diff --git a/app/models/group.rb b/app/models/group.rb
index a2f88cca828..00a595d2705 100644
--- a/app/models/group.rb
+++ b/app/models/group.rb
@@ -19,6 +19,7 @@ class Group < Namespace
   has_many :project_group_links, dependent: :destroy
   has_many :shared_projects, through: :project_group_links, source: :project
   has_many :notification_settings, dependent: :destroy, as: :source
+  has_many :labels, class_name: 'GroupLabel'
 
   validate :avatar_type, if: ->(user) { user.avatar.present? && user.avatar_changed? }
   validate :visibility_level_allowed_by_projects
diff --git a/app/models/group_label.rb b/app/models/group_label.rb
new file mode 100644
index 00000000000..a854d075820
--- /dev/null
+++ b/app/models/group_label.rb
@@ -0,0 +1,5 @@
+class GroupLabel < Label
+  belongs_to :group
+
+  validates :group, presence: true
+end
diff --git a/db/migrate/20160919144305_add_type_to_labels.rb b/db/migrate/20160919144305_add_type_to_labels.rb
new file mode 100644
index 00000000000..43aac7846d3
--- /dev/null
+++ b/db/migrate/20160919144305_add_type_to_labels.rb
@@ -0,0 +1,9 @@
+class AddTypeToLabels < ActiveRecord::Migration
+  include Gitlab::Database::MigrationHelpers
+
+  DOWNTIME = false
+
+  def change
+    add_column :labels, :type, :string
+  end
+end
diff --git a/db/migrate/20160919145149_add_group_id_to_labels.rb b/db/migrate/20160919145149_add_group_id_to_labels.rb
new file mode 100644
index 00000000000..05e21af0584
--- /dev/null
+++ b/db/migrate/20160919145149_add_group_id_to_labels.rb
@@ -0,0 +1,13 @@
+class AddGroupIdToLabels < ActiveRecord::Migration
+  include Gitlab::Database::MigrationHelpers
+
+  DOWNTIME = false
+
+  disable_ddl_transaction!
+
+  def change
+    add_column :labels, :group_id, :integer
+    add_foreign_key :labels, :namespaces, column: :group_id, on_delete: :cascade
+    add_concurrent_index :labels, :group_id
+  end
+end
diff --git a/db/schema.rb b/db/schema.rb
index 5ce855fe08f..37f0be0e834 100644
--- a/db/schema.rb
+++ b/db/schema.rb
@@ -529,8 +529,11 @@ ActiveRecord::Schema.define(version: 20161017095000) do
     t.string "description"
     t.integer "priority"
     t.text "description_html"
+    t.string "type"
+    t.integer "group_id"
   end
 
+  add_index "labels", ["group_id"], name: "index_labels_on_group_id", using: :btree
   add_index "labels", ["priority"], name: "index_labels_on_priority", using: :btree
   add_index "labels", ["project_id"], name: "index_labels_on_project_id", using: :btree
   add_index "labels", ["title"], name: "index_labels_on_title", using: :btree
@@ -1213,6 +1216,7 @@ ActiveRecord::Schema.define(version: 20161017095000) do
 
   add_foreign_key "boards", "projects"
   add_foreign_key "issue_metrics", "issues", on_delete: :cascade
+  add_foreign_key "labels", "namespaces", column: "group_id", on_delete: :cascade
   add_foreign_key "lists", "boards"
   add_foreign_key "lists", "labels"
   add_foreign_key "merge_request_metrics", "merge_requests", on_delete: :cascade
diff --git a/spec/models/group_label_spec.rb b/spec/models/group_label_spec.rb
new file mode 100644
index 00000000000..a82d23bcc0b
--- /dev/null
+++ b/spec/models/group_label_spec.rb
@@ -0,0 +1,11 @@
+require 'spec_helper'
+
+describe GroupLabel, models: true do
+  describe 'relationships' do
+    it { is_expected.to belong_to(:group) }
+  end
+
+  describe 'validations' do
+    it { is_expected.to validate_presence_of(:group) }
+  end
+end
diff --git a/spec/models/group_spec.rb b/spec/models/group_spec.rb
index 0b3ef9b98fd..ac862055ebc 100644
--- a/spec/models/group_spec.rb
+++ b/spec/models/group_spec.rb
@@ -12,6 +12,7 @@ describe Group, models: true do
     it { is_expected.to have_many(:project_group_links).dependent(:destroy) }
     it { is_expected.to have_many(:shared_projects).through(:project_group_links) }
     it { is_expected.to have_many(:notification_settings).dependent(:destroy) }
+    it { is_expected.to have_many(:labels).class_name('GroupLabel') }
 
     describe '#members & #requesters' do
       let(:requester) { create(:user) }