diff --git a/util/settings/settings.go b/util/settings/settings.go
index fbb22d6e68620..22123f470f440 100644
--- a/util/settings/settings.go
+++ b/util/settings/settings.go
@@ -6,6 +6,7 @@ import (
 	"crypto/tls"
 	"crypto/x509"
 	"encoding/base64"
+	"encoding/hex"
 	"fmt"
 	"net/url"
 	"os"
@@ -235,6 +236,8 @@ const (
 	anonymousUserEnabledKey = "users.anonymous.enabled"
 	// diffOptions is the key where diff options are configured
 	resourceCompareOptionsKey = "resource.compareoptions"
+	// maximum number of allowed chars in kubernetes labels
+	appInstanceLabelMaxLen = 63
 )
 
 // SettingsManager holds config info for a new manager with which to access Kubernetes ConfigMaps.
@@ -434,6 +437,10 @@ func (mgr *SettingsManager) GetAppInstanceLabelKey() (string, error) {
 	if label == "" {
 		return common.LabelKeyAppInstance, nil
 	}
+	if len(label) > appInstanceLabelMaxLen {
+		hash := sha256.Sum224([]byte(label))
+		return "sha224-" + hex.EncodeToString(hash[:]), nil
+	}
 	return label, nil
 }
 
diff --git a/util/settings/settings_test.go b/util/settings/settings_test.go
index 4c8b47517ef0d..c2d15d4a715cc 100644
--- a/util/settings/settings_test.go
+++ b/util/settings/settings_test.go
@@ -140,6 +140,15 @@ func TestGetAppInstanceLabelKey(t *testing.T) {
 	assert.Equal(t, "testLabel", label)
 }
 
+func TestGetAppInstanceLabelForLengthyLabel(t *testing.T) {
+	_, settingsManager := fixtures(map[string]string{
+		"application.instanceLabelKey": "this.is.definitely.a.string.that.is.used.for.tests.and.that.is.longer.than.63.characters",
+	})
+	label, err := settingsManager.GetAppInstanceLabelKey()
+	assert.NoError(t, err)
+	assert.Equal(t, "sha224-e1727dad441e85277dd5948c7afa1785124be3a007b2fe11238929b6", label)
+}
+
 func TestGetResourceOverrides(t *testing.T) {
 	ignoreStatus := v1alpha1.ResourceOverride{IgnoreDifferences: v1alpha1.OverrideIgnoreDiff{
 		JSONPointers: []string{"/status"},