diff --git a/internal/cli/issues.go b/internal/cli/issues.go
index 0436079..f894fab 100644
--- a/internal/cli/issues.go
+++ b/internal/cli/issues.go
@@ -440,27 +440,37 @@ TIP: Run 'linear init' first to set default team.`,
 
 func newIssuesUpdateCmd() *cobra.Command {
 	var (
-		team        string
-		title       string
-		description string
-		state       string
-		priority    string
-		estimate    string
-		labels      string
-		cycle       string
-		project     string
-		assignee    string
-		dueDate     string
-		parent      string
-		dependsOn   string
-		blockedBy   string
-		attachFiles []string
+		team         string
+		title        string
+		description  string
+		state        string
+		priority     string
+		estimate     string
+		labels       string
+		addLabels    string
+		removeLabels string
+		cycle        string
+		project      string
+		assignee     string
+		dueDate      string
+		parent       string
+		dependsOn    string
+		blockedBy    string
+		attachFiles  []string
 	)
 
 	cmd := &cobra.Command{
 		Use:   "update <issue-id>",
 		Short: "Update an existing issue",
-		Long:  `Update an existing issue. Only provided flags are changed.`,
+		Long: `Update an existing issue. Only provided flags are changed.
+
+LABEL MODES:
+  --labels         Replace ALL labels (removes existing, sets new ones)
+  --add-labels     Add labels without removing existing ones
+  --remove-labels  Remove specific labels without affecting others
+
+  --add-labels and --remove-labels can be used together.
+  --labels cannot be combined with --add-labels or --remove-labels.`,
 		Example: `  # Update state and priority
   linear issues update CEN-123 --state Done --priority 0
 
@@ -470,6 +480,18 @@ func newIssuesUpdateCmd() *cobra.Command {
   # Assign to yourself
   linear issues update CEN-123 --assignee me
 
+  # Replace all labels (existing labels are removed)
+  linear issues update CEN-123 --labels "backend,security"
+
+  # Add labels without removing existing ones
+  linear issues update CEN-123 --add-labels "bug,urgent"
+
+  # Remove specific labels
+  linear issues update CEN-123 --remove-labels "wontfix"
+
+  # Add and remove labels in one command
+  linear issues update CEN-123 --add-labels "in-progress" --remove-labels "backlog"
+
   # Update description from file (use - for stdin)
   cat updated-spec.md | linear issues update CEN-123 -d -`,
 		Args: cobra.ExactArgs(1),
@@ -489,6 +511,7 @@ func newIssuesUpdateCmd() *cobra.Command {
 			// Check if any updates provided (description="-" means stdin)
 			hasFlags := title != "" || description != "" || state != "" ||
 				priority != "" || estimate != "" || labels != "" ||
+				addLabels != "" || removeLabels != "" ||
 				cycle != "" || project != "" || assignee != "" ||
 				dueDate != "" || parent != "" || dependsOn != "" || blockedBy != "" ||
 				len(attachFiles) > 0
@@ -497,6 +520,11 @@ func newIssuesUpdateCmd() *cobra.Command {
 				return fmt.Errorf("no updates specified. Use flags like --state, --priority, etc")
 			}
 
+			// Validate mutual exclusivity: --labels cannot be used with --add-labels or --remove-labels
+			if labels != "" && (addLabels != "" || removeLabels != "") {
+				return fmt.Errorf("--labels cannot be combined with --add-labels or --remove-labels. Use --labels to replace all labels, or --add-labels/--remove-labels for incremental changes")
+			}
+
 			// Get description from flag or stdin
 			desc, err := getDescriptionFromFlagOrStdin(description)
 			if err != nil {
@@ -540,6 +568,12 @@ func newIssuesUpdateCmd() *cobra.Command {
 			if labels != "" {
 				input.LabelIDs = parseCommaSeparated(labels)
 			}
+			if addLabels != "" {
+				input.AddLabelIDs = parseCommaSeparated(addLabels)
+			}
+			if removeLabels != "" {
+				input.RemoveLabelIDs = parseCommaSeparated(removeLabels)
+			}
 			if cycle != "" {
 				input.CycleID = &cycle
 			}
@@ -584,7 +618,9 @@ func newIssuesUpdateCmd() *cobra.Command {
 	cmd.Flags().StringVarP(&state, "state", "s", "", "Update workflow state name (e.g., 'In Progress', 'Backlog')")
 	cmd.Flags().StringVarP(&priority, "priority", "p", "", "Priority: 0-4 or none/urgent/high/normal/low")
 	cmd.Flags().StringVarP(&estimate, "estimate", "e", "", "Update story points estimate")
-	cmd.Flags().StringVarP(&labels, "labels", "l", "", "Update labels (comma-separated)")
+	cmd.Flags().StringVarP(&labels, "labels", "l", "", "Replace ALL labels (comma-separated); removes existing labels")
+	cmd.Flags().StringVar(&addLabels, "add-labels", "", "Add labels without removing existing ones (comma-separated)")
+	cmd.Flags().StringVar(&removeLabels, "remove-labels", "", "Remove specific labels without affecting others (comma-separated)")
 	cmd.Flags().StringVarP(&cycle, "cycle", "c", "", "Update cycle number or name")
 	cmd.Flags().StringVarP(&project, "project", "P", "", ProjectFlagDescription)
 	cmd.Flags().StringVarP(&assignee, "assignee", "a", "", "Update assignee name or email (use 'me' for yourself)")
diff --git a/internal/service/issue.go b/internal/service/issue.go
index ebab9a4..91fb110 100644
--- a/internal/service/issue.go
+++ b/internal/service/issue.go
@@ -549,20 +549,22 @@ func (s *IssueService) Create(input *CreateIssueInput) (string, error) {
 
 // UpdateIssueInput represents input for updating an issue
 type UpdateIssueInput struct {
-	Title       *string
-	Description *string
-	StateID     *string
-	AssigneeID  *string
-	ProjectID   *string
-	ParentID    *string
-	TeamID      *string
-	CycleID     *string
-	Priority    *int
-	Estimate    *float64
-	DueDate     *string
-	LabelIDs    []string
-	DependsOn   []string // Issue identifiers this issue depends on (stored in metadata)
-	BlockedBy   []string // Issue identifiers that block this issue (stored in metadata)
+	Title          *string
+	Description    *string
+	StateID        *string
+	AssigneeID     *string
+	ProjectID      *string
+	ParentID       *string
+	TeamID         *string
+	CycleID        *string
+	Priority       *int
+	Estimate       *float64
+	DueDate        *string
+	LabelIDs       []string // Replace mode: replaces all labels
+	AddLabelIDs    []string // Additive mode: labels to add (names, resolved later)
+	RemoveLabelIDs []string // Subtractive mode: labels to remove (names, resolved later)
+	DependsOn      []string // Issue identifiers this issue depends on (stored in metadata)
+	BlockedBy      []string // Issue identifiers that block this issue (stored in metadata)
 }
 
 // Update updates an existing issue
@@ -679,7 +681,8 @@ func (s *IssueService) Update(identifier string, input *UpdateIssueInput) (strin
 		}
 		linearInput.CycleID = &cycleID
 	}
-	if len(input.LabelIDs) > 0 {
+	hasLabelChanges := len(input.LabelIDs) > 0 || len(input.AddLabelIDs) > 0 || len(input.RemoveLabelIDs) > 0
+	if hasLabelChanges {
 		// Resolve team ID for label resolution
 		var teamIDForLabels string
 		var err error
@@ -701,16 +704,52 @@ func (s *IssueService) Update(identifier string, input *UpdateIssueInput) (strin
 			}
 		}
 
-		// Resolve label names to IDs
-		resolvedLabelIDs := make([]string, 0, len(input.LabelIDs))
-		for _, labelName := range input.LabelIDs {
-			labelID, err := s.client.ResolveLabelIdentifier(labelName, teamIDForLabels)
-			if err != nil {
-				return "", fmt.Errorf("failed to resolve label '%s': %w", labelName, err)
+		if len(input.LabelIDs) > 0 {
+			// Replace mode: resolve label names to IDs and set directly
+			resolvedLabelIDs := make([]string, 0, len(input.LabelIDs))
+			for _, labelName := range input.LabelIDs {
+				labelID, err := s.client.ResolveLabelIdentifier(labelName, teamIDForLabels)
+				if err != nil {
+					return "", fmt.Errorf("failed to resolve label '%s': %w", labelName, err)
+				}
+				resolvedLabelIDs = append(resolvedLabelIDs, labelID)
 			}
-			resolvedLabelIDs = append(resolvedLabelIDs, labelID)
+			linearInput.LabelIDs = resolvedLabelIDs
+		} else {
+			// Additive/subtractive mode: fetch current labels, merge/remove, then set
+			currentLabelIDs := s.extractCurrentLabelIDs(issue)
+
+			// Build a set from current labels for efficient merge/remove
+			labelSet := make(map[string]bool, len(currentLabelIDs))
+			for _, id := range currentLabelIDs {
+				labelSet[id] = true
+			}
+
+			// Add new labels
+			for _, labelName := range input.AddLabelIDs {
+				labelID, err := s.client.ResolveLabelIdentifier(labelName, teamIDForLabels)
+				if err != nil {
+					return "", fmt.Errorf("failed to resolve label '%s': %w", labelName, err)
+				}
+				labelSet[labelID] = true
+			}
+
+			// Remove labels
+			for _, labelName := range input.RemoveLabelIDs {
+				labelID, err := s.client.ResolveLabelIdentifier(labelName, teamIDForLabels)
+				if err != nil {
+					return "", fmt.Errorf("failed to resolve label '%s': %w", labelName, err)
+				}
+				delete(labelSet, labelID)
+			}
+
+			// Convert set back to slice
+			finalLabelIDs := make([]string, 0, len(labelSet))
+			for id := range labelSet {
+				finalLabelIDs = append(finalLabelIDs, id)
+			}
+			linearInput.LabelIDs = finalLabelIDs
 		}
-		linearInput.LabelIDs = resolvedLabelIDs
 	}
 
 	// Perform update only if there are GraphQL fields to update
@@ -819,6 +858,18 @@ func hasServiceFieldsToUpdate(input core.UpdateIssueInput) bool {
 		len(input.LabelIDs) > 0
 }
 
+// extractCurrentLabelIDs extracts the current label IDs from an issue
+func (s *IssueService) extractCurrentLabelIDs(issue *core.Issue) []string {
+	if issue.Labels == nil || len(issue.Labels.Nodes) == 0 {
+		return nil
+	}
+	ids := make([]string, len(issue.Labels.Nodes))
+	for i, label := range issue.Labels.Nodes {
+		ids[i] = label.ID
+	}
+	return ids
+}
+
 // resolveStateID resolves a state name to a valid state ID
 func (s *IssueService) resolveStateID(stateName, teamID string) (string, error) {
 	// Always resolve by name - no UUID support