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diff --git a/docs/user/custom_labels.rst b/docs/user/custom_labels.rst
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+++ b/docs/user/custom_labels.rst
@@ -0,0 +1,60 @@
+Custom Labels
+=============
+
+Custom labels are a powerful feature that allows to add more labels to metrics when Prometheus
+scrapes the targets.
+
+By default, there are no custom labels. The Promgen's administrator can add custom labels to a
+specific model such as Service or Project via the Django's admin interface. Once added, Promgen will
+automatically add those labels as new fields of the model on the web interface and in the API schema.
+After user inputs the values for those labels, Promgen will add them to the targets when generating
+the Prometheus configuration file.
+
+Here is an example of a custom label added to the Service model:
+
+1. The administrator adds a custom label called "environment" to the Service model via the Django's
+admin interface.
+
+.. image:: /images/custom_labels_1.png
+
+2. The user creates a new Service called "webapp" and inputs the value "production" for the
+"environment" label.
+
+.. image:: /images/custom_labels_2.png
+
+3. The "environment" label is now displayed as a new field in the Service model on the web
+interface and also in the API schema.
+
+.. image:: /images/custom_labels_3.png
+
+4. Promgen generates the Prometheus configuration file and adds the label "environment=production"
+to the targets associated with the "webapp" service.
+
+.. code-block:: none
+    :caption: Scrape config
+
+    [
+      {
+        "labels": {
+            ...
+          "environment": "production"
+        },
+        "targets": [
+            ...
+        ]
+      }
+    ]
+
+
+Notes
+-----
+
+The name of the custom label must be a valid Prometheus label name. It also cannot be a reserved
+label name such as "job" or "instance" or any other label name that Prometheus uses internally.
+
+The value of the custom label must be a valid Prometheus label value. If user inputs an empty value
+for the custom label, Promgen will not add that label to the targets.
+
+Custom labels are unique per model but not unique across models. If a custom label with the same
+name is added to both the Service and Project models, Promgen will prioritize the custom label from
+the Project model when generating the Prometheus configuration file.
diff --git a/docs/user/index.rst b/docs/user/index.rst
index 294a18753..0f5b5ed98 100644
--- a/docs/user/index.rst
+++ b/docs/user/index.rst
@@ -4,6 +4,7 @@ Using Promgen
 .. toctree::
   :maxdepth: 3
 
+  /user/custom_labels
   /user/rules
   /user/notifications
   /user/queue