        labelableId: $labelableId
+                        labelIds: $labelIds
+                      }) {
+                        clientMutationId
+                      }
+                    }
+                  `;
+                  await github.graphql(addLabelsMutation, {
+                    labelableId: discussionId,
+                    labelIds: labelIds,
+                  });
+                }
+              }
+              const finalQuery = shouldUpdateLabels
+                ? `
+                query($owner: String!, $repo: String!, $number: Int!) {
+                  repository(owner: $owner, name: $repo) {
+                    discussion(number: $number) {
+                      id
+                      title
+                      body
+                      url
+                      labels(first: 100) {
+                        nodes {
+                          id
+                          name
+                        }
+                      }
+                    }
+                  }
+                }
+              `
+                : `
+                query($owner: String!, $repo: String!, $number: Int!) {
+                  repository(owner: $owner, name: $repo) {
+                    discussion(number: $number) {
                       id
-                      number
                       title
                       body
                       url
@@ -8849,23 +8993,15 @@ jobs:
                   }
                 }
               `;
-              const variables = {
-                discussionId: discussionId,
-              };
-              if (fieldsToUpdate.title !== undefined) {
-                variables.title = fieldsToUpdate.title;
-              }
-              if (fieldsToUpdate.body !== undefined) {
-                variables.body = fieldsToUpdate.body;
-              }
-              const mutationResult = await github.graphql(updateDiscussionMutation, variables);
-              if (!mutationResult?.updateDiscussion?.discussion) {
-                throw new Error("Failed to update discussion");
-              }
-              const discussion = mutationResult.updateDiscussion.discussion;
+              const finalQueryResult = await github.graphql(finalQuery, {
+                owner: context.repo.owner,
+                repo: context.repo.repo,
+                number: discussionNumber,
+              });
+              const updatedDiscussion = finalQueryResult.repository.discussion;
               return {
-                ...discussion,
-                html_url: discussion.url,
+                ...updatedDiscussion,
+                html_url: updatedDiscussion.url,
               };
             }
             const getSummaryLine = createGetSummaryLine({
diff --git a/.github/workflows/poem-bot.lock.yml b/.github/workflows/poem-bot.lock.yml
index 4e1e5e46a50..2b6a7a4af85 100644
--- a/.github/workflows/poem-bot.lock.yml
+++ b/.github/workflows/poem-bot.lock.yml
@@ -10633,7 +10633,7 @@ jobs:
           };
           
           EOF_4d21ccbd
-          cat > /tmp/gh-aw/scripts/update_runner.cjs << 'EOF_006d32d7'
+          cat > /tmp/gh-aw/scripts/update_runner.cjs << 'EOF_60283df2'
           // @ts-check
           /// <reference types="@actions/github-script" />
           
@@ -10718,11 +10718,12 @@ jobs:
            * @param {boolean} params.canUpdateStatus - Whether status updates are allowed
            * @param {boolean} params.canUpdateTitle - Whether title updates are allowed
            * @param {boolean} params.canUpdateBody - Whether body updates are allowed
+           * @param {boolean} [params.canUpdateLabels] - Whether label updates are allowed
            * @param {boolean} params.supportsStatus - Whether this type supports status
            * @returns {{hasUpdates: boolean, updateData: any, logMessages: string[]}}
            */
           function buildUpdateData(params) {
-            const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, supportsStatus } = params;
+            const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, canUpdateLabels, supportsStatus } = params;
           
             /** @type {any} */
             const updateData = {};
@@ -10772,6 +10773,17 @@ jobs:
               }
             }
           
+            // Handle labels update
+            if (canUpdateLabels && item.labels !== undefined) {
+              if (Array.isArray(item.labels)) {
+                updateData.labels = item.labels;
+                hasUpdates = true;
+                logMessages.push(`Will update labels to: ${item.labels.join(", ")}`);
+              } else {
+                logMessages.push("Invalid labels value: must be an array");
+              }
+            }
+          
             return { hasUpdates, updateData, logMessages };
           }
           
@@ -10816,12 +10828,13 @@ jobs:
             const canUpdateStatus = process.env.GH_AW_UPDATE_STATUS === "true";
             const canUpdateTitle = process.env.GH_AW_UPDATE_TITLE === "true";
             const canUpdateBody = process.env.GH_AW_UPDATE_BODY === "true";
+            const canUpdateLabels = process.env.GH_AW_UPDATE_LABELS === "true";
           
             core.info(`Update target configuration: ${updateTarget}`);
             if (supportsStatus) {
-              core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+              core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
             } else {
-              core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+              core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
             }
           
             // Check context validity
@@ -10865,6 +10878,7 @@ jobs:
                 canUpdateStatus,
                 canUpdateTitle,
                 canUpdateBody,
+                canUpdateLabels,
                 supportsStatus,
               });
           
@@ -10986,7 +11000,7 @@ jobs:
             createGetSummaryLine,
           };
           
-          EOF_006d32d7
+          EOF_60283df2
       - name: Create Issue
         id: create_issue
         if: ((!cancelled()) && (needs.agent.result != 'skipped')) && (contains(needs.agent.outputs.output_types, 'create_issue'))
diff --git a/.github/workflows/sub-issue-closer.lock.yml b/.github/workflows/sub-issue-closer.lock.yml
index 79ff3044722..68936429e28 100644
--- a/.github/workflows/sub-issue-closer.lock.yml
+++ b/.github/workflows/sub-issue-closer.lock.yml
@@ -7428,7 +7428,7 @@ jobs:
           };
           
           EOF_4d21ccbd
-          cat > /tmp/gh-aw/scripts/update_runner.cjs << 'EOF_006d32d7'
+          cat > /tmp/gh-aw/scripts/update_runner.cjs << 'EOF_60283df2'
           // @ts-check
           /// <reference types="@actions/github-script" />
           
@@ -7513,11 +7513,12 @@ jobs:
            * @param {boolean} params.canUpdateStatus - Whether status updates are allowed
            * @param {boolean} params.canUpdateTitle - Whether title updates are allowed
            * @param {boolean} params.canUpdateBody - Whether body updates are allowed
+           * @param {boolean} [params.canUpdateLabels] - Whether label updates are allowed
            * @param {boolean} params.supportsStatus - Whether this type supports status
            * @returns {{hasUpdates: boolean, updateData: any, logMessages: string[]}}
            */
           function buildUpdateData(params) {
-            const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, supportsStatus } = params;
+            const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, canUpdateLabels, supportsStatus } = params;
           
             /** @type {any} */
             const updateData = {};
@@ -7567,6 +7568,17 @@ jobs:
               }
             }
           
+            // Handle labels update
+            if (canUpdateLabels && item.labels !== undefined) {
+              if (Array.isArray(item.labels)) {
+                updateData.labels = item.labels;
+                hasUpdates = true;
+                logMessages.push(`Will update labels to: ${item.labels.join(", ")}`);
+              } else {
+                logMessages.push("Invalid labels value: must be an array");
+              }
+            }
+          
             return { hasUpdates, updateData, logMessages };
           }
           
@@ -7611,12 +7623,13 @@ jobs:
             const canUpdateStatus = process.env.GH_AW_UPDATE_STATUS === "true";
             const canUpdateTitle = process.env.GH_AW_UPDATE_TITLE === "true";
             const canUpdateBody = process.env.GH_AW_UPDATE_BODY === "true";
+            const canUpdateLabels = process.env.GH_AW_UPDATE_LABELS === "true";
           
             core.info(`Update target configuration: ${updateTarget}`);
             if (supportsStatus) {
-              core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+              core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
             } else {
-              core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+              core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
             }
           
             // Check context validity
@@ -7660,6 +7673,7 @@ jobs:
                 canUpdateStatus,
                 canUpdateTitle,
                 canUpdateBody,
+                canUpdateLabels,
                 supportsStatus,
               });
           
@@ -7781,7 +7795,7 @@ jobs:
             createGetSummaryLine,
           };
           
-          EOF_006d32d7
+          EOF_60283df2
       - name: Add Comment
         id: add_comment
         if: ((!cancelled()) && (needs.agent.result != 'skipped')) && (contains(needs.agent.outputs.output_types, 'add_comment'))
diff --git a/pkg/parser/schemas/main_workflow_schema.json b/pkg/parser/schemas/main_workflow_schema.json
index 242abcbb833..d2f5ac0670e 100644
--- a/pkg/parser/schemas/main_workflow_schema.json
+++ b/pkg/parser/schemas/main_workflow_schema.json
@@ -3369,6 +3369,17 @@
                   "type": "null",
                   "description": "Allow updating discussion body - presence of key indicates field can be updated"
                 },
+                "labels": {
+                  "type": "null",
+                  "description": "Allow updating discussion labels - presence of key indicates field can be updated"
+                },
+                "allowed-labels": {
+                  "type": "array",
+                  "items": {
+                    "type": "string"
+                  },
+                  "description": "Optional list of allowed labels. If omitted, any labels are allowed (including creating new ones)."
+                },
                 "max": {
                   "type": "integer",
                   "description": "Maximum number of discussions to update (default: 1)",
diff --git a/pkg/workflow/compiler_safe_outputs_consolidated.go b/pkg/workflow/compiler_safe_outputs_consolidated.go
index a1cc03341ae..de1f4231edf 100644
--- a/pkg/workflow/compiler_safe_outputs_consolidated.go
+++ b/pkg/workflow/compiler_safe_outputs_consolidated.go
@@ -983,6 +983,9 @@ func (c *Compiler) buildUpdateDiscussionStepConfig(data *WorkflowData, mainJobNa
 	if cfg.Body != nil {
 		customEnvVars = append(customEnvVars, "          GH_AW_UPDATE_BODY: \"true\"\n")
 	}
+	if cfg.Labels != nil {
+		customEnvVars = append(customEnvVars, "          GH_AW_UPDATE_LABELS: \"true\"\n")
+	}
 
 	condition := BuildSafeOutputType("update_discussion")
 
diff --git a/pkg/workflow/js/update_discussion.cjs b/pkg/workflow/js/update_discussion.cjs
index c8432e9f94f..f1eee2ff90b 100644
--- a/pkg/workflow/js/update_discussion.cjs
+++ b/pkg/workflow/js/update_discussion.cjs
@@ -24,10 +24,32 @@ const renderStagedItem = createRenderStagedItem({
  */
 async function executeDiscussionUpdate(github, context, discussionNumber, updateData) {
   // Remove internal fields used for operation handling
-  const { _operation, _rawBody, ...fieldsToUpdate } = updateData;
+  const { _operation, _rawBody, labels, ...fieldsToUpdate } = updateData;
+
+  // Check if labels should be updated based on environment variable
+  const shouldUpdateLabels = process.env.GH_AW_UPDATE_LABELS === "true" && labels !== undefined;
 
   // First, fetch the discussion node ID using its number
-  const getDiscussionQuery = `
+  const getDiscussionQuery = shouldUpdateLabels
+    ? `
+    query($owner: String!, $repo: String!, $number: Int!) {
+      repository(owner: $owner, name: $repo) {
+        discussion(number: $number) {
+          id
+          title
+          body
+          url
+          labels(first: 100) {
+            nodes {
+              id
+              name
+            }
+          }
+        }
+      }
+    }
+  `
+    : `
     query($owner: String!, $repo: String!, $number: Int!) {
       repository(owner: $owner, name: $repo) {
         discussion(number: $number) {
@@ -50,11 +72,13 @@ async function executeDiscussionUpdate(github, context, discussionNumber, update
     throw new Error(`Discussion #${discussionNumber} not found`);
   }
 
-  const discussionId = queryResult.repository.discussion.id;
+  const discussion = queryResult.repository.discussion;
+  const discussionId = discussion.id;
+  const currentLabels = shouldUpdateLabels ? discussion.labels?.nodes || [] : [];
 
   // Ensure at least one field is being updated
-  if (fieldsToUpdate.title === undefined && fieldsToUpdate.body === undefined) {
-    throw new Error("At least one field (title or body) must be provided for update");
+  if (fieldsToUpdate.title === undefined && fieldsToUpdate.body === undefined && !shouldUpdateLabels) {
+    throw new Error("At least one field (title, body, or labels) must be provided for update");
   }
 
   // Add footer to body if body is being updated
@@ -76,56 +100,174 @@ async function executeDiscussionUpdate(github, context, discussionNumber, update
     fieldsToUpdate.body = fieldsToUpdate.body + footer;
   }
 
-  // Build the update mutation dynamically based on which fields are being updated
-  const mutationFields = [];
-  if (fieldsToUpdate.title !== undefined) {
-    mutationFields.push("title: $title");
-  }
-  if (fieldsToUpdate.body !== undefined) {
-    mutationFields.push("body: $body");
+  // Update title and/or body if needed
+  if (fieldsToUpdate.title !== undefined || fieldsToUpdate.body !== undefined) {
+    // Build the update mutation dynamically based on which fields are being updated
+    const mutationFields = [];
+    if (fieldsToUpdate.title !== undefined) {
+      mutationFields.push("title: $title");
+    }
+    if (fieldsToUpdate.body !== undefined) {
+      mutationFields.push("body: $body");
+    }
+
+    const updateDiscussionMutation = `
+      mutation($discussionId: ID!${fieldsToUpdate.title !== undefined ? ", $title: String!" : ""}${fieldsToUpdate.body !== undefined ? ", $body: String!" : ""}) {
+        updateDiscussion(input: {
+          discussionId: $discussionId
+          ${mutationFields.join("\n          ")}
+        }) {
+          discussion {
+            id
+            number
+            title
+            body
+            url
+          }
+        }
+      }
+    `;
+
+    const variables = {
+      discussionId: discussionId,
+    };
+
+    if (fieldsToUpdate.title !== undefined) {
+      variables.title = fieldsToUpdate.title;
+    }
+
+    if (fieldsToUpdate.body !== undefined) {
+      variables.body = fieldsToUpdate.body;
+    }
+
+    const mutationResult = await github.graphql(updateDiscussionMutation, variables);
+
+    if (!mutationResult?.updateDiscussion?.discussion) {
+      throw new Error("Failed to update discussion");
+    }
   }
 
-  const updateDiscussionMutation = `
-    mutation($discussionId: ID!${fieldsToUpdate.title !== undefined ? ", $title: String!" : ""}${fieldsToUpdate.body !== undefined ? ", $body: String!" : ""}) {
-      updateDiscussion(input: {
-        discussionId: $discussionId
-        ${mutationFields.join("\n        ")}
-      }) {
-        discussion {
+  // Update labels if provided and enabled
+  if (shouldUpdateLabels && Array.isArray(labels)) {
+    // Get the repository ID to look up label IDs
+    const repoQuery = `
+      query($owner: String!, $repo: String!) {
+        repository(owner: $owner, name: $repo) {
           id
-          number
-          title
-          body
-          url
+          labels(first: 100) {
+            nodes {
+              id
+              name
+            }
+          }
         }
       }
+    `;
+
+    const repoResult = await github.graphql(repoQuery, {
+      owner: context.repo.owner,
+      repo: context.repo.repo,
+    });
+
+    if (!repoResult?.repository) {
+      throw new Error(`Repository ${context.repo.owner}/${context.repo.repo} not found`);
     }
-  `;
 
-  const variables = {
-    discussionId: discussionId,
-  };
+    const repoLabels = repoResult.repository.labels?.nodes || [];
 
-  if (fieldsToUpdate.title !== undefined) {
-    variables.title = fieldsToUpdate.title;
-  }
+    // Map label names to IDs
+    const labelIds = labels.map(labelName => {
+      const label = repoLabels.find(l => l.name === labelName);
+      if (!label) {
+        throw new Error(`Label "${labelName}" not found in repository`);
+      }
+      return label.id;
+    });
 
-  if (fieldsToUpdate.body !== undefined) {
-    variables.body = fieldsToUpdate.body;
-  }
+    // Remove all current labels
+    if (currentLabels.length > 0) {
+      const removeLabelsMutation = `
+        mutation($labelableId: ID!, $labelIds: [ID!]!) {
+          removeLabelsFromLabelable(input: {
+            labelableId: $labelableId
+            labelIds: $labelIds
+          }) {
+            clientMutationId
+          }
+        }
+      `;
 
-  const mutationResult = await github.graphql(updateDiscussionMutation, variables);
+      await github.graphql(removeLabelsMutation, {
+        labelableId: discussionId,
+        labelIds: currentLabels.map(l => l.id),
+      });
+    }
 
-  if (!mutationResult?.updateDiscussion?.discussion) {
-    throw new Error("Failed to update discussion");
+    // Add new labels
+    if (labelIds.length > 0) {
+      const addLabelsMutation = `
+        mutation($labelableId: ID!, $labelIds: [ID!]!) {
+          addLabelsToLabelable(input: {
+            labelableId: $labelableId
+            labelIds: $labelIds
+          }) {
+            clientMutationId
+          }
+        }
+      `;
+
+      await github.graphql(addLabelsMutation, {
+        labelableId: discussionId,
+        labelIds: labelIds,
+      });
+    }
   }
 
-  const discussion = mutationResult.updateDiscussion.discussion;
+  // Fetch the updated discussion to return
+  const finalQuery = shouldUpdateLabels
+    ? `
+    query($owner: String!, $repo: String!, $number: Int!) {
+      repository(owner: $owner, name: $repo) {
+        discussion(number: $number) {
+          id
+          title
+          body
+          url
+          labels(first: 100) {
+            nodes {
+              id
+              name
+            }
+          }
+        }
+      }
+    }
+  `
+    : `
+    query($owner: String!, $repo: String!, $number: Int!) {
+      repository(owner: $owner, name: $repo) {
+        discussion(number: $number) {
+          id
+          title
+          body
+          url
+        }
+      }
+    }
+  `;
+
+  const finalQueryResult = await github.graphql(finalQuery, {
+    owner: context.repo.owner,
+    repo: context.repo.repo,
+    number: discussionNumber,
+  });
+
+  const updatedDiscussion = finalQueryResult.repository.discussion;
 
   // Return with html_url (which the GraphQL returns as 'url')
   return {
-    ...discussion,
-    html_url: discussion.url,
+    ...updatedDiscussion,
+    html_url: updatedDiscussion.url,
   };
 }
 
diff --git a/pkg/workflow/js/update_discussion.test.cjs b/pkg/workflow/js/update_discussion.test.cjs
index 518469fac05..51e24ac69e0 100644
--- a/pkg/workflow/js/update_discussion.test.cjs
+++ b/pkg/workflow/js/update_discussion.test.cjs
@@ -63,9 +63,11 @@ describe("update_discussion.cjs", () => {
     delete process.env.GH_AW_AGENT_OUTPUT;
     delete process.env.GH_AW_UPDATE_TITLE;
     delete process.env.GH_AW_UPDATE_BODY;
+    delete process.env.GH_AW_UPDATE_LABELS;
     delete process.env.GH_AW_UPDATE_TARGET;
     process.env.GH_AW_UPDATE_TITLE = "false";
     process.env.GH_AW_UPDATE_BODY = "false";
+    process.env.GH_AW_UPDATE_LABELS = "false";
 
     const scriptPath = path.join(__dirname, "update_discussion.cjs");
     updateDiscussionScript = fs.readFileSync(scriptPath, "utf8");
@@ -134,9 +136,19 @@ describe("update_discussion.cjs", () => {
       },
     });
 
+    // Mock the final query to get updated discussion
+    mockGithub.graphql.mockResolvedValueOnce({
+      repository: {
+        discussion: {
+          ...mockDiscussion,
+          title: "Updated discussion title",
+        },
+      },
+    });
+
     await eval(`(async () => { ${updateDiscussionScript} })()`);
 
-    expect(mockGithub.graphql).toHaveBeenCalledTimes(2);
+    expect(mockGithub.graphql).toHaveBeenCalledTimes(3);
     expect(mockCore.setOutput).toHaveBeenCalledWith("discussion_number", 123);
     expect(mockCore.setOutput).toHaveBeenCalledWith("discussion_url", mockDiscussion.url);
     expect(mockCore.summary.addRaw).toHaveBeenCalled();
@@ -175,9 +187,19 @@ describe("update_discussion.cjs", () => {
       },
     });
 
+    // Mock the final query
+    mockGithub.graphql.mockResolvedValueOnce({
+      repository: {
+        discussion: {
+          ...mockDiscussion,
+          body: "New discussion body content",
+        },
+      },
+    });
+
     await eval(`(async () => { ${updateDiscussionScript} })()`);
 
-    expect(mockGithub.graphql).toHaveBeenCalledTimes(2);
+    expect(mockGithub.graphql).toHaveBeenCalledTimes(3);
     expect(mockCore.setOutput).toHaveBeenCalledWith("discussion_number", 123);
   });
 
@@ -221,9 +243,20 @@ describe("update_discussion.cjs", () => {
       },
     });
 
+    // Mock the final query
+    mockGithub.graphql.mockResolvedValueOnce({
+      repository: {
+        discussion: {
+          ...mockDiscussion,
+          title: "New title",
+          body: "New body content",
+        },
+      },
+    });
+
     await eval(`(async () => { ${updateDiscussionScript} })()`);
 
-    expect(mockGithub.graphql).toHaveBeenCalledTimes(2);
+    expect(mockGithub.graphql).toHaveBeenCalledTimes(3);
   });
 
   it('should handle explicit discussion number with target "*"', async () => {
@@ -265,9 +298,19 @@ describe("update_discussion.cjs", () => {
       },
     });
 
+    // Mock the final query
+    mockGithub.graphql.mockResolvedValueOnce({
+      repository: {
+        discussion: {
+          ...mockDiscussion,
+          title: "Updated title",
+        },
+      },
+    });
+
     await eval(`(async () => { ${updateDiscussionScript} })()`);
 
-    expect(mockGithub.graphql).toHaveBeenCalledTimes(2);
+    expect(mockGithub.graphql).toHaveBeenCalledTimes(3);
     // Should use the explicit discussion number 456
     expect(mockGithub.graphql).toHaveBeenNthCalledWith(
       1,
@@ -333,11 +376,175 @@ describe("update_discussion.cjs", () => {
       });
     });
 
+    // Mock the final query
+    mockGithub.graphql.mockImplementationOnce(() => {
+      return Promise.resolve({
+        repository: {
+          discussion: {
+            ...mockDiscussion,
+            body: capturedBody,
+          },
+        },
+      });
+    });
+
     await eval(`(async () => { ${updateDiscussionScript} })()`);
 
-    expect(mockGithub.graphql).toHaveBeenCalledTimes(2);
+    expect(mockGithub.graphql).toHaveBeenCalledTimes(3);
     // Verify the custom footer was used
     expect(capturedBody).toContain("Custom footer by");
     expect(capturedBody).toContain("Custom Workflow");
   });
+
+  it("should update discussion labels successfully", async () => {
+    setAgentOutput({
+      items: [{ type: "update_discussion", labels: ["bug", "enhancement"] }],
+    });
+    process.env.GH_AW_UPDATE_LABELS = "true";
+    global.context.eventName = "discussion";
+
+    const mockDiscussion = {
+      id: "D_kwDOABCD123",
+      number: 123,
+      title: "Test Discussion",
+      body: "Test body",
+      url: "https://github.com/testowner/testrepo/discussions/123",
+      labels: {
+        nodes: [{ id: "L_kwDOABCD001", name: "old-label" }],
+      },
+    };
+
+    const mockLabels = [
+      { id: "L_kwDOABCD002", name: "bug" },
+      { id: "L_kwDOABCD003", name: "enhancement" },
+    ];
+
+    // Mock the first query to get discussion with labels
+    mockGithub.graphql.mockResolvedValueOnce({
+      repository: {
+        discussion: mockDiscussion,
+      },
+    });
+
+    // Mock the repository labels query
+    mockGithub.graphql.mockResolvedValueOnce({
+      repository: {
+        id: "R_kwDOABCD",
+        labels: {
+          nodes: mockLabels,
+        },
+      },
+    });
+
+    // Mock remove labels mutation
+    mockGithub.graphql.mockResolvedValueOnce({
+      removeLabelsFromLabelable: {
+        clientMutationId: null,
+      },
+    });
+
+    // Mock add labels mutation
+    mockGithub.graphql.mockResolvedValueOnce({
+      addLabelsToLabelable: {
+        clientMutationId: null,
+      },
+    });
+
+    // Mock the final query to get updated discussion
+    mockGithub.graphql.mockResolvedValueOnce({
+      repository: {
+        discussion: {
+          ...mockDiscussion,
+          labels: {
+            nodes: mockLabels,
+          },
+        },
+      },
+    });
+
+    await eval(`(async () => { ${updateDiscussionScript} })()`);
+
+    expect(mockGithub.graphql).toHaveBeenCalledTimes(5);
+    expect(mockCore.setOutput).toHaveBeenCalledWith("discussion_number", 123);
+    expect(mockCore.setOutput).toHaveBeenCalledWith("discussion_url", mockDiscussion.url);
+  });
+
+  it("should update both title and labels successfully", async () => {
+    setAgentOutput({
+      items: [
+        {
+          type: "update_discussion",
+          title: "New title",
+          labels: ["question"],
+        },
+      ],
+    });
+    process.env.GH_AW_UPDATE_TITLE = "true";
+    process.env.GH_AW_UPDATE_LABELS = "true";
+    global.context.eventName = "discussion";
+
+    const mockDiscussion = {
+      id: "D_kwDOABCD123",
+      number: 123,
+      title: "Old title",
+      body: "Old body",
+      url: "https://github.com/testowner/testrepo/discussions/123",
+      labels: {
+        nodes: [],
+      },
+    };
+
+    const mockLabels = [{ id: "L_kwDOABCD004", name: "question" }];
+
+    // Mock the first query to get discussion
+    mockGithub.graphql.mockResolvedValueOnce({
+      repository: {
+        discussion: mockDiscussion,
+      },
+    });
+
+    // Mock the title update mutation
+    mockGithub.graphql.mockResolvedValueOnce({
+      updateDiscussion: {
+        discussion: {
+          ...mockDiscussion,
+          title: "New title",
+        },
+      },
+    });
+
+    // Mock the repository labels query
+    mockGithub.graphql.mockResolvedValueOnce({
+      repository: {
+        id: "R_kwDOABCD",
+        labels: {
+          nodes: mockLabels,
+        },
+      },
+    });
+
+    // Mock add labels mutation (no need to remove since there are no existing labels)
+    mockGithub.graphql.mockResolvedValueOnce({
+      addLabelsToLabelable: {
+        clientMutationId: null,
+      },
+    });
+
+    // Mock the final query to get updated discussion
+    mockGithub.graphql.mockResolvedValueOnce({
+      repository: {
+        discussion: {
+          ...mockDiscussion,
+          title: "New title",
+          labels: {
+            nodes: mockLabels,
+          },
+        },
+      },
+    });
+
+    await eval(`(async () => { ${updateDiscussionScript} })()`);
+
+    expect(mockGithub.graphql).toHaveBeenCalledTimes(5);
+  });
 });
diff --git a/pkg/workflow/js/update_runner.cjs b/pkg/workflow/js/update_runner.cjs
index ba20cfa0100..b055b9f2bc2 100644
--- a/pkg/workflow/js/update_runner.cjs
+++ b/pkg/workflow/js/update_runner.cjs
@@ -82,11 +82,12 @@ function resolveTargetNumber(params) {
  * @param {boolean} params.canUpdateStatus - Whether status updates are allowed
  * @param {boolean} params.canUpdateTitle - Whether title updates are allowed
  * @param {boolean} params.canUpdateBody - Whether body updates are allowed
+ * @param {boolean} [params.canUpdateLabels] - Whether label updates are allowed
  * @param {boolean} params.supportsStatus - Whether this type supports status
  * @returns {{hasUpdates: boolean, updateData: any, logMessages: string[]}}
  */
 function buildUpdateData(params) {
-  const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, supportsStatus } = params;
+  const { item, canUpdateStatus, canUpdateTitle, canUpdateBody, canUpdateLabels, supportsStatus } = params;
 
   /** @type {any} */
   const updateData = {};
@@ -136,6 +137,17 @@ function buildUpdateData(params) {
     }
   }
 
+  // Handle labels update
+  if (canUpdateLabels && item.labels !== undefined) {
+    if (Array.isArray(item.labels)) {
+      updateData.labels = item.labels;
+      hasUpdates = true;
+      logMessages.push(`Will update labels to: ${item.labels.join(", ")}`);
+    } else {
+      logMessages.push("Invalid labels value: must be an array");
+    }
+  }
+
   return { hasUpdates, updateData, logMessages };
 }
 
@@ -180,12 +192,13 @@ async function runUpdateWorkflow(config) {
   const canUpdateStatus = process.env.GH_AW_UPDATE_STATUS === "true";
   const canUpdateTitle = process.env.GH_AW_UPDATE_TITLE === "true";
   const canUpdateBody = process.env.GH_AW_UPDATE_BODY === "true";
+  const canUpdateLabels = process.env.GH_AW_UPDATE_LABELS === "true";
 
   core.info(`Update target configuration: ${updateTarget}`);
   if (supportsStatus) {
-    core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+    core.info(`Can update status: ${canUpdateStatus}, title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
   } else {
-    core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}`);
+    core.info(`Can update title: ${canUpdateTitle}, body: ${canUpdateBody}, labels: ${canUpdateLabels}`);
   }
 
   // Check context validity
@@ -229,6 +242,7 @@ async function runUpdateWorkflow(config) {
       canUpdateStatus,
       canUpdateTitle,
       canUpdateBody,
+      canUpdateLabels,
       supportsStatus,
     });
 
diff --git a/pkg/workflow/safe_outputs_config.go b/pkg/workflow/safe_outputs_config.go
index f73d478bd5c..3e05640523d 100644
--- a/pkg/workflow/safe_outputs_config.go
+++ b/pkg/workflow/safe_outputs_config.go
@@ -861,6 +861,9 @@ func generateSafeOutputsConfig(data *WorkflowData) string {
 				maxValue = data.SafeOutputs.UpdateDiscussions.Max
 			}
 			updateDiscussionConfig["max"] = maxValue
+			if len(data.SafeOutputs.UpdateDiscussions.AllowedLabels) > 0 {
+				updateDiscussionConfig["allowed_labels"] = data.SafeOutputs.UpdateDiscussions.AllowedLabels
+			}
 			safeOutputsConfig["update_discussion"] = updateDiscussionConfig
 		}
 		if data.SafeOutputs.UpdatePullRequests != nil {
diff --git a/pkg/workflow/update_discussion.go b/pkg/workflow/update_discussion.go
index 926bcd65ebf..14c9775eff2 100644
--- a/pkg/workflow/update_discussion.go
+++ b/pkg/workflow/update_discussion.go
@@ -9,8 +9,10 @@ var updateDiscussionLog = logger.New("workflow:update_discussion")
 // UpdateDiscussionsConfig holds configuration for updating GitHub discussions from agent output
 type UpdateDiscussionsConfig struct {
 	UpdateEntityConfig `yaml:",inline"`
-	Title              *bool `yaml:"title,omitempty"` // Allow updating discussion title - presence indicates field can be updated
-	Body               *bool `yaml:"body,omitempty"`  // Allow updating discussion body - presence indicates field can be updated
+	Title              *bool    `yaml:"title,omitempty"`          // Allow updating discussion title - presence indicates field can be updated
+	Body               *bool    `yaml:"body,omitempty"`           // Allow updating discussion body - presence indicates field can be updated
+	Labels             *bool    `yaml:"labels,omitempty"`         // Allow updating discussion labels - presence indicates field can be updated
+	AllowedLabels      []string `yaml:"allowed-labels,omitempty"` // Optional list of allowed labels. If omitted, any labels are allowed (including creating new ones).
 }
 
 // parseUpdateDiscussionsConfig handles update-discussion configuration
@@ -47,6 +49,21 @@ func (c *Compiler) parseUpdateDiscussionsConfig(outputMap map[string]any) *Updat
 			if _, exists := configMap["body"]; exists {
 				updateDiscussionsConfig.Body = new(bool)
 			}
+
+			// Parse labels - presence of the key (even if nil/empty) indicates field can be updated
+			if _, exists := configMap["labels"]; exists {
+				updateDiscussionsConfig.Labels = new(bool)
+			}
+
+			// Parse allowed-labels using shared helper
+			updateDiscussionsConfig.AllowedLabels = parseAllowedLabelsFromConfig(configMap)
+			if len(updateDiscussionsConfig.AllowedLabels) > 0 {
+				updateDiscussionLog.Printf("Allowed labels configured: %v", updateDiscussionsConfig.AllowedLabels)
+				// If allowed-labels is specified, implicitly enable labels
+				if updateDiscussionsConfig.Labels == nil {
+					updateDiscussionsConfig.Labels = new(bool)
+				}
+			}
 		}
 	}
 
diff --git a/pkg/workflow/update_discussion_test.go b/pkg/workflow/update_discussion_test.go
new file mode 100644
index 00000000000..8dbfa941c11
--- /dev/null
+++ b/pkg/workflow/update_discussion_test.go
@@ -0,0 +1,349 @@
+package workflow
+
+import (
+	"os"
+	"path/filepath"
+	"testing"
+
+	"github.com/githubnext/gh-aw/pkg/testutil"
+)
+
+func TestUpdateDiscussionConfigParsing(t *testing.T) {
+	// Create temporary directory for test files
+	tmpDir := testutil.TempDir(t, "output-update-discussion-test")
+
+	// Test case with basic update-discussion configuration
+	testContent := `---
+on:
+  discussion:
+    types: [created]
+permissions:
+  contents: read
+  discussions: write
+engine: claude
+strict: false
+safe-outputs:
+  update-discussion:
+---
+
+# Test Update Discussion Configuration
+
+This workflow tests the update-discussion configuration parsing.
+`
+
+	testFile := filepath.Join(tmpDir, "test-update-discussion.md")
+	if err := os.WriteFile(testFile, []byte(testContent), 0644); err != nil {
+		t.Fatal(err)
+	}
+
+	compiler := NewCompiler(false, "", "test")
+
+	// Parse the workflow data
+	workflowData, err := compiler.ParseWorkflowFile(testFile)
+	if err != nil {
+		t.Fatalf("Unexpected error parsing workflow with update-discussion config: %v", err)
+	}
+
+	// Verify output configuration is parsed correctly
+	if workflowData.SafeOutputs == nil {
+		t.Fatal("Expected output configuration to be parsed")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions == nil {
+		t.Fatal("Expected update-discussion configuration to be parsed")
+	}
+
+	// Check defaults
+	if workflowData.SafeOutputs.UpdateDiscussions.Max != 1 {
+		t.Fatalf("Expected max to be 1, got %d", workflowData.SafeOutputs.UpdateDiscussions.Max)
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Target != "" {
+		t.Fatalf("Expected target to be empty (default), got '%s'", workflowData.SafeOutputs.UpdateDiscussions.Target)
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Title != nil {
+		t.Fatal("Expected title to be nil by default (not updatable)")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Body != nil {
+		t.Fatal("Expected body to be nil by default (not updatable)")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Labels != nil {
+		t.Fatal("Expected labels to be nil by default (not updatable)")
+	}
+
+	if len(workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels) != 0 {
+		t.Fatal("Expected allowed-labels to be empty by default")
+	}
+}
+
+func TestUpdateDiscussionConfigWithAllOptions(t *testing.T) {
+	// Create temporary directory for test files
+	tmpDir := testutil.TempDir(t, "output-update-discussion-all-test")
+
+	// Test case with all options configured
+	testContent := `---
+on:
+  discussion:
+    types: [created]
+permissions:
+  contents: read
+  discussions: write
+engine: claude
+strict: false
+safe-outputs:
+  update-discussion:
+    max: 3
+    target: "*"
+    title:
+    body:
+    labels:
+    allowed-labels: [bug, enhancement, documentation]
+---
+
+# Test Update Discussion Full Configuration
+
+This workflow tests the update-discussion configuration with all options.
+`
+
+	testFile := filepath.Join(tmpDir, "test-update-discussion-full.md")
+	if err := os.WriteFile(testFile, []byte(testContent), 0644); err != nil {
+		t.Fatal(err)
+	}
+
+	compiler := NewCompiler(false, "", "test")
+
+	// Parse the workflow data
+	workflowData, err := compiler.ParseWorkflowFile(testFile)
+	if err != nil {
+		t.Fatalf("Unexpected error parsing workflow with full update-discussion config: %v", err)
+	}
+
+	// Verify output configuration is parsed correctly
+	if workflowData.SafeOutputs == nil {
+		t.Fatal("Expected output configuration to be parsed")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions == nil {
+		t.Fatal("Expected update-discussion configuration to be parsed")
+	}
+
+	// Check all options
+	if workflowData.SafeOutputs.UpdateDiscussions.Max != 3 {
+		t.Fatalf("Expected max to be 3, got %d", workflowData.SafeOutputs.UpdateDiscussions.Max)
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Target != "*" {
+		t.Fatalf("Expected target to be '*', got '%s'", workflowData.SafeOutputs.UpdateDiscussions.Target)
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Title == nil {
+		t.Fatal("Expected title to be non-nil (updatable)")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Body == nil {
+		t.Fatal("Expected body to be non-nil (updatable)")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Labels == nil {
+		t.Fatal("Expected labels to be non-nil (updatable)")
+	}
+
+	// Check allowed-labels
+	expectedAllowedLabels := []string{"bug", "enhancement", "documentation"}
+	if len(workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels) != len(expectedAllowedLabels) {
+		t.Fatalf("Expected %d allowed-labels, got %d", len(expectedAllowedLabels), len(workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels))
+	}
+
+	for i, expected := range expectedAllowedLabels {
+		if workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels[i] != expected {
+			t.Fatalf("Expected allowed-label[%d] to be '%s', got '%s'", i, expected, workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels[i])
+		}
+	}
+}
+
+func TestUpdateDiscussionConfigTargetParsing(t *testing.T) {
+	// Create temporary directory for test files
+	tmpDir := testutil.TempDir(t, "output-update-discussion-target-test")
+
+	// Test case with specific target number
+	testContent := `---
+on:
+  discussion:
+    types: [created]
+permissions:
+  contents: read
+  discussions: write
+engine: claude
+strict: false
+safe-outputs:
+  update-discussion:
+    target: "123"
+    title:
+---
+
+# Test Update Discussion Target Configuration
+
+This workflow tests the update-discussion target configuration parsing.
+`
+
+	testFile := filepath.Join(tmpDir, "test-update-discussion-target.md")
+	if err := os.WriteFile(testFile, []byte(testContent), 0644); err != nil {
+		t.Fatal(err)
+	}
+
+	compiler := NewCompiler(false, "", "test")
+
+	// Parse the workflow data
+	workflowData, err := compiler.ParseWorkflowFile(testFile)
+	if err != nil {
+		t.Fatalf("Unexpected error parsing workflow with target update-discussion config: %v", err)
+	}
+
+	// Verify output configuration is parsed correctly
+	if workflowData.SafeOutputs == nil {
+		t.Fatal("Expected output configuration to be parsed")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions == nil {
+		t.Fatal("Expected update-discussion configuration to be parsed")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Target != "123" {
+		t.Fatalf("Expected target to be '123', got '%s'", workflowData.SafeOutputs.UpdateDiscussions.Target)
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Title == nil {
+		t.Fatal("Expected title to be non-nil (updatable)")
+	}
+}
+
+func TestUpdateDiscussionConfigLabelsOnly(t *testing.T) {
+	// Create temporary directory for test files
+	tmpDir := testutil.TempDir(t, "output-update-discussion-labels-test")
+
+	// Test case with only labels configuration
+	testContent := `---
+on:
+  discussion:
+    types: [created]
+permissions:
+  contents: read
+  discussions: write
+engine: claude
+strict: false
+safe-outputs:
+  update-discussion:
+    labels:
+    allowed-labels: [question, idea]
+---
+
+# Test Update Discussion Labels Configuration
+
+This workflow tests the update-discussion labels configuration.
+`
+
+	testFile := filepath.Join(tmpDir, "test-update-discussion-labels.md")
+	if err := os.WriteFile(testFile, []byte(testContent), 0644); err != nil {
+		t.Fatal(err)
+	}
+
+	compiler := NewCompiler(false, "", "test")
+
+	// Parse the workflow data
+	workflowData, err := compiler.ParseWorkflowFile(testFile)
+	if err != nil {
+		t.Fatalf("Unexpected error parsing workflow with labels update-discussion config: %v", err)
+	}
+
+	// Verify output configuration is parsed correctly
+	if workflowData.SafeOutputs == nil {
+		t.Fatal("Expected output configuration to be parsed")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions == nil {
+		t.Fatal("Expected update-discussion configuration to be parsed")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions.Labels == nil {
+		t.Fatal("Expected labels to be non-nil (updatable)")
+	}
+
+	// Check allowed-labels
+	expectedAllowedLabels := []string{"question", "idea"}
+	if len(workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels) != len(expectedAllowedLabels) {
+		t.Fatalf("Expected %d allowed-labels, got %d", len(expectedAllowedLabels), len(workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels))
+	}
+
+	for i, expected := range expectedAllowedLabels {
+		if workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels[i] != expected {
+			t.Fatalf("Expected allowed-label[%d] to be '%s', got '%s'", i, expected, workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels[i])
+		}
+	}
+}
+
+func TestUpdateDiscussionConfigAllowedLabelsImplicitlyEnablesLabels(t *testing.T) {
+	// Create temporary directory for test files
+	tmpDir := testutil.TempDir(t, "output-update-discussion-implicit-labels-test")
+
+	// Test case with only allowed-labels (no explicit labels:)
+	testContent := `---
+on:
+  discussion:
+    types: [created]
+permissions:
+  contents: read
+  discussions: write
+engine: claude
+strict: false
+safe-outputs:
+  update-discussion:
+    allowed-labels: [bug, enhancement]
+---
+
+# Test Update Discussion Implicit Labels Configuration
+
+This workflow tests that allowed-labels implicitly enables labels.
+`
+
+	testFile := filepath.Join(tmpDir, "test-update-discussion-implicit-labels.md")
+	if err := os.WriteFile(testFile, []byte(testContent), 0644); err != nil {
+		t.Fatal(err)
+	}
+
+	compiler := NewCompiler(false, "", "test")
+
+	// Parse the workflow data
+	workflowData, err := compiler.ParseWorkflowFile(testFile)
+	if err != nil {
+		t.Fatalf("Unexpected error parsing workflow with implicit labels config: %v", err)
+	}
+
+	// Verify output configuration is parsed correctly
+	if workflowData.SafeOutputs == nil {
+		t.Fatal("Expected output configuration to be parsed")
+	}
+
+	if workflowData.SafeOutputs.UpdateDiscussions == nil {
+		t.Fatal("Expected update-discussion configuration to be parsed")
+	}
+
+	// The key test: labels should be implicitly enabled when allowed-labels is present
+	if workflowData.SafeOutputs.UpdateDiscussions.Labels == nil {
+		t.Fatal("Expected labels to be implicitly enabled when allowed-labels is present")
+	}
+
+	// Check allowed-labels
+	expectedAllowedLabels := []string{"bug", "enhancement"}
+	if len(workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels) != len(expectedAllowedLabels) {
+		t.Fatalf("Expected %d allowed-labels, got %d", len(expectedAllowedLabels), len(workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels))
+	}
+
+	for i, expected := range expectedAllowedLabels {
+		if workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels[i] != expected {
+			t.Fatalf("Expected allowed-label[%d] to be '%s', got '%s'", i, expected, workflowData.SafeOutputs.UpdateDiscussions.AllowedLabels[i])
+		}
+	}
+}
diff --git a/schemas/agent-output.json b/schemas/agent-output.json
index f4a9df676c6..0dc62831291 100644
--- a/schemas/agent-output.json
+++ b/schemas/agent-output.json
@@ -330,7 +330,7 @@
     },
     "UpdateDiscussionOutput": {
       "title": "Update Discussion Output",
-      "description": "Output for updating an existing GitHub discussion's title and/or body. Note: The JavaScript validation ensures at least one of title or body is provided.",
+      "description": "Output for updating an existing GitHub discussion's title, body, and/or labels. Note: The JavaScript validation ensures at least one of title, body, or labels is provided.",
       "type": "object",
       "properties": {
         "type": {
@@ -344,6 +344,13 @@
           "type": "string",
           "description": "New discussion body to replace the existing content"
         },
+        "labels": {
+          "type": "array",
+          "items": {
+            "type": "string"
+          },
+          "description": "Array of label names to set on the discussion (replaces existing labels)"
+        },
         "discussion_number": {
           "oneOf": [
             {"type": "number"},