Labuan is an island off the northwest coast of Borneo. In 1840 the British used the previously uninhabited island as a base for operations against piracy and later as a station for the submarine cable between Singapore and Hong Kong. The Sultan of Brunei ceded Labuan to Britain in 1846, and the island became a Crown Colony in 1848. It was made a part of North Borneo in January 1890, then in October 1906 joined to the Straits Settlements.
Labuan was occupied by Japan from December 1941 to June 1945, after which it was under British military administration (along with the rest of the Straits Settlements), then joined to British North Borneo, in July 1946, which in turn became a part of Malaysia in 1963.

A post office was operating in Labuan by 1864, and used a circular date stamp as postmark. Mail was routed through Singapore. From 1867 Labuan officially used the postage stamps of the Straits Settlements, then issued its own beginning in May 1879.
The first stamps of Labuan depict the usual profile of Queen Victoria, but are unusual for being inscribed in Arabic and Chinese scripts in addition to "LABUAN POSTAGE". Perennial shortages necessitated a variety of surcharges in between the several reprints and color changes of the 1880s. The original stamps were engraved, but the last of the design, in April 1894, were done by lithography.
A last Labuan-only design came out in 1902, depicting a crown and inscribed "LABUAN COLONY". After the incorporation into the Straits Settlements in 1906, Labuan ceased issuing its own stamps, although they remained valid for some time. Many of the remainders were cancelled to order for sale to collectors.