diff --git a/Lib/mailbox.py b/Lib/mailbox.py
index 5bb9843eba31b4..847bc77176c1d1 100644
--- a/Lib/mailbox.py
+++ b/Lib/mailbox.py
@@ -1426,9 +1426,9 @@ def _generate_toc(self):
                 if len(stops) < len(starts):
                     stops.append(line_pos - len(linesep))
                 starts.append(next_pos)
-                labels = [label.strip() for label
-                                        in self._file.readline()[1:].split(b',')
-                                        if label.strip()]
+                labels = [label.strip().decode(errors='surrogateescape')
+                          for label in self._file.readline()[1:].split(b',')
+                          if label.strip()]
                 label_lists.append(labels)
             elif line == b'\037' or line == b'\037' + linesep:
                 if len(stops) < len(starts):
@@ -1447,7 +1447,7 @@ def _pre_mailbox_hook(self, f):
         babyl = b'BABYL OPTIONS:' + linesep
         babyl += b'Version: 5' + linesep
         labels = self.get_labels()
-        labels = (label.encode() for label in labels)
+        labels = (label.encode(errors='surrogateescape') for label in labels)
         babyl += b'Labels:' + b','.join(labels) + linesep
         babyl += b'\037'
         f.write(babyl)
@@ -1473,10 +1473,12 @@ def _install_message(self, message):
                     labels.append(label)
             self._file.write(b'1')
             for label in special_labels:
-                self._file.write(b', ' + label.encode())
+                label = label.encode(errors='surrogateescape')
+                self._file.write(b', ' + label)
             self._file.write(b',,')
             for label in labels:
-                self._file.write(b' ' + label.encode() + b',')
+                label = label.encode(errors='surrogateescape')
+                self._file.write(b' ' + label + b',')
             self._file.write(linesep)
         else:
             self._file.write(b'1,,' + linesep)
diff --git a/Lib/test/test_mailbox.py b/Lib/test/test_mailbox.py
index f1100f98ab9a06..0fdf0cc7ac42a9 100644
--- a/Lib/test/test_mailbox.py
+++ b/Lib/test/test_mailbox.py
@@ -1521,6 +1521,38 @@ def test_labels(self):
         self._box.remove(key1)
         self.assertEqual(set(self._box.get_labels()), set(['blah']))
 
+    def test_labels_read_from_file(self):
+        # Labels read back from the file are strings.
+        msg = mailbox.BabylMessage(self._template % 0)
+        msg.set_labels(['unseen', 'foo'])
+        self._box.add(msg)
+        self._box.add(mailbox.BabylMessage(self._template % 1))
+        self._box.close()
+        self._box = self._factory(self._path)
+        self.assertEqual(sorted(self._box[0].get_labels()), ['foo', 'unseen'])
+        self.assertEqual(self._box.get_labels(), ['foo'])
+        self._box.remove(1)
+        self._box.close()
+        self._box = self._factory(self._path)
+        self.assertEqual(sorted(self._box[0].get_labels()), ['foo', 'unseen'])
+        self.assertEqual(self._box.get_labels(), ['foo'])
+
+    def test_non_utf8_labels(self):
+        # Labels that are not valid UTF-8 are kept as they are.
+        msg = mailbox.BabylMessage(self._template % 0)
+        msg.set_labels(['caf\udce9'])
+        self._box.add(msg)
+        self._box.add(mailbox.BabylMessage(self._template % 1))
+        self._box.close()
+        with open(self._path, 'rb') as f:
+            self.assertIn(b' caf\xe9,', f.read())
+        self._box = self._factory(self._path)
+        self.assertEqual(self._box[0].get_labels(), ['caf\udce9'])
+        self._box.remove(1)
+        self._box.close()
+        with open(self._path, 'rb') as f:
+            self.assertIn(b'Labels:caf\xe9', f.read())
+
     def test_visible_headers(self):
         # gh-157880: visible headers are written to the file and read back
         msg = mailbox.BabylMessage(self._template % 0)
diff --git a/Misc/NEWS.d/next/Library/2026-10-24-13-39-23.gh-issue-160598.ROamiQ.rst b/Misc/NEWS.d/next/Library/2026-10-24-13-39-23.gh-issue-160598.ROamiQ.rst
new file mode 100644
index 00000000000000..4220af1d464e71
--- /dev/null
+++ b/Misc/NEWS.d/next/Library/2026-10-24-13-39-23.gh-issue-160598.ROamiQ.rst
@@ -0,0 +1,3 @@
+Fix :class:`mailbox.Babyl` returning message labels as :class:`bytes`
+after reading a mailbox file, which made unseen messages appear as read
+when converted to other formats and made rewriting the mailbox fail.