diff --git a/spec/frontend/gfm_auto_complete_spec.js b/spec/frontend/gfm_auto_complete_spec.js
index c7008c780d67e1e6476d087e409ae40b78054029..b79e6e0fe7bd89337f0ebfff0a753b677c1e874b 100644
--- a/spec/frontend/gfm_auto_complete_spec.js
+++ b/spec/frontend/gfm_auto_complete_spec.js
@@ -6,17 +6,21 @@ import GfmAutoComplete from '~/gfm_auto_complete';
 import 'vendor/jquery.caret';
 import 'vendor/jquery.atwho';
 
+import { TEST_HOST } from 'helpers/test_constants';
+import labelsFixture from 'fixtures/autocomplete_sources/labels.json'; // eslint-disable-line import/no-unresolved
+
 describe('GfmAutoComplete', () => {
   const gfmAutoCompleteCallbacks = GfmAutoComplete.prototype.getDefaultCallbacks.call({
     fetchData: () => {},
   });
 
   let atwhoInstance;
-  let items;
   let sorterValue;
 
   describe('DefaultOptions.sorter', () => {
     describe('assets loading', () => {
+      let items;
+
       beforeEach(() => {
         jest.spyOn(GfmAutoComplete, 'isLoading').mockReturnValue(true);
 
@@ -61,7 +65,7 @@ describe('GfmAutoComplete', () => {
         atwhoInstance = { setting: {} };
 
         const query = 'query';
-        items = [];
+        const items = [];
         const searchKey = 'searchKey';
 
         gfmAutoCompleteCallbacks.sorter.call(atwhoInstance, query, items, searchKey);
@@ -250,4 +254,90 @@ describe('GfmAutoComplete', () => {
       ).toBe('<li><small>grp/proj#5</small> Some Issue</li>');
     });
   });
+
+  describe('labels', () => {
+    const dataSources = {
+      labels: `${TEST_HOST}/autocomplete_sources/labels`,
+    };
+
+    const allLabels = labelsFixture;
+    const assignedLabels = allLabels.filter(label => label.set);
+    const unassignedLabels = allLabels.filter(label => !label.set);
+
+    let autocomplete;
+    let $textarea;
+
+    beforeEach(() => {
+      autocomplete = new GfmAutoComplete(dataSources);
+      $textarea = $('<textarea></textarea>');
+      autocomplete.setup($textarea, { labels: true });
+    });
+
+    afterEach(() => {
+      autocomplete.destroy();
+    });
+
+    const triggerDropdown = text => {
+      $textarea
+        .trigger('focus')
+        .val(text)
+        .caret('pos', -1);
+      $textarea.trigger('keyup');
+
+      return new Promise(window.requestAnimationFrame);
+    };
+
+    const getDropdownItems = () => {
+      const dropdown = document.getElementById('at-view-labels');
+      const items = dropdown.getElementsByTagName('li');
+      return [].map.call(items, item => item.textContent.trim());
+    };
+
+    const expectLabels = ({ input, output }) =>
+      triggerDropdown(input).then(() => {
+        expect(getDropdownItems()).toEqual(output.map(label => label.title));
+      });
+
+    describe('with no labels assigned', () => {
+      beforeEach(() => {
+        autocomplete.cachedData['~'] = [...unassignedLabels];
+      });
+
+      it.each`
+        input           | output
+        ${'~'}          | ${unassignedLabels}
+        ${'/label ~'}   | ${unassignedLabels}
+        ${'/relabel ~'} | ${unassignedLabels}
+        ${'/unlabel ~'} | ${[]}
+      `('$input shows $output.length labels', expectLabels);
+    });
+
+    describe('with some labels assigned', () => {
+      beforeEach(() => {
+        autocomplete.cachedData['~'] = allLabels;
+      });
+
+      it.each`
+        input           | output
+        ${'~'}          | ${allLabels}
+        ${'/label ~'}   | ${unassignedLabels}
+        ${'/relabel ~'} | ${allLabels}
+        ${'/unlabel ~'} | ${assignedLabels}
+      `('$input shows $output.length labels', expectLabels);
+    });
+
+    describe('with all labels assigned', () => {
+      beforeEach(() => {
+        autocomplete.cachedData['~'] = [...assignedLabels];
+      });
+
+      it.each`
+        input           | output
+        ${'~'}          | ${assignedLabels}
+        ${'/label ~'}   | ${[]}
+        ${'/relabel ~'} | ${assignedLabels}
+        ${'/unlabel ~'} | ${assignedLabels}
+      `('$input shows $output.length labels', expectLabels);
+    });
+  });
 });