diff --git a/app/models/project.rb b/app/models/project.rb
index e55a57e46ef..f6218519533 100644
--- a/app/models/project.rb
+++ b/app/models/project.rb
@@ -1068,7 +1068,7 @@ class Project < ActiveRecord::Base
   # rubocop: disable CodeReuse/ServiceClass
   def create_labels
     Label.templates.each do |label|
-      params = label.attributes.except('id', 'template', 'created_at', 'updated_at')
+      params = label.attributes.except('id', 'template', 'created_at', 'updated_at', 'type')
       Labels::FindOrCreateService.new(nil, self, params).execute(skip_authorization: true)
     end
   end
diff --git a/changelogs/unreleased/issue_55744.yml b/changelogs/unreleased/issue_55744.yml
new file mode 100644
index 00000000000..6a643732b18
--- /dev/null
+++ b/changelogs/unreleased/issue_55744.yml
@@ -0,0 +1,5 @@
+---
+title: Fix template labels not being created on new projects
+merge_request: 24803
+author:
+type: fixed
diff --git a/db/post_migrate/20190131122559_fix_null_type_labels.rb b/db/post_migrate/20190131122559_fix_null_type_labels.rb
new file mode 100644
index 00000000000..83bb613990c
--- /dev/null
+++ b/db/post_migrate/20190131122559_fix_null_type_labels.rb
@@ -0,0 +1,23 @@
+# frozen_string_literal: true
+
+class FixNullTypeLabels < ActiveRecord::Migration[5.0]
+  include Gitlab::Database::MigrationHelpers
+
+  DOWNTIME = false
+
+  disable_ddl_transaction!
+
+  def up
+    update_column_in_batches(:labels, :type, 'ProjectLabel') do |table, query|
+      query.where(
+        table[:project_id].not_eq(nil)
+          .and(table[:template].eq(false))
+          .and(table[:type].eq(nil))
+      )
+    end
+  end
+
+  def down
+    # no action
+  end
+end
diff --git a/db/schema.rb b/db/schema.rb
index 7c1733becb9..4cc870ba6c8 100644
--- a/db/schema.rb
+++ b/db/schema.rb
@@ -10,7 +10,7 @@
 #
 # It's strongly recommended that you check this file into your version control system.
 
-ActiveRecord::Schema.define(version: 20190124200344) do
+ActiveRecord::Schema.define(version: 20190131122559) do
 
   # These are extensions that must be enabled in order to support this database
   enable_extension "plpgsql"
diff --git a/spec/migrations/fix_null_type_labels_spec.rb b/spec/migrations/fix_null_type_labels_spec.rb
new file mode 100644
index 00000000000..462ae9b913f
--- /dev/null
+++ b/spec/migrations/fix_null_type_labels_spec.rb
@@ -0,0 +1,36 @@
+# frozen_string_literal: true
+
+require 'spec_helper'
+require Rails.root.join('db', 'post_migrate', '20190131122559_fix_null_type_labels')
+
+describe FixNullTypeLabels, :migration do
+  let(:migration) { described_class.new }
+  let(:projects) { table(:projects) }
+  let(:namespaces) { table(:namespaces) }
+  let(:labels) { table(:labels) }
+
+  before do
+    group = namespaces.create(name: 'labels-test-project', path: 'labels-test-project', type: 'Group')
+    project = projects.create!(namespace_id: group.id, name: 'labels-test-group', path: 'labels-test-group')
+
+    @template_label = labels.create(title: 'template', template: true)
+    @project_label = labels.create(title: 'project label', project_id: project.id, type: 'ProjectLabel')
+    @group_label = labels.create(title: 'group_label', group_id: group.id, type: 'GroupLabel')
+    @broken_label_1 = labels.create(title: 'broken 1', project_id: project.id)
+    @broken_label_2 = labels.create(title: 'broken 2', project_id: project.id)
+  end
+
+  describe '#up' do
+    it 'fix labels with type missing' do
+      migration.up
+
+      # Labels that requires type change
+      expect(@broken_label_1.reload.type).to eq('ProjectLabel')
+      expect(@broken_label_2.reload.type).to eq('ProjectLabel')
+      # Labels out of scope
+      expect(@template_label.reload.type).to be_nil
+      expect(@project_label.reload.type).to eq('ProjectLabel')
+      expect(@group_label.reload.type).to eq('GroupLabel')
+    end
+  end
+end
diff --git a/spec/services/projects/create_service_spec.rb b/spec/services/projects/create_service_spec.rb
index f71e2b4bc24..54ce33dd103 100644
--- a/spec/services/projects/create_service_spec.rb
+++ b/spec/services/projects/create_service_spec.rb
@@ -16,7 +16,11 @@ describe Projects::CreateService, '#execute' do
     Label.create(title: "bug", template: true)
     project = create_project(user, opts)
 
-    expect(project.labels).not_to be_empty
+    created_label = project.reload.labels.last
+
+    expect(created_label.type).to eq('ProjectLabel')
+    expect(created_label.project_id).to eq(project.id)
+    expect(created_label.title).to eq('bug')
   end
 
   context 'user namespace' do