The labor theory of property, also called the labor theory of appropriation, labor theory of ownership, labor theory of entitlement, and principle of first appropriation, is a theory of natural law that holds that property originally comes about by the exertion of labor upon natural resources. The theory has been used to justify the homestead principle, which holds that one may gain whole permanent ownership of an unowned natural resource by performing an act of original appropriation.

In his Second Treatise on Government, the philosopher John Locke asked by what right an individual can claim to own one part of the world, when, according to the Bible, God gave the world to all humanity in common. He answered that, although persons belong to God, they own the fruits of their labor. When a person works, that labor enters into the object upon which they are working. Thus, the object becomes the property of that person; however, Locke held that one may only appropriate property in this fashion if the Lockean proviso held true, that is, "... there is enough, and as good, left in common for others".

Though the earth, and all inferiour creatures, be common to all men, yet every man has a property in his own person: this nobody has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature hath placed it in, it hath by this labour something annexed to it, that excludes the common right of other men. For this labour being the unquestionable property of the labourer, no man but he can have a right to what that is once joined to, at least where there is enough, and as good, left in common for others.

— John Locke, Two Treatises of Government, § 27

Locke argued in support of individual property rights as natural rights. Following the argument, the fruits of one's labor are one's own because one worked for it. Thus, any form of income tax would be hostile to natural law. Furthermore, the laborer must also hold a natural property right in the resource itself because exclusive ownership was immediately necessary for production.

Jean-Jacques Rousseau later criticized this second step in Discourse on Inequality, where he argues that the natural right argument does not extend to resources that one did not create. Both philosophers hold that the relation between labor and ownership pertains only to property that was significantly unused before such labor took place.

Land in its original state would be considered unowned by anyone, but if an individual applied his labor to the land by farming it, for example, it becomes his property. Merely placing a fence around land rather than using the land enclosed would not bring property into being according to most natural law theorists.

Economist Murray Rothbard put it this way: