diff --git a/google/resource_compute_instance_template.go b/google/resource_compute_instance_template.go
index b33e65f6..b225dca2 100644
--- a/google/resource_compute_instance_template.go
+++ b/google/resource_compute_instance_template.go
@@ -324,6 +324,14 @@ func resourceComputeInstanceTemplate() *schema.Resource {
 				Type:     schema.TypeString,
 				Computed: true,
 			},
+
+			"labels": &schema.Schema{
+				Type:     schema.TypeMap,
+				Optional: true,
+				ForceNew: true,
+				Elem:     &schema.Schema{Type: schema.TypeString},
+				Set:      schema.HashString,
+			},
 		},
 	}
 }
@@ -576,6 +584,9 @@ func resourceComputeInstanceTemplateCreate(d *schema.ResourceData, meta interfac
 	instanceProperties.ServiceAccounts = serviceAccounts
 
 	instanceProperties.Tags = resourceInstanceTags(d)
+	if _, ok := d.GetOk("labels"); ok {
+		instanceProperties.Labels = expandLabels(d)
+	}
 
 	var itName string
 	if v, ok := d.GetOk("name"); ok {
@@ -743,6 +754,9 @@ func resourceComputeInstanceTemplateRead(d *schema.ResourceData, meta interface{
 			return fmt.Errorf("Error setting tags_fingerprint: %s", err)
 		}
 	}
+	if instanceTemplate.Properties.Labels != nil {
+		d.Set("labels", instanceTemplate.Properties.Labels)
+	}
 	if err = d.Set("self_link", instanceTemplate.SelfLink); err != nil {
 		return fmt.Errorf("Error setting self_link: %s", err)
 	}
diff --git a/google/resource_compute_instance_template_test.go b/google/resource_compute_instance_template_test.go
index 58d745f1..79517a05 100644
--- a/google/resource_compute_instance_template_test.go
+++ b/google/resource_compute_instance_template_test.go
@@ -28,6 +28,7 @@ func TestAccComputeInstanceTemplate_basic(t *testing.T) {
 					testAccCheckComputeInstanceTemplateTag(&instanceTemplate, "foo"),
 					testAccCheckComputeInstanceTemplateMetadata(&instanceTemplate, "foo", "bar"),
 					testAccCheckComputeInstanceTemplateDisk(&instanceTemplate, "projects/debian-cloud/global/images/debian-8-jessie-v20160803", true, true),
+					testAccCheckComputeInstanceTemplateContainsLabel(&instanceTemplate, "my_label", "foobar"),
 				),
 			},
 		},
@@ -412,6 +413,19 @@ func testAccCheckComputeInstanceTemplateNetworkIP(n, networkIP string, instanceT
 	}
 }
 
+func testAccCheckComputeInstanceTemplateContainsLabel(instanceTemplate *compute.InstanceTemplate, key string, value string) resource.TestCheckFunc {
+	return func(s *terraform.State) error {
+		v, ok := instanceTemplate.Properties.Labels[key]
+		if !ok {
+			return fmt.Errorf("Expected label with key '%s' not found", key)
+		}
+		if v != value {
+			return fmt.Errorf("Incorrect label value for key '%s': expected '%s' but found '%s'", key, value, v)
+		}
+		return nil
+	}
+}
+
 var testAccComputeInstanceTemplate_basic = fmt.Sprintf(`
 resource "google_compute_instance_template" "foobar" {
 	name = "instancet-test-%s"
@@ -441,6 +455,10 @@ resource "google_compute_instance_template" "foobar" {
 	service_account {
 		scopes = ["userinfo-email", "compute-ro", "storage-ro"]
 	}
+
+    labels {
+        my_label = "foobar"
+    }
 }`, acctest.RandString(10))
 
 var testAccComputeInstanceTemplate_preemptible = fmt.Sprintf(`
diff --git a/website/docs/r/compute_instance_template.html.markdown b/website/docs/r/compute_instance_template.html.markdown
index 6897e8d2..13442c5f 100644
--- a/website/docs/r/compute_instance_template.html.markdown
+++ b/website/docs/r/compute_instance_template.html.markdown
@@ -24,6 +24,10 @@ resource "google_compute_instance_template" "default" {
 
   tags = ["foo", "bar"]
 
+  labels = {
+    environment = "dev"
+  }
+
   instance_description = "description assigned to instances"
   machine_type         = "n1-standard-1"
   can_ip_forward       = false
@@ -133,6 +137,9 @@ The following arguments are supported:
 * `instance_description` - (Optional) A brief description to use for instances
     created from this template.
 
+* `labels` - (Optional) A set of key/value label pairs to assign to instances
+    created from this template,
+
 * `metadata` - (Optional) Metadata key/value pairs to make available from
     within instances created from this template.