diff --git a/src/GitReleaseManager.Core/ReleaseNotes/ReleaseNotesBuilder.cs b/src/GitReleaseManager.Core/ReleaseNotes/ReleaseNotesBuilder.cs
index 79273145..ff4584eb 100644
--- a/src/GitReleaseManager.Core/ReleaseNotes/ReleaseNotesBuilder.cs
+++ b/src/GitReleaseManager.Core/ReleaseNotes/ReleaseNotesBuilder.cs
@@ -101,7 +101,10 @@ public async Task<string> BuildReleaseNotesAsync(string user, string repository,
         private Dictionary<string, List<Issue>> GetIssuesDict(List<Issue> issues)
         {
             var issueLabels = _configuration.IssueLabelsInclude;
+            var excludedIssueLabels = _configuration.IssueLabelsExclude;
+
             var issuesByLabel = issues
+                .Where(o => !o.Labels.Any(l => excludedIssueLabels.Any(eil => string.Equals(eil, l.Name, StringComparison.OrdinalIgnoreCase))))
                 .SelectMany(o => o.Labels, (issue, label) => new { Label = label.Name, Issue = issue })
                 .Where(o => issueLabels.Any(il => string.Equals(il, o.Label, StringComparison.OrdinalIgnoreCase)))
                 .GroupBy(o => o.Label, o => o.Issue)
@@ -136,16 +139,21 @@ private string GetValidLabel(string label, int issuesCount)
             foreach (var issue in issues)
             {
                 var includedIssuesCount = 0;
-                var excludedIssuesCount = 0;
+                var isExcluded = false;
 
                 foreach (var issueLabel in issue.Labels)
                 {
                     includedIssuesCount += _configuration.IssueLabelsInclude.Count(issueToInclude => issueLabel.Name.ToUpperInvariant() == issueToInclude.ToUpperInvariant());
 
-                    excludedIssuesCount += _configuration.IssueLabelsExclude.Count(issueToExclude => issueLabel.Name.ToUpperInvariant() == issueToExclude.ToUpperInvariant());
+                    isExcluded = isExcluded || _configuration.IssueLabelsExclude.Any(issueToExclude => issueLabel.Name.ToUpperInvariant() == issueToExclude.ToUpperInvariant());
+                }
+
+                if (isExcluded)
+                {
+                    continue;
                 }
 
-                if (includedIssuesCount + excludedIssuesCount != 1)
+                if (includedIssuesCount != 1)
                 {
                     var allIssueLabels = _configuration.IssueLabelsInclude.Union(_configuration.IssueLabelsExclude).ToList();
                     var allIssuesExceptLast = allIssueLabels.Take(allIssueLabels.Count - 1);
diff --git a/src/GitReleaseManager.Tests/ReleaseNotesBuilderTests.CorrectlyExcludeIssuesWhenBothIncludeAndExcludeLabelIsSet.approved.txt b/src/GitReleaseManager.Tests/ReleaseNotesBuilderTests.CorrectlyExcludeIssuesWhenBothIncludeAndExcludeLabelIsSet.approved.txt
new file mode 100644
index 00000000..b7344330
--- /dev/null
+++ b/src/GitReleaseManager.Tests/ReleaseNotesBuilderTests.CorrectlyExcludeIssuesWhenBothIncludeAndExcludeLabelIsSet.approved.txt
@@ -0,0 +1,5 @@
+As part of this release we had [10 commits](https://github.com/TestUser/FakeRepository/commits/1.2.3) which resulted in [2 issues](https://github.com/gep13/FakeRepository/issues?q=milestone%3A1.2.3?closed=1) being closed.
+
+__Feature__
+
+- [__#3__](http://example.com/3) Issue 3
diff --git a/src/GitReleaseManager.Tests/ReleaseNotesBuilderTests.cs b/src/GitReleaseManager.Tests/ReleaseNotesBuilderTests.cs
index 7b3126e6..43e46526 100644
--- a/src/GitReleaseManager.Tests/ReleaseNotesBuilderTests.cs
+++ b/src/GitReleaseManager.Tests/ReleaseNotesBuilderTests.cs
@@ -184,6 +184,13 @@ public void CorrectlyExcludeIssues()
             Assert.True(true); // Just to make sonarlint happy
         }
 
+        [Test]
+        public void CorrectlyExcludeIssuesWhenBothIncludeAndExcludeLabelIsSet()
+        {
+            AcceptTest(10, CreateIssue(5, "Improvement", "Build"), CreateIssue(3, "Feature"));
+            Assert.True(true);
+        }
+
         private static void AcceptTest(int commits, params Issue[] issues)
         {
             AcceptTest(commits, null, null, issues);