diff --git a/builder/dockerfile/evaluator.go b/builder/dockerfile/evaluator.go
index d0f9a7ca55..08c05daf8f 100644
--- a/builder/dockerfile/evaluator.go
+++ b/builder/dockerfile/evaluator.go
@@ -129,47 +129,18 @@ func (b *Builder) dispatch(stepN int, stepTotal int, ast *parser.Node) error {
 
 	}
 
-	// count the number of nodes that we are going to traverse first
-	// so we can pre-create the argument and message array. This speeds up the
-	// allocation of those list a lot when they have a lot of arguments
-	cursor := ast
-	var n int
-	for cursor.Next != nil {
-		cursor = cursor.Next
-		n++
-	}
-	msgList := make([]string, n)
-
-	var i int
+	msgList := initMsgList(ast)
 	// Append build args to runConfig environment variables
 	envs := append(b.runConfig.Env, b.buildArgsWithoutConfigEnv()...)
 
-	for ast.Next != nil {
+	for i := 0; ast.Next != nil; i++ {
 		ast = ast.Next
-		var str string
-		str = ast.Value
-		if replaceEnvAllowed[cmd] {
-			var err error
-			var words []string
-
-			if allowWordExpansion[cmd] {
-				words, err = ProcessWords(str, envs, b.directive.EscapeToken)
-				if err != nil {
-					return err
-				}
-				strList = append(strList, words...)
-			} else {
-				str, err = ProcessWord(str, envs, b.directive.EscapeToken)
-				if err != nil {
-					return err
-				}
-				strList = append(strList, str)
-			}
-		} else {
-			strList = append(strList, str)
+		words, err := b.evaluateEnv(cmd, ast.Value, envs)
+		if err != nil {
+			return err
 		}
+		strList = append(strList, words...)
 		msgList[i] = ast.Value
-		i++
 	}
 
 	msg += " " + strings.Join(msgList, " ")
@@ -186,6 +157,29 @@ func (b *Builder) dispatch(stepN int, stepTotal int, ast *parser.Node) error {
 	return fmt.Errorf("Unknown instruction: %s", upperCasedCmd)
 }
 
+// count the number of nodes that we are going to traverse first
+// allocation of those list a lot when they have a lot of arguments
+func initMsgList(cursor *parser.Node) []string {
+	var n int
+	for ; cursor.Next != nil; n++ {
+		cursor = cursor.Next
+	}
+	return make([]string, n)
+}
+
+func (b *Builder) evaluateEnv(cmd string, str string, envs []string) ([]string, error) {
+	if !replaceEnvAllowed[cmd] {
+		return []string{str}, nil
+	}
+	var processFunc func(string, []string, rune) ([]string, error)
+	if allowWordExpansion[cmd] {
+		processFunc = ProcessWords
+	} else {
+		processFunc = ProcessWord
+	}
+	return processFunc(str, envs, b.directive.EscapeToken)
+}
+
 // buildArgsWithoutConfigEnv returns a list of key=value pairs for all the build
 // args that are not overriden by runConfig environment variables.
 func (b *Builder) buildArgsWithoutConfigEnv() []string {
diff --git a/builder/dockerfile/parser/line_parsers.go b/builder/dockerfile/parser/line_parsers.go
index 4efae66823..0334834e62 100644
--- a/builder/dockerfile/parser/line_parsers.go
+++ b/builder/dockerfile/parser/line_parsers.go
@@ -220,7 +220,9 @@ func NodeFromLabels(labels map[string]string) *Node {
 	for _, key := range keys {
 		value := labels[key]
 		labelPairs = append(labelPairs, fmt.Sprintf("%q='%s'", key, value))
-		node := newKeyValueNode(key, value)
+		// Value must be single quoted to prevent env variable expansion
+		// See https://github.com/docker/docker/issues/26027
+		node := newKeyValueNode(key, "'"+value+"'")
 		rootNode, prevNode = appendKeyValueNode(node, rootNode, prevNode)
 	}
 
diff --git a/builder/dockerfile/parser/line_parsers_test.go b/builder/dockerfile/parser/line_parsers_test.go
index 5f762de422..30b6bdd824 100644
--- a/builder/dockerfile/parser/line_parsers_test.go
+++ b/builder/dockerfile/parser/line_parsers_test.go
@@ -40,19 +40,19 @@ func TestParseNameValNewFormat(t *testing.T) {
 func TestNodeFromLabels(t *testing.T) {
 	labels := map[string]string{
 		"foo":   "bar",
-		"weird": "'first second'",
+		"weird": "first' second",
 	}
 	expected := &Node{
 		Value:    "label",
-		Original: `LABEL "foo"='bar' "weird"=''first second''`,
+		Original: `LABEL "foo"='bar' "weird"='first' second'`,
 		Next: &Node{
 			Value: "foo",
 			Next: &Node{
-				Value: "bar",
+				Value: "'bar'",
 				Next: &Node{
 					Value: "weird",
 					Next: &Node{
-						Value: "'first second'",
+						Value: "'first' second'",
 					},
 				},
 			},
diff --git a/builder/dockerfile/shell_parser.go b/builder/dockerfile/shell_parser.go
index 189afd1fdb..2a8b441134 100644
--- a/builder/dockerfile/shell_parser.go
+++ b/builder/dockerfile/shell_parser.go
@@ -24,16 +24,9 @@ type shellWord struct {
 
 // ProcessWord will use the 'env' list of environment variables,
 // and replace any env var references in 'word'.
-func ProcessWord(word string, env []string, escapeToken rune) (string, error) {
-	sw := &shellWord{
-		word:        word,
-		envs:        env,
-		pos:         0,
-		escapeToken: escapeToken,
-	}
-	sw.scanner.Init(strings.NewReader(word))
-	word, _, err := sw.process()
-	return word, err
+func ProcessWord(word string, env []string, escapeToken rune) ([]string, error) {
+	word, _, err := process(word, env, escapeToken)
+	return []string{word}, err
 }
 
 // ProcessWords will use the 'env' list of environment variables,
@@ -44,6 +37,11 @@ func ProcessWord(word string, env []string, escapeToken rune) (string, error) {
 // Note, each one is trimmed to remove leading and trailing spaces (unless
 // they are quoted", but ProcessWord retains spaces between words.
 func ProcessWords(word string, env []string, escapeToken rune) ([]string, error) {
+	_, words, err := process(word, env, escapeToken)
+	return words, err
+}
+
+func process(word string, env []string, escapeToken rune) (string, []string, error) {
 	sw := &shellWord{
 		word:        word,
 		envs:        env,
@@ -51,8 +49,7 @@ func ProcessWords(word string, env []string, escapeToken rune) ([]string, error)
 		escapeToken: escapeToken,
 	}
 	sw.scanner.Init(strings.NewReader(word))
-	_, words, err := sw.process()
-	return words, err
+	return sw.process()
 }
 
 func (sw *shellWord) process() (string, []string, error) {
diff --git a/builder/dockerfile/shell_parser_test.go b/builder/dockerfile/shell_parser_test.go
index ca4728d798..0712fde675 100644
--- a/builder/dockerfile/shell_parser_test.go
+++ b/builder/dockerfile/shell_parser_test.go
@@ -6,6 +6,8 @@ import (
 	"runtime"
 	"strings"
 	"testing"
+
+	"github.com/docker/docker/pkg/testutil/assert"
 )
 
 func TestShellParser4EnvVars(t *testing.T) {
@@ -13,9 +15,7 @@ func TestShellParser4EnvVars(t *testing.T) {
 	lineCount := 0
 
 	file, err := os.Open(fn)
-	if err != nil {
-		t.Fatalf("Can't open '%s': %s", err, fn)
-	}
+	assert.NilError(t, err)
 	defer file.Close()
 
 	scanner := bufio.NewScanner(file)
@@ -36,29 +36,25 @@ func TestShellParser4EnvVars(t *testing.T) {
 		}
 
 		words := strings.Split(line, "|")
-		if len(words) != 3 {
-			t.Fatalf("Error in '%s' - should be exactly one | in:%q", fn, line)
-		}
+		assert.Equal(t, len(words), 3)
 
-		words[0] = strings.TrimSpace(words[0])
-		words[1] = strings.TrimSpace(words[1])
-		words[2] = strings.TrimSpace(words[2])
+		platform := strings.TrimSpace(words[0])
+		source := strings.TrimSpace(words[1])
+		expected := strings.TrimSpace(words[2])
 
 		// Key W=Windows; A=All; U=Unix
-		if (words[0] != "W") && (words[0] != "A") && (words[0] != "U") {
-			t.Fatalf("Invalid tag %s at line %d of %s. Must be W, A or U", words[0], lineCount, fn)
+		if platform != "W" && platform != "A" && platform != "U" {
+			t.Fatalf("Invalid tag %s at line %d of %s. Must be W, A or U", platform, lineCount, fn)
 		}
 
-		if ((words[0] == "W" || words[0] == "A") && runtime.GOOS == "windows") ||
-			((words[0] == "U" || words[0] == "A") && runtime.GOOS != "windows") {
-			newWord, err := ProcessWord(words[1], envs, '\\')
-
-			if err != nil {
-				newWord = "error"
-			}
-
-			if newWord != words[2] {
-				t.Fatalf("Error. Src: %s  Calc: %s  Expected: %s at line %d", words[1], newWord, words[2], lineCount)
+		if ((platform == "W" || platform == "A") && runtime.GOOS == "windows") ||
+			((platform == "U" || platform == "A") && runtime.GOOS != "windows") {
+			newWord, err := ProcessWord(source, envs, '\\')
+			if expected == "error" {
+				assert.Error(t, err, "")
+			} else {
+				assert.NilError(t, err)
+				assert.DeepEqual(t, newWord, []string{expected})
 			}
 		}
 	}