diff --git a/app/assets/javascripts/boards/components/board_sidebar.js b/app/assets/javascripts/boards/components/board_sidebar.js
index 371be1092294f48e44adeaeaa49cccc3c853853a..a9102743bf91eb06d1ee64fe2a4667bdad2db7ca 100644
--- a/app/assets/javascripts/boards/components/board_sidebar.js
+++ b/app/assets/javascripts/boards/components/board_sidebar.js
@@ -51,6 +51,16 @@ gl.issueBoards.BoardSidebar = Vue.extend({
     canRemove() {
       return !this.list.preset;
     },
+    hasLabels() {
+      return this.issue.labels && this.issue.labels.length;
+    },
+    labelDropdownTitle() {
+      return this.hasLabels ?
+        `${this.issue.labels[0].title} ${this.issue.labels.length - 1}+ more` : 'Label';
+    },
+    selectedLabels() {
+      return this.hasLabels ? this.issue.labels.map(l => l.title).join(',') : '';
+    }
   },
   watch: {
     detail: {
diff --git a/app/assets/javascripts/gl_dropdown.js b/app/assets/javascripts/gl_dropdown.js
index cbc05b229cbc07fce2ea95c6bc1c1cd6089f1cda..c3959ef3e9ef903fde623d02d95042eb84fe400a 100644
--- a/app/assets/javascripts/gl_dropdown.js
+++ b/app/assets/javascripts/gl_dropdown.js
@@ -616,7 +616,11 @@ GitLabDropdown = (function() {
     }
 
     if (this.options.opened) {
-      this.options.opened.call(this, e);
+      if (this.options.preserveContext) {
+        this.options.opened(e);
+      } else {
+        this.options.opened.call(this, e);
+      }
     }
 
     return this.dropdown.trigger('shown.gl.dropdown');
diff --git a/app/assets/javascripts/labels_select.js b/app/assets/javascripts/labels_select.js
index 37a45d1d1a2fd7e49f7c4eaae1971604d50ffd99..cb851ff6745979c3379be484e235872409fb27e4 100644
--- a/app/assets/javascripts/labels_select.js
+++ b/app/assets/javascripts/labels_select.js
@@ -39,7 +39,7 @@ export default class LabelsSelect {
       showNo = $dropdown.data('showNo');
       showAny = $dropdown.data('showAny');
       showMenuAbove = $dropdown.data('showMenuAbove');
-      defaultLabel = $dropdown.data('defaultLabel');
+      defaultLabel = $dropdown.data('defaultLabel') || 'Label';
       abilityName = $dropdown.data('abilityName');
       $selectbox = $dropdown.closest('.selectbox');
       $block = $selectbox.closest('.block');
@@ -244,21 +244,21 @@ export default class LabelsSelect {
           var $dropdownInputField = $dropdownParent.find('.dropdown-input-field');
           var isSelected = el !== null ? el.hasClass('is-active') : false;
 
-          var { title } = selected;
+          var title = selected ? selected.title : null;
           var selectedLabels = this.selected;
 
           if ($dropdownInputField.length && $dropdownInputField.val().length) {
             $dropdownParent.find('.dropdown-input-clear').trigger('click');
           }
 
-          if (selected.id === 0) {
+          if (selected && selected.id === 0) {
             this.selected = [];
             return 'No Label';
           }
           else if (isSelected) {
             this.selected.push(title);
           }
-          else {
+          else if (!isSelected && title) {
             var index = this.selected.indexOf(title);
             this.selected.splice(index, 1);
           }
@@ -409,6 +409,14 @@ export default class LabelsSelect {
             }
           }
         },
+        opened: function(e) {
+          if ($dropdown.hasClass('js-issue-board-sidebar')) {
+            const previousSelection = $dropdown.attr('data-selected');
+            this.selected = previousSelection ? previousSelection.split(',') : [];
+            $dropdown.data('glDropdown').updateLabel();
+          }
+        },
+        preserveContext: true,
       });
 
       // Set dropdown data
diff --git a/app/views/shared/boards/components/sidebar/_labels.html.haml b/app/views/shared/boards/components/sidebar/_labels.html.haml
index 607e7f471c97802cee77a3671ddaced6dc7edd84..532045f3697c0124286c7af48f6035ae723aa545 100644
--- a/app/views/shared/boards/components/sidebar/_labels.html.haml
+++ b/app/views/shared/boards/components/sidebar/_labels.html.haml
@@ -19,6 +19,7 @@
         ":value" => "label.id" }
       .dropdown
         %button.dropdown-menu-toggle.js-label-select.js-multiselect.js-issue-board-sidebar{ type: "button",
+          "v-bind:data-selected" => "selectedLabels",
           data: { toggle: "dropdown",
             field_name: "issue[label_names][]",
             show_no: "true",
@@ -28,7 +29,7 @@
             namespace_path: @namespace_path,
             project_path: @project.try(:path) } }
           %span.dropdown-toggle-text
-            = _("Label")
+            {{ labelDropdownTitle }}
           = icon('chevron-down')
         .dropdown-menu.dropdown-select.dropdown-menu-paging.dropdown-menu-labels.dropdown-menu-selectable
           = render partial: "shared/issuable/label_page_default"
diff --git a/changelogs/unreleased/44127-board-label-edit-drop-down-is-showing-incorrect-selected-labels-summary.yml b/changelogs/unreleased/44127-board-label-edit-drop-down-is-showing-incorrect-selected-labels-summary.yml
new file mode 100644
index 0000000000000000000000000000000000000000..de991ef475ac964ac4f02dbaab2e630338d6d6d0
--- /dev/null
+++ b/changelogs/unreleased/44127-board-label-edit-drop-down-is-showing-incorrect-selected-labels-summary.yml
@@ -0,0 +1,5 @@
+---
+title: Board label edit dropdown shows incorrect selected labels summary
+merge_request: 20673
+author:
+type: fixed