diff --git a/python/ray/autoscaler/_private/kuberay/autoscaling_config.py b/python/ray/autoscaler/_private/kuberay/autoscaling_config.py
index 8960dd2df89f..cb5f9e262a7b 100644
--- a/python/ray/autoscaler/_private/kuberay/autoscaling_config.py
+++ b/python/ray/autoscaler/_private/kuberay/autoscaling_config.py
@@ -7,6 +7,7 @@
 
 import requests
 
+from ray._private.label_utils import parse_node_labels_string
 from ray.autoscaler._private.constants import (
     DISABLE_LAUNCH_CONFIG_CHECK_KEY,
     DISABLE_NODE_UPDATERS_KEY,
@@ -201,6 +202,7 @@ def _node_type_from_group_spec(
         max_workers = group_spec["maxReplicas"] * group_spec.get("numOfHosts", 1)
 
     resources = _get_ray_resources_from_group_spec(group_spec, is_head)
+    labels = _get_labels_from_group_spec(group_spec)
 
     node_type = {
         "min_workers": min_workers,
@@ -209,6 +211,7 @@ def _node_type_from_group_spec(
         # Pod config data is required by the operator but not by the autoscaler.
         "node_config": {},
         "resources": resources,
+        "labels": labels,
     }
 
     idle_timeout_s = group_spec.get(IDLE_SECONDS_KEY)
@@ -297,6 +300,28 @@ def _get_ray_resources_from_group_spec(
     return resources
 
 
+def _get_labels_from_group_spec(group_spec: Dict[str, Any]) -> Dict[str, str]:
+    """
+    Parses Ray node labels from rayStartParams for autoscaling config.
+    Labels are a comma-separated string of key-value pairs.
+    """
+    ray_start_params = group_spec.get("rayStartParams", {})
+    labels_str = ray_start_params.get("labels")
+
+    if not labels_str:
+        return {}
+
+    try:
+        return parse_node_labels_string(labels_str)
+    except ValueError as e:
+        group_name = group_spec.get("groupName", _HEAD_GROUP_NAME)
+        logger.error(
+            f"Error parsing `labels`: {labels_str} in rayStartParams for group {group_name}: {e}"
+        )
+        # Return an empty dict when failed to parse labels.
+        return {}
+
+
 def _get_num_cpus(
     ray_start_params: Dict[str, str],
     k8s_resources: Dict[str, Dict[str, str]],
diff --git a/python/ray/tests/kuberay/test_autoscaling_config.py b/python/ray/tests/kuberay/test_autoscaling_config.py
index 61a886d96758..8dc63b4192c3 100644
--- a/python/ray/tests/kuberay/test_autoscaling_config.py
+++ b/python/ray/tests/kuberay/test_autoscaling_config.py
@@ -74,6 +74,7 @@ def _get_basic_autoscaling_config() -> dict:
         },
         "available_node_types": {
             "headgroup": {
+                "labels": {},
                 "max_workers": 0,
                 "min_workers": 0,
                 "node_config": {},
@@ -85,6 +86,7 @@ def _get_basic_autoscaling_config() -> dict:
                 },
             },
             "small-group": {
+                "labels": {},
                 "max_workers": 300,
                 "min_workers": 0,
                 "node_config": {},
@@ -98,6 +100,7 @@ def _get_basic_autoscaling_config() -> dict:
             # Same as "small-group" with a GPU resource entry added
             # and modified max_workers.
             "gpu-group": {
+                "labels": {},
                 "max_workers": 200,
                 "min_workers": 0,
                 "node_config": {},
@@ -112,6 +115,7 @@ def _get_basic_autoscaling_config() -> dict:
             # Same as "small-group" with a TPU resource entry added
             # and modified max_workers and node_config.
             "tpu-group": {
+                "labels": {},
                 "max_workers": 8,
                 "min_workers": 0,
                 "node_config": {},
@@ -238,6 +242,45 @@ def _get_ray_cr_with_only_requests() -> dict:
     return cr
 
 
+def _get_ray_cr_with_labels() -> dict:
+    """CR with labels in rayStartParams of head and worker groups."""
+    cr = get_basic_ray_cr()
+
+    # Pass invalid labels to the head group to test error handling.
+    cr["spec"]["headGroupSpec"]["rayStartParams"]["labels"] = "!!ray.io/node-group=,"
+    # Pass valid labels to each of the worker groups.
+    cr["spec"]["workerGroupSpecs"][0]["rayStartParams"][
+        "labels"
+    ] = "ray.io/availability-region=us-central2, ray.io/market-type=spot"
+    cr["spec"]["workerGroupSpecs"][1]["rayStartParams"][
+        "labels"
+    ] = "ray.io/accelerator-type=A100"
+    cr["spec"]["workerGroupSpecs"][2]["rayStartParams"][
+        "labels"
+    ] = "ray.io/accelerator-type=TPU-V4"
+    return cr
+
+
+def _get_autoscaling_config_with_labels() -> dict:
+    """Autoscaling config with parsed labels for each group."""
+    config = _get_basic_autoscaling_config()
+
+    # Since we passed invalid labels to the head group `rayStartParams`,
+    # we expect an empty dictionary in the autoscaling config.
+    config["available_node_types"]["headgroup"]["labels"] = {}
+    config["available_node_types"]["small-group"]["labels"] = {
+        "ray.io/availability-region": "us-central2",
+        "ray.io/market-type": "spot",
+    }
+    config["available_node_types"]["gpu-group"]["labels"] = {
+        "ray.io/accelerator-type": "A100"
+    }
+    config["available_node_types"]["tpu-group"]["labels"] = {
+        "ray.io/accelerator-type": "TPU-V4"
+    }
+    return config
+
+
 def _get_autoscaling_config_with_options() -> dict:
     config = _get_basic_autoscaling_config()
     config["upscaling_speed"] = 1
@@ -359,6 +402,14 @@ def test_resource_quantity(input: str, output: int):
             None,
             id="tpu-k8s-resource-limit-and-custom-resource",
         ),
+        pytest.param(
+            _get_ray_cr_with_labels(),
+            _get_autoscaling_config_with_labels(),
+            None,
+            None,
+            None,
+            id="groups-with-labels",
+        ),
     ]
 )