diff --git a/nodepool/launcher.py b/nodepool/launcher.py
index ed73d3e86..a7b8460eb 100644
--- a/nodepool/launcher.py
+++ b/nodepool/launcher.py
@@ -247,15 +247,20 @@ class PoolWorker(threading.Thread, stats.StatsReporter):
             # Got a lock, so assign it
             log.info("Assigning node request %s" % req)
 
+            rh = pm.getRequestHandler(self, req)
+            rh.run()
+
             if has_quota_support:
                 # Adjust the label quota so we don't accept more requests
                 # than we have labels available.
-                for label in req.node_types:
-                    with contextlib.suppress(KeyError):
-                        label_quota[label] -= 1
+                # Since nodes can have multiple other labels apart from the
+                # requested type, we need to adjust the quota for all labels
+                # of nodes that are allocated to the request.
+                for node in rh.nodeset:
+                    for node_type in node.type:
+                        with contextlib.suppress(KeyError):
+                            label_quota[node_type] -= 1
 
-            rh = pm.getRequestHandler(self, req)
-            rh.run()
             if rh.paused:
                 self.paused_handler = rh
             self.request_handlers.append(rh)
diff --git a/nodepool/tests/fixtures/static-2-nodes-multilabel.yaml b/nodepool/tests/fixtures/static-2-nodes-multilabel.yaml
index 48e551129..e2834205b 100644
--- a/nodepool/tests/fixtures/static-2-nodes-multilabel.yaml
+++ b/nodepool/tests/fixtures/static-2-nodes-multilabel.yaml
@@ -11,6 +11,8 @@ zookeeper-tls:
 labels:
   - name: fake-label
   - name: fake-label2
+  - name: label-host-1
+  - name: label-host-2
 
 providers:
   - name: static-provider
@@ -22,6 +24,7 @@ providers:
             labels:
               - fake-label
               - fake-label2
+              - label-host-1
             host-key: ssh-rsa FAKEKEY
             timeout: 13
             connection-port: 22022
@@ -29,6 +32,7 @@ providers:
           - name: fake-host-2
             labels:
               - fake-label2
+              - label-host-2
             host-key: ssh-rsa FAKEKEY
             timeout: 13
             connection-port: 22022
diff --git a/nodepool/tests/unit/test_driver_static.py b/nodepool/tests/unit/test_driver_static.py
index f2dc3e1fd..8523c9222 100644
--- a/nodepool/tests/unit/test_driver_static.py
+++ b/nodepool/tests/unit/test_driver_static.py
@@ -326,6 +326,47 @@ class TestDriverStatic(tests.DBTestCase):
         self.waitForNodeDeletion(node)
         self.waitForNodeRequest(req_waiting, zk.FULFILLED)
 
+    def test_label_quota(self):
+        configfile = self.setup_config('static-2-nodes-multilabel.yaml')
+        pool = self.useNodepool(configfile, watermark_sleep=1)
+        pool.start()
+
+        req1 = zk.NodeRequest()
+        req1.state = zk.REQUESTED
+        req1.node_types.append('label-host-1')
+
+        req2 = zk.NodeRequest()
+        req2.state = zk.REQUESTED
+        req2.node_types.append('label-host-2')
+
+        # Request a label that is no longer available, but wasn't requested
+        # by any of the previous requests.
+        req_waiting = zk.NodeRequest()
+        req_waiting.state = zk.REQUESTED
+        req_waiting.node_types.append('fake-label2')
+
+        self.zk.storeNodeRequest(req1)
+        self.zk.storeNodeRequest(req2)
+        self.zk.storeNodeRequest(req_waiting)
+
+        req1 = self.waitForNodeRequest(req1, zk.FULFILLED)
+        node = self.zk.getNode(req1.nodes[0])
+        self.zk.lockNode(node)
+        node.state = zk.USED
+        self.zk.storeNode(node)
+
+        req2 = self.waitForNodeRequest(req2, zk.FULFILLED)
+
+        # Assert that the request was not accepted, which means that
+        # the label quota was correctly adjusted.
+        req_waiting = self.zk.getNodeRequest(req_waiting.id)
+        self.assertEqual(req_waiting.state, zk.REQUESTED)
+        self.assertEqual(req_waiting.declined_by, [])
+
+        self.zk.unlockNode(node)
+        self.waitForNodeDeletion(node)
+        self.waitForNodeRequest(req_waiting, zk.FULFILLED)
+
     def test_static_ignore_assigned_ready_nodes(self):
         """Regression test to not touch assigned READY nodes"""
         configfile = self.setup_config('static-basic.yaml')