diff --git a/nova/tests/unit/virt/libvirt/test_driver.py b/nova/tests/unit/virt/libvirt/test_driver.py
index baaacbbedefa..c8a2f4c8bf2f 100644
--- a/nova/tests/unit/virt/libvirt/test_driver.py
+++ b/nova/tests/unit/virt/libvirt/test_driver.py
@@ -15202,8 +15202,11 @@ class LibvirtConnTestCase(test.NoDBTestCase,
                              'ephemeral_foo')
             ]
 
+            # This also asserts that the filesystem label name is generated
+            # correctly as 'ephemeral0' to help prevent regression of the
+            # related bug fix from https://launchpad.net/bugs/2061701
             create_ephemeral_mock.assert_called_once_with(
-                ephemeral_size=1, fs_label='ephemeral_foo',
+                ephemeral_size=1, fs_label='ephemeral0',
                 os_type='linux', target=ephemeral_backing)
 
             fetch_image_mock.assert_called_once_with(
diff --git a/nova/virt/libvirt/driver.py b/nova/virt/libvirt/driver.py
index 68b0ce24a06c..0aa135d6fb24 100644
--- a/nova/virt/libvirt/driver.py
+++ b/nova/virt/libvirt/driver.py
@@ -5152,6 +5152,13 @@ class LibvirtDriver(driver.ComputeDriver):
                               {'img_id': img_id, 'e': e},
                               instance=instance)
 
+    @staticmethod
+    def _get_fs_label_ephemeral(index: int) -> str:
+        # Use a consistent naming convention for FS labels. We need to be
+        # mindful of various filesystems label name length limitations.
+        # See for example: https://bugs.launchpad.net/nova/+bug/2061701
+        return f'ephemeral{index}'
+
     # NOTE(sileht): many callers of this method assume that this
     # method doesn't fail if an image already exists but instead
     # think that it will be reused (ie: (live)-migration/resize)
@@ -5267,7 +5274,7 @@ class LibvirtDriver(driver.ComputeDriver):
             created_disks = created_disks or not disk_image.exists()
 
             fn = functools.partial(self._create_ephemeral,
-                                   fs_label='ephemeral0',
+                                   fs_label=self._get_fs_label_ephemeral(0),
                                    os_type=instance.os_type,
                                    is_block_dev=disk_image.is_block_dev,
                                    vm_mode=vm_mode)
@@ -5291,7 +5298,7 @@ class LibvirtDriver(driver.ComputeDriver):
                 raise exception.InvalidBDMFormat(details=msg)
 
             fn = functools.partial(self._create_ephemeral,
-                                   fs_label='ephemeral%d' % idx,
+                                   fs_label=self._get_fs_label_ephemeral(idx),
                                    os_type=instance.os_type,
                                    is_block_dev=disk_image.is_block_dev,
                                    vm_mode=vm_mode)
@@ -11747,7 +11754,7 @@ class LibvirtDriver(driver.ComputeDriver):
                     # cached.
                     disk.cache(
                         fetch_func=self._create_ephemeral,
-                        fs_label=cache_name,
+                        fs_label=self._get_fs_label_ephemeral(0),
                         os_type=instance.os_type,
                         filename=cache_name,
                         size=info['virt_disk_size'],
diff --git a/releasenotes/notes/bug-2061701-ephemeral-disk-fs-label-504484c4522e6d6a.yaml b/releasenotes/notes/bug-2061701-ephemeral-disk-fs-label-504484c4522e6d6a.yaml
new file mode 100644
index 000000000000..5f4c22ca248a
--- /dev/null
+++ b/releasenotes/notes/bug-2061701-ephemeral-disk-fs-label-504484c4522e6d6a.yaml
@@ -0,0 +1,6 @@
+fixes:
+  - |
+    Fixed an issue where certain server actions could fail for servers with
+    ephemeral disks due to filesystem label name length limitations
+    (VFAT, XFS, ...). Filesystem label name generation has been fixed for these
+    cases. See https://launchpad.net/bugs/2061701 for more details.