Label switching is a technique of network relaying to overcome the problems perceived by traditional IP-table switching (also known as traditional layer 3 hop-by-hop routing). Here, the switching of network packets occurs at a lower level, namely the data link layer rather than the traditional network layer.

Each packet is assigned a label number and the switching takes place after examination of the label assigned to each packet. The switching is much faster than IP-routing. New technologies such as Multiprotocol Label Switching (MPLS) use label switching. The established ATM protocol also uses label switching at its core.

According to RFC 2475 (An Architecture for Differentiated Services, December 1998):

A related topic is multilayer switching, which discusses silicon-based wire-speed routing devices that examine not only network-layer packet information but also layer 4 (transport) and layer-7 (application) information.