diff --git a/apps/web/core/components/labels/create-update-label-inline.tsx b/apps/web/core/components/labels/create-update-label-inline.tsx
index e391ac4ea..8f5683711 100644
--- a/apps/web/core/components/labels/create-update-label-inline.tsx
+++ b/apps/web/core/components/labels/create-update-label-inline.tsx
@@ -13,6 +13,11 @@ import type { IIssueLabel } from "@plane/types";
 import { Input } from "@plane/ui";
 import { captureError, captureSuccess } from "@/helpers/event-tracker.helper";
 
+// error codes
+const errorCodes = {
+  LABEL_NAME_ALREADY_EXISTS: "LABEL_NAME_ALREADY_EXISTS",
+};
+
 export type TLabelOperationsCallbacks = {
   createLabel: (data: Partial<IIssueLabel>) => Promise<IIssueLabel>;
   updateLabel: (labelId: string, data: Partial<IIssueLabel>) => Promise<IIssueLabel>;
@@ -59,6 +64,23 @@ export const CreateUpdateLabelInline = observer(
       if (onClose) onClose();
     };
 
+    // eslint-disable-next-line @typescript-eslint/no-explicit-any
+    const getErrorMessage = (error: any, operation: "create" | "update"): string => {
+      const errorData = error ?? {};
+
+      const labelError = errorData.name?.includes(errorCodes.LABEL_NAME_ALREADY_EXISTS);
+      if (labelError) {
+        return t("label.create.already_exists");
+      }
+
+      // Fallback to general error messages
+      if (operation === "create") {
+        return errorData?.detail ?? errorData?.error ?? t("common.something_went_wrong");
+      }
+
+      return errorData?.error ?? t("project_settings.labels.toast.error");
+    };
+
     const handleLabelCreate: SubmitHandler<IIssueLabel> = async (formData) => {
       if (isSubmitting) return;
 
@@ -83,10 +105,12 @@ export const CreateUpdateLabelInline = observer(
             },
             error,
           });
+
+          const errorMessage = getErrorMessage(error, "create");
           setToast({
             title: "Error!",
             type: TOAST_TYPE.ERROR,
-            message: error?.detail ?? error.error ?? t("common.something_went_wrong"),
+            message: errorMessage,
           });
           reset(formData);
         });
@@ -117,10 +141,11 @@ export const CreateUpdateLabelInline = observer(
             },
             error,
           });
+          const errorMessage = getErrorMessage(error, "update");
           setToast({
             title: "Oops!",
             type: TOAST_TYPE.ERROR,
-            message: error?.error ?? t("project_settings.labels.toast.error"),
+            message: errorMessage,
           });
           reset(formData);
         });