diff --git a/matter_server/server/device_controller.py b/matter_server/server/device_controller.py
index 1420d37a..9df276c1 100644
--- a/matter_server/server/device_controller.py
+++ b/matter_server/server/device_controller.py
@@ -296,6 +296,13 @@ def get_node(self, node_id: int) -> MatterNodeData:
     @api_command(APICommand.SET_DEFAULT_FABRIC_LABEL)
     async def set_default_fabric_label(self, label: str | None) -> None:
         """Set the default fabric label."""
+        if label is not None and len(label) > 32:
+            LOGGER.info(
+                "Fabric label '%s' exceeds 32 characters, truncating to '%s'",
+                label,
+                label[:32],
+            )
+            label = label[:32]
         self._default_fabric_label = label
 
     @api_command(APICommand.COMMISSION_WITH_CODE)
diff --git a/tests/test_fabric_label_validation.py b/tests/test_fabric_label_validation.py
new file mode 100644
index 00000000..bc609dcd
--- /dev/null
+++ b/tests/test_fabric_label_validation.py
@@ -0,0 +1,120 @@
+"""Test fabric label validation functionality."""
+# pylint: disable=protected-access
+
+import logging
+
+import pytest
+
+
+class MockDeviceController:
+    """Mock device controller with fabric label validation logic."""
+
+    def __init__(self):
+        """Initialize mock device controller."""
+        self._default_fabric_label = None
+        self.logger = logging.getLogger(__name__)
+
+    async def set_default_fabric_label(self, label: str | None) -> None:
+        """Set the default fabric label with validation."""
+        if label is not None and len(label) > 32:
+            self.logger.info(
+                "Fabric label '%s' exceeds 32 characters, truncating to '%s'",
+                label,
+                label[:32],
+            )
+            label = label[:32]
+        self._default_fabric_label = label
+
+
+class TestFabricLabelValidation:
+    """Test fabric label length validation."""
+
+    @pytest.fixture
+    def mock_device_controller(self):
+        """Create a mock device controller for testing."""
+        return MockDeviceController()
+
+    @pytest.mark.asyncio
+    async def test_fabric_label_under_32_chars(self, mock_device_controller, caplog):
+        """Test that fabric labels under 32 characters are not modified."""
+        label = "Short Label"
+
+        with caplog.at_level(logging.INFO):
+            await mock_device_controller.set_default_fabric_label(label)
+
+        assert mock_device_controller._default_fabric_label == label
+        assert not caplog.records  # No log messages should be generated
+
+    @pytest.mark.asyncio
+    async def test_fabric_label_exactly_32_chars(self, mock_device_controller, caplog):
+        """Test that fabric labels exactly 32 characters are not modified."""
+        label = "A" * 32  # Exactly 32 characters
+
+        with caplog.at_level(logging.INFO):
+            await mock_device_controller.set_default_fabric_label(label)
+
+        assert mock_device_controller._default_fabric_label == label
+        assert len(mock_device_controller._default_fabric_label) == 32
+        assert not caplog.records  # No log messages should be generated
+
+    @pytest.mark.asyncio
+    async def test_fabric_label_over_32_chars_truncated(
+        self, mock_device_controller, caplog
+    ):
+        """Test that fabric labels over 32 characters are truncated."""
+        long_label = (
+            "This is a very long fabric label that exceeds the 32 character limit"
+        )
+        expected_truncated = long_label[:32]
+
+        with caplog.at_level(logging.INFO):
+            await mock_device_controller.set_default_fabric_label(long_label)
+
+        assert mock_device_controller._default_fabric_label == expected_truncated
+        assert len(mock_device_controller._default_fabric_label) == 32
+
+        # Check that a log message was generated
+        assert len(caplog.records) == 1
+        assert caplog.records[0].levelname == "INFO"
+        assert "exceeds 32 characters, truncating" in caplog.records[0].message
+        assert long_label in caplog.records[0].message
+        assert expected_truncated in caplog.records[0].message
+
+    @pytest.mark.asyncio
+    async def test_fabric_label_none_value(self, mock_device_controller, caplog):
+        """Test that None values are handled properly."""
+        with caplog.at_level(logging.INFO):
+            await mock_device_controller.set_default_fabric_label(None)
+
+        assert mock_device_controller._default_fabric_label is None
+        assert not caplog.records  # No log messages should be generated
+
+    @pytest.mark.asyncio
+    async def test_fabric_label_empty_string(self, mock_device_controller, caplog):
+        """Test that empty strings are handled properly."""
+        label = ""
+
+        with caplog.at_level(logging.INFO):
+            await mock_device_controller.set_default_fabric_label(label)
+
+        assert mock_device_controller._default_fabric_label == label
+        assert not caplog.records  # No log messages should be generated
+
+    @pytest.mark.asyncio
+    async def test_fabric_label_unicode_characters(
+        self, mock_device_controller, caplog
+    ):
+        """Test that unicode characters are handled properly in truncation."""
+        # Unicode string that's longer than 32 characters
+        unicode_label = "Café™ ★ 🏠 This is a unicode string that exceeds 32 chars"
+        expected_truncated = unicode_label[:32]
+
+        with caplog.at_level(logging.INFO):
+            await mock_device_controller.set_default_fabric_label(unicode_label)
+
+        assert mock_device_controller._default_fabric_label == expected_truncated
+        assert len(mock_device_controller._default_fabric_label) == 32
+
+        # Check that a log message was generated
+        assert len(caplog.records) == 1
+        assert "exceeds 32 characters, truncating" in caplog.records[0].message