diff --git a/clang/docs/ReleaseNotes.rst b/clang/docs/ReleaseNotes.rst
index 2c575cd1d4289..2e2c5198fa8f5 100644
--- a/clang/docs/ReleaseNotes.rst
+++ b/clang/docs/ReleaseNotes.rst
@@ -395,6 +395,8 @@ Improvements to Clang's diagnostics
   that were previously incorrectly accepted in case of other irrelevant
   conditions are now consistently diagnosed, identical to C++ mode.
 
+- Fix false-positive unused label diagnostic when a label is used in a named break
+  or continue (#GH166013)
 - Clang now emits a diagnostic in case `vector_size` or `ext_vector_type`
   attributes are used with a negative size (#GH165463).
 
diff --git a/clang/lib/Sema/SemaStmt.cpp b/clang/lib/Sema/SemaStmt.cpp
index f39896336053e..5b3ef1adf38e3 100644
--- a/clang/lib/Sema/SemaStmt.cpp
+++ b/clang/lib/Sema/SemaStmt.cpp
@@ -3281,6 +3281,9 @@ static Scope *FindLabeledBreakContinueScope(Sema &S, Scope *CurScope,
                                             SourceLocation LabelLoc,
                                             bool IsContinue) {
   assert(Target && "not a named break/continue?");
+
+  Target->markUsed(S.Context);
+
   Scope *Found = nullptr;
   for (Scope *Scope = CurScope; Scope; Scope = Scope->getParent()) {
     if (Scope->isFunctionScope())
diff --git a/clang/test/Sema/labeled-break-continue.c b/clang/test/Sema/labeled-break-continue.c
index 78f81c484c3d5..6b4adc23dca8d 100644
--- a/clang/test/Sema/labeled-break-continue.c
+++ b/clang/test/Sema/labeled-break-continue.c
@@ -1,6 +1,6 @@
-// RUN: %clang_cc1 -std=c2y -verify -fsyntax-only -fblocks %s
-// RUN: %clang_cc1 -std=c23 -verify -fsyntax-only -fblocks -fnamed-loops %s
-// RUN: %clang_cc1 -x c++ -verify -fsyntax-only -fblocks -fnamed-loops %s
+// RUN: %clang_cc1 -std=c2y -verify -Wunused -fsyntax-only -fblocks %s
+// RUN: %clang_cc1 -std=c23 -verify -Wunused -fsyntax-only -fblocks -fnamed-loops %s
+// RUN: %clang_cc1 -x c++ -verify -Wunused -fsyntax-only -fblocks -fnamed-loops %s
 
 void f1() {
   l1: while (true) {
@@ -159,3 +159,15 @@ void f7() {
     continue d; // expected-error {{'continue' label does not name an enclosing loop}}
   }
 }
+
+void f8() {
+  l1: // no-warning
+  while (true) {
+    break l1;
+  }
+
+  l2: // no-warning
+  while (true) {
+    continue l2;
+  }
+}