diff --git a/lib/compress.js b/lib/compress.js
index f1557848..c2a547eb 100644
--- a/lib/compress.js
+++ b/lib/compress.js
@@ -1951,13 +1951,26 @@ Compressor.prototype.compress = function(node) {
         return statements;
 
         function last_of(compressor, predicate) {
-            var block = compressor.self(), stat, level = 0;
+            var block = compressor.self(), level = 0;
             do {
-                do {
+                if (block instanceof AST_Catch || block instanceof AST_Finally) {
+                    block = compressor.parent(level++);
+                } else if (block instanceof AST_LabeledStatement) {
+                    block = block.body;
+                }
+                var stat = null;
+                while (true) {
                     if (predicate(block)) return true;
                     block = compressor.parent(level++);
-                } while (block instanceof AST_If && (stat = block));
-            } while ((block instanceof AST_BlockStatement || block instanceof AST_Scope)
+                    if (!(block instanceof AST_If)) break;
+                    stat = block;
+                }
+            } while (stat
+                && (block instanceof AST_BlockStatement
+                    || block instanceof AST_Catch
+                    || block instanceof AST_Finally
+                    || block instanceof AST_Scope
+                    || block instanceof AST_Try)
                 && is_last_statement(block.body, stat));
         }
 
@@ -3677,6 +3690,11 @@ Compressor.prototype.compress = function(node) {
         function eliminate_dead_code(statements, compressor) {
             var has_quit;
             var self = compressor.self();
+            if (self instanceof AST_Catch || self instanceof AST_Finally) {
+                self = compressor.parent();
+            } else if (self instanceof AST_LabeledStatement) {
+                self = self.body;
+            }
             for (var i = 0, n = 0, len = statements.length; i < len; i++) {
                 var stat = statements[i];
                 if (stat instanceof AST_LoopControl) {
@@ -5965,10 +5983,19 @@ Compressor.prototype.compress = function(node) {
     });
 
     OPT(AST_LabeledStatement, function(self, compressor) {
-        if (compressor.option("dead_code")
-            && self.body instanceof AST_Break
-            && compressor.loopcontrol_target(self.body) === self.body) {
-            return make_node(AST_EmptyStatement, self);
+        if (self.body instanceof AST_If || self.body instanceof AST_Break) {
+            var body = tighten_body([ self.body ], compressor);
+            switch (body.length) {
+              case 0:
+                self.body = make_node(AST_EmptyStatement, self);
+                break;
+              case 1:
+                self.body = body[0];
+                break;
+              default:
+                self.body = make_node(AST_BlockStatement, self, { body: body });
+                break;
+            }
         }
         return compressor.option("unused") && self.label.references.length == 0 ? self.body : self;
     });
diff --git a/test/compress/labels.js b/test/compress/labels.js
index 4bf32648..42dd3251 100644
--- a/test/compress/labels.js
+++ b/test/compress/labels.js
@@ -111,6 +111,7 @@ labels_5: {
 labels_6: {
     options = {
         dead_code: true,
+        unused: true,
     }
     input: {
         out: break out;
@@ -208,6 +209,59 @@ labels_10: {
     expect_stdout: "PASS"
 }
 
+labels_11: {
+    options = {
+        conditionals: true,
+        if_return: true,
+        unused: true,
+    }
+    input: {
+        L: if (console.log("PASS"))
+            break L;
+    }
+    expect: {
+        console.log("PASS");
+    }
+    expect_stdout: "PASS"
+}
+
+labels_12: {
+    options = {
+        conditionals: true,
+        dead_code: true,
+        if_return: true,
+        unused: true,
+    }
+    input: {
+        L: try {
+            if (console.log("foo"))
+                break L;
+            throw "bar";
+        } catch (e) {
+            console.log(e);
+            break L;
+        } finally {
+            if (console.log("baz"))
+                break L;
+        }
+    }
+    expect: {
+        try {
+            if (!console.log("foo"))
+                throw "bar";
+        } catch (e) {
+            console.log(e);
+        } finally {
+            console.log("baz")
+        }
+    }
+    expect_stdout: [
+        "foo",
+        "bar",
+        "baz",
+    ]
+}
+
 issue_4466_1: {
     mangle = {
         v8: false,