diff --git a/java/test/src/main/java/io/ray/test/NodeLabelSchedulingTest.java b/java/test/src/main/java/io/ray/test/NodeLabelSchedulingTest.java
index e321ecd9984f..b25457e87d6e 100644
--- a/java/test/src/main/java/io/ray/test/NodeLabelSchedulingTest.java
+++ b/java/test/src/main/java/io/ray/test/NodeLabelSchedulingTest.java
@@ -24,7 +24,7 @@ public void testEmptyNodeLabels() {
   }
 
   public void testSetNodeLabels() {
-    System.setProperty("ray.head-args.0", "--labels=\"gpu_type=A100,azone=azone-1\"");
+    System.setProperty("ray.head-args.0", "--labels={\"gpu_type\":\"A100\",\"azone\":\"azone-1\"}");
     try {
       Ray.init();
       List<NodeInfo> nodeInfos = Ray.getRuntimeContext().getAllNodeInfo();
diff --git a/python/ray/_private/label_utils.py b/python/ray/_private/label_utils.py
deleted file mode 100644
index b4ac0d96fa3a..000000000000
--- a/python/ray/_private/label_utils.py
+++ /dev/null
@@ -1,100 +0,0 @@
-import re
-import yaml
-from typing import Dict
-
-import ray._private.ray_constants as ray_constants
-
-# Regex patterns used to validate that labels conform to Kubernetes label syntax rules.
-# https://kubernetes.io/docs/concepts/overview/working-with-objects/labels/#syntax-and-character-set
-
-# Regex for mandatory name (DNS label) or value
-# Examples:
-#   Valid matches: "a", "label-name", "a-._b", "123", "this_is_a_valid_label"
-#   Invalid matches: "-abc", "abc-", "my@label", "a" * 64
-LABEL_REGEX = re.compile(r"[a-zA-Z0-9]([a-zA-Z0-9_.-]*[a-zA-Z0-9]){0,62}")
-
-# Regex for optional prefix (DNS subdomain)
-# Examples:
-#   Valid matches: "abc", "sub.domain.example", "my-label", "123.456.789"
-#   Invalid matches: "-abc", "prefix_", "sub..domain", sub.$$.example
-LABEL_PREFIX_REGEX = rf"^({LABEL_REGEX.pattern}?(\.{LABEL_REGEX.pattern}?)*)$"
-
-
-def parse_node_labels_string(labels_str: str) -> Dict[str, str]:
-    labels = {}
-
-    # Remove surrounding quotes if they exist
-    if len(labels_str) > 1 and labels_str.startswith('"') and labels_str.endswith('"'):
-        labels_str = labels_str[1:-1]
-
-    if labels_str == "":
-        return labels
-
-    # Labels argument should consist of a string of key=value pairs
-    # separated by commas. Labels follow Kubernetes label syntax.
-    label_pairs = labels_str.split(",")
-    for pair in label_pairs:
-        # Split each pair by `=`
-        key_value = pair.split("=")
-        if len(key_value) != 2:
-            raise ValueError("Label value is not a key-value pair.")
-        key = key_value[0].strip()
-        value = key_value[1].strip()
-        labels[key] = value
-
-    return labels
-
-
-def parse_node_labels_from_yaml_file(path: str) -> Dict[str, str]:
-    if path == "":
-        return {}
-    with open(path, "r") as file:
-        # Expects valid YAML content
-        labels = yaml.safe_load(file)
-        if not isinstance(labels, dict):
-            raise ValueError(
-                "The format after deserialization is not a key-value pair map."
-            )
-        for key, value in labels.items():
-            if not isinstance(key, str):
-                raise ValueError("The key is not string type.")
-            if not isinstance(value, str):
-                raise ValueError(f'The value of "{key}" is not string type.')
-
-    return labels
-
-
-def validate_node_labels(labels: Dict[str, str]):
-    if labels is None:
-        return
-    for key in labels.keys():
-        if key.startswith(ray_constants.RAY_DEFAULT_LABEL_KEYS_PREFIX):
-            raise ValueError(
-                f"Custom label keys `{key}` cannot start with the prefix "
-                f"`{ray_constants.RAY_DEFAULT_LABEL_KEYS_PREFIX}`. "
-                f"This is reserved for Ray defined labels."
-            )
-        if "/" in key:
-            prefix, name = key.rsplit("/")
-            if len(prefix) > 253 or not re.match(LABEL_PREFIX_REGEX, prefix):
-                raise ValueError(
-                    f"Invalid label key prefix `{prefix}`. Prefix must be a series of DNS labels "
-                    f"separated by dots (.),not longer than 253 characters in total."
-                )
-        else:
-            name = key
-        if len(name) > 63 or not re.match(LABEL_REGEX, name):
-            raise ValueError(
-                f"Invalid label key name `{name}`. Name must be 63 chars or less beginning and ending "
-                f"with an alphanumeric character ([a-z0-9A-Z]) with dashes (-), underscores (_),"
-                f"dots (.), and alphanumerics between."
-            )
-        value = labels.get(key)
-        if value is None or value == "":
-            return
-        if len(value) > 63 or not re.match(LABEL_REGEX, value):
-            raise ValueError(
-                f"Invalid label key value `{value}`. Value must be 63 chars or less beginning and ending "
-                f"with an alphanumeric character ([a-z0-9A-Z]) with dashes (-), underscores (_),"
-                f"dots (.), and alphanumerics between."
-            )
diff --git a/python/ray/_private/parameter.py b/python/ray/_private/parameter.py
index 108d9dc919ca..3baba979e62f 100644
--- a/python/ray/_private/parameter.py
+++ b/python/ray/_private/parameter.py
@@ -3,8 +3,10 @@
 from typing import Dict, List, Optional
 
 import ray._private.ray_constants as ray_constants
-from ray._private.label_utils import validate_node_labels
-from ray._private.utils import check_ray_client_dependencies_installed
+from ray._private.utils import (
+    validate_node_labels,
+    check_ray_client_dependencies_installed,
+)
 
 
 logger = logging.getLogger(__name__)
diff --git a/python/ray/_private/utils.py b/python/ray/_private/utils.py
index 169d44baa4db..fb6b9828e16e 100644
--- a/python/ray/_private/utils.py
+++ b/python/ray/_private/utils.py
@@ -1803,6 +1803,43 @@ def update_envs(env_vars: Dict[str, str]):
         os.environ[key] = result
 
 
+def parse_node_labels_json(
+    labels_json: str, cli_logger, cf, command_arg="--labels"
+) -> Dict[str, str]:
+    try:
+        labels = json.loads(labels_json)
+        if not isinstance(labels, dict):
+            raise ValueError(
+                "The format after deserialization is not a key-value pair map"
+            )
+        for key, value in labels.items():
+            if not isinstance(key, str):
+                raise ValueError("The key is not string type.")
+            if not isinstance(value, str):
+                raise ValueError(f'The value of the "{key}" is not string type')
+    except Exception as e:
+        cli_logger.abort(
+            "`{}` is not a valid JSON string, detail error:{}"
+            "Valid values look like this: `{}`",
+            cf.bold(f"{command_arg}={labels_json}"),
+            str(e),
+            cf.bold(f'{command_arg}=\'{{"gpu_type": "A100", "region": "us"}}\''),
+        )
+    return labels
+
+
+def validate_node_labels(labels: Dict[str, str]):
+    if labels is None:
+        return
+    for key in labels.keys():
+        if key.startswith(ray_constants.RAY_DEFAULT_LABEL_KEYS_PREFIX):
+            raise ValueError(
+                f"Custom label keys `{key}` cannot start with the prefix "
+                f"`{ray_constants.RAY_DEFAULT_LABEL_KEYS_PREFIX}`. "
+                f"This is reserved for Ray defined labels."
+            )
+
+
 def parse_pg_formatted_resources_to_original(
     pg_formatted_resources: Dict[str, float]
 ) -> Dict[str, float]:
diff --git a/python/ray/scripts/scripts.py b/python/ray/scripts/scripts.py
index 397f6e638210..3e33963fc531 100644
--- a/python/ray/scripts/scripts.py
+++ b/python/ray/scripts/scripts.py
@@ -25,14 +25,11 @@
 import ray
 import ray._private.ray_constants as ray_constants
 import ray._private.services as services
-from ray._private.label_utils import (
-    parse_node_labels_from_yaml_file,
-    parse_node_labels_string,
-)
 from ray._private.utils import (
     check_ray_client_dependencies_installed,
     load_class,
     parse_resources_json,
+    parse_node_labels_json,
 )
 from ray._private.internal_api import memory_summary
 from ray._private.usage import usage_lib
@@ -638,19 +635,9 @@ def debug(address: str, verbose: bool):
     "--labels",
     required=False,
     hidden=True,
-    default="",
-    type=str,
-    help="a string list of key-value pairs mapping label name to label value."
-    "These values take precedence over conflicting keys passed in from --labels-file."
-    'Ex: --labels "key1=val1,key2=val2"',
-)
-@click.option(
-    "--labels-file",
-    required=False,
-    hidden=True,
-    default="",
+    default="{}",
     type=str,
-    help="a path to a YAML file containing a dictionary mapping of label keys to values.",
+    help="a JSON serialized dictionary mapping label name to label value.",
 )
 @click.option(
     "--include-log-monitor",
@@ -708,7 +695,6 @@ def start(
     ray_debugger_external,
     disable_usage_stats,
     labels,
-    labels_file,
     include_log_monitor,
 ):
     """Start Ray processes manually on the local machine."""
@@ -729,34 +715,7 @@ def start(
         node_ip_address = services.resolve_ip_for_localhost(node_ip_address)
 
     resources = parse_resources_json(resources, cli_logger, cf)
-
-    # Compose labels passed in with `--labels` and `--labels-file`.
-    # The label value from `--labels` will overrwite the value of any duplicate keys.
-    try:
-        labels_from_file_dict = parse_node_labels_from_yaml_file(labels_file)
-    except Exception as e:
-        cli_logger.abort(
-            "The file at `{}` is not a valid YAML file, detailed error:{}"
-            "Valid values look like this: `{}`",
-            cf.bold(f"--labels-file={labels_file}"),
-            str(e),
-            cf.bold("--labels-file='gpu_type: A100\nregion: us'"),
-        )
-    try:
-        labels_from_string = parse_node_labels_string(labels)
-    except Exception as e:
-        cli_logger.abort(
-            "`{}` is not a valid string of key-value pairs, detail error:{}"
-            "Valid values look like this: `{}`",
-            cf.bold(f"--labels={labels}"),
-            str(e),
-            cf.bold('--labels="key1=val1,key2=val2"'),
-        )
-    labels_dict = (
-        {**labels_from_file_dict, **labels_from_string}
-        if labels_from_file_dict
-        else labels_from_string
-    )
+    labels_dict = parse_node_labels_json(labels, cli_logger, cf)
 
     if plasma_store_socket_name is not None:
         warnings.warn(
diff --git a/python/ray/tests/BUILD b/python/ray/tests/BUILD
index e902e1b59bd8..deb289cfa750 100644
--- a/python/ray/tests/BUILD
+++ b/python/ray/tests/BUILD
@@ -349,7 +349,6 @@ py_test_module_list(
 py_test_module_list(
     size = "medium",
     files = [
-        "test_label_utils.py",
         "test_minimal_install.py",
         "test_runtime_env_ray_minimal.py",
         "test_utils.py",
diff --git a/python/ray/tests/test_label_utils.py b/python/ray/tests/test_label_utils.py
deleted file mode 100644
index 328a2594602b..000000000000
--- a/python/ray/tests/test_label_utils.py
+++ /dev/null
@@ -1,121 +0,0 @@
-import pytest
-from ray._private.label_utils import (
-    parse_node_labels_string,
-    parse_node_labels_from_yaml_file,
-    validate_node_labels,
-)
-import sys
-import tempfile
-
-
-def test_parse_node_labels_from_string():
-    # Empty label argument passed
-    labels_string = ""
-    labels_dict = parse_node_labels_string(labels_string)
-    assert labels_dict == {}
-
-    # Valid label key with empty value
-    labels_string = "region="
-    labels_dict = parse_node_labels_string(labels_string)
-    assert labels_dict == {"region": ""}
-
-    # Multiple valid label keys and values
-    labels_string = "ray.io/accelerator-type=A100,region=us-west4"
-    labels_dict = parse_node_labels_string(labels_string)
-    assert labels_dict == {"ray.io/accelerator-type": "A100", "region": "us-west4"}
-
-    # Invalid label
-    labels_string = "ray.io/accelerator-type=type=A100"
-    with pytest.raises(ValueError) as e:
-        parse_node_labels_string(labels_string)
-    assert "Label value is not a key-value pair" in str(e)
-
-
-def test_parse_node_labels_from_yaml_file():
-    # Empty/invalid yaml
-    with tempfile.NamedTemporaryFile(mode="w+", delete=True) as test_file:
-        test_file.write("")
-        test_file.flush()  # Ensure data is written
-        with pytest.raises(ValueError) as e:
-            parse_node_labels_from_yaml_file(test_file.name)
-        assert "The format after deserialization is not a key-value pair map" in str(e)
-
-    # With non-existent yaml file
-    with pytest.raises(FileNotFoundError):
-        parse_node_labels_from_yaml_file("missing-file.yaml")
-
-    # Valid label key with empty value
-    with tempfile.NamedTemporaryFile(mode="w+", delete=True) as test_file:
-        test_file.write('"ray.io/accelerator-type": ""')
-        test_file.flush()  # Ensure data is written
-        labels_dict = parse_node_labels_from_yaml_file(test_file.name)
-    assert labels_dict == {"ray.io/accelerator-type": ""}
-
-    # Multiple valid label keys and values
-    with tempfile.NamedTemporaryFile(mode="w+", delete=True) as test_file:
-        test_file.write(
-            '"ray.io/accelerator-type": "A100"\n"region": "us"\n"market-type": "spot"'
-        )
-        test_file.flush()  # Ensure data is written
-        labels_dict = parse_node_labels_from_yaml_file(test_file.name)
-    assert labels_dict == {
-        "ray.io/accelerator-type": "A100",
-        "region": "us",
-        "market-type": "spot",
-    }
-
-    # Non-string label key
-    with tempfile.NamedTemporaryFile(mode="w+", delete=True) as test_file:
-        test_file.write('{100: "A100"}')
-        test_file.flush()  # Ensure data is written
-        with pytest.raises(ValueError) as e:
-            parse_node_labels_from_yaml_file(test_file.name)
-    assert "The key is not string type." in str(e)
-
-    # Non-string label value
-    with tempfile.NamedTemporaryFile(mode="w+", delete=True) as test_file:
-        test_file.write('{"gpu": 100}')
-        test_file.flush()  # Ensure data is written
-        with pytest.raises(ValueError) as e:
-            parse_node_labels_from_yaml_file(test_file.name)
-    assert 'The value of "gpu" is not string type' in str(e)
-
-
-def test_validate_node_labels():
-    # Custom label starts with ray.io prefix
-    labels_dict = {"ray.io/accelerator-type": "A100"}
-    with pytest.raises(ValueError) as e:
-        validate_node_labels(labels_dict)
-    assert "This is reserved for Ray defined labels." in str(e)
-
-    # Invalid key prefix syntax
-    labels_dict = {"!invalidPrefix/accelerator-type": "A100"}
-    with pytest.raises(ValueError) as e:
-        validate_node_labels(labels_dict)
-    assert "Invalid label key prefix" in str(e)
-
-    # Invalid key name syntax
-    labels_dict = {"!!accelerator-type?": "A100"}
-    with pytest.raises(ValueError) as e:
-        validate_node_labels(labels_dict)
-    assert "Invalid label key name" in str(e)
-
-    # Invalid key value syntax
-    labels_dict = {"accelerator-type": "??"}
-    with pytest.raises(ValueError) as e:
-        validate_node_labels(labels_dict)
-    assert "Invalid label key value" in str(e)
-
-    # Valid node label
-    labels_dict = {"accelerator-type": "A100"}
-    validate_node_labels(labels_dict)
-
-
-if __name__ == "__main__":
-    import os
-
-    # Skip test_basic_2_client_mode for now- the test suite is breaking.
-    if os.environ.get("PARALLEL_CI"):
-        sys.exit(pytest.main(["-n", "auto", "--boxed", "-vs", __file__]))
-    else:
-        sys.exit(pytest.main(["-sv", __file__]))
diff --git a/python/ray/tests/test_node_label_scheduling_strategy.py b/python/ray/tests/test_node_label_scheduling_strategy.py
index 8ed19dfba377..83195c6922e9 100644
--- a/python/ray/tests/test_node_label_scheduling_strategy.py
+++ b/python/ray/tests/test_node_label_scheduling_strategy.py
@@ -31,7 +31,7 @@ def get_node_id():
 
 @pytest.mark.parametrize(
     "call_ray_start",
-    ["ray start --head --labels gpu_type=A100,region=us"],
+    ['ray start --head --labels={"gpu_type":"A100","region":"us"}'],
     indirect=True,
 )
 def test_node_label_scheduling_basic(call_ray_start):
diff --git a/python/ray/tests/test_node_labels.py b/python/ray/tests/test_node_labels.py
index 850263d3b532..0854286d3bda 100644
--- a/python/ray/tests/test_node_labels.py
+++ b/python/ray/tests/test_node_labels.py
@@ -19,7 +19,7 @@ def add_default_labels(node_info, labels):
 
 @pytest.mark.parametrize(
     "call_ray_start",
-    ['ray start --head --labels "gpu_type=A100,region=us"'],
+    ['ray start --head --labels={"gpu_type":"A100","region":"us"}'],
     indirect=True,
 )
 def test_ray_start_set_node_labels(call_ray_start):
@@ -33,7 +33,7 @@ def test_ray_start_set_node_labels(call_ray_start):
 @pytest.mark.parametrize(
     "call_ray_start",
     [
-        'ray start --head --labels ""',
+        "ray start --head --labels={}",
     ],
     indirect=True,
 )
@@ -80,17 +80,19 @@ def test_ray_init_set_node_labels_value_error(ray_start_cluster):
 
 
 def test_ray_start_set_node_labels_value_error():
-    out = check_cmd_stderr(["ray", "start", "--head", "--labels", "xxx"])
-    assert "is not a valid string of key-value pairs, detail error" in out
+    out = check_cmd_stderr(["ray", "start", "--head", "--labels=xxx"])
+    assert "is not a valid JSON string, detail error" in out
 
-    out = check_cmd_stderr(["ray", "start", "--head", "--labels", "!gpu_type=1"])
-    assert "Invalid label key name `!gpu_type`" in out
+    out = check_cmd_stderr(["ray", "start", "--head", '--labels={"gpu_type":1}'])
+    assert 'The value of the "gpu_type" is not string type' in out
 
-    out = check_cmd_stderr(["ray", "start", "--head", "--labels", "ray.io/node_id=111"])
+    out = check_cmd_stderr(
+        ["ray", "start", "--head", '--labels={"ray.io/node_id":"111"}']
+    )
     assert "cannot start with the prefix `ray.io/`" in out
 
     out = check_cmd_stderr(
-        ["ray", "start", "--head", "--labels", "ray.io/other_key=111"]
+        ["ray", "start", "--head", '--labels={"ray.io/other_key":"111"}']
     )
     assert "cannot start with the prefix `ray.io/`" in out
 
diff --git a/python/ray/tests/test_utils.py b/python/ray/tests/test_utils.py
index fe81b3ac7ed3..b5bb5d34f86a 100644
--- a/python/ray/tests/test_utils.py
+++ b/python/ray/tests/test_utils.py
@@ -1,6 +1,6 @@
 # coding: utf-8
 """
-Unit/Integration Testing for python/ray/_private/utils.py
+Unit/Integration Testing for python/_private/utils.py
 
 This currently expects to work for minimal installs.
 """