diff --git a/mmv1/third_party/terraform/resources/resource_dataproc_cluster.go.erb b/mmv1/third_party/terraform/resources/resource_dataproc_cluster.go.erb
index 1cf7667d0799..466889209934 100644
--- a/mmv1/third_party/terraform/resources/resource_dataproc_cluster.go.erb
+++ b/mmv1/third_party/terraform/resources/resource_dataproc_cluster.go.erb
@@ -73,6 +73,22 @@ var (
 	}
 )
 
+const resourceDataprocGoogleProvidedLabelPrefix = "labels.goog-dataproc"
+
+func resourceDataprocLabelDiffSuppress(k, old, new string, d *schema.ResourceData) bool {
+	if strings.HasPrefix(k, resourceDataprocGoogleProvidedLabelPrefix) && new == "" {
+		return true
+	}
+
+	// Let diff be determined by labels (above)
+	if strings.HasPrefix(k, "labels.%") {
+		return true
+	}
+
+	// For other keys, don't suppress diff.
+	return false
+}
+
 func resourceDataprocCluster() *schema.Resource {
 	return &schema.Resource{
 		Create: resourceDataprocClusterCreate,
@@ -138,14 +154,12 @@ func resourceDataprocCluster() *schema.Resource {
 				Description: `The timeout duration which allows graceful decomissioning when you change the number of worker nodes directly through a terraform apply`,
 			},
 
-
 			"labels": {
 				Type:     schema.TypeMap,
 				Optional: true,
 				Elem:     &schema.Schema{Type: schema.TypeString},
-				// GCP automatically adds two labels
-				//    'goog-dataproc-cluster-uuid'
-				//    'goog-dataproc-cluster-name'
+				// GCP automatically adds labels
+				DiffSuppressFunc: resourceDataprocLabelDiffSuppress,
 				Computed:    true,
 				Description: `The list of labels (key/value pairs) to be applied to instances in the cluster. GCP generates some itself including goog-dataproc-cluster-name which is the name of the cluster.`,
 			},
diff --git a/mmv1/third_party/terraform/tests/resource_dataproc_cluster_test.go.erb b/mmv1/third_party/terraform/tests/resource_dataproc_cluster_test.go.erb
index 4b834dbe1b58..cfe20777def9 100644
--- a/mmv1/third_party/terraform/tests/resource_dataproc_cluster_test.go.erb
+++ b/mmv1/third_party/terraform/tests/resource_dataproc_cluster_test.go.erb
@@ -656,13 +656,7 @@ func TestAccDataprocCluster_withLabels(t *testing.T) {
 				Check: resource.ComposeTestCheckFunc(
 					testAccCheckDataprocClusterExists(t, "google_dataproc_cluster.with_labels", &cluster),
 
-					// We only provide one, but GCP adds three, so expect 4. This means unfortunately a
-					// diff will exist unless the user adds these in. An alternative approach would
-					// be to follow the same approach as properties, i.e. split in into labels
-					// and override_labels
-					//
-					// The config is currently configured with ignore_changes = ["labels"] to handle this
-					//
+					// We only provide one, but GCP adds three, so expect 4.
 					resource.TestCheckResourceAttr("google_dataproc_cluster.with_labels", "labels.%", "4"),
 					resource.TestCheckResourceAttr("google_dataproc_cluster.with_labels", "labels.key1", "value1"),
 				),
@@ -1439,12 +1433,6 @@ resource "google_dataproc_cluster" "with_labels" {
   labels = {
     key1 = "value1"
   }
-
-  # This is because GCP automatically adds its own labels as well.
-  # In this case we just want to test our newly added label is there
-  lifecycle {
-    ignore_changes = [labels]
-  }
 }
 `, rnd)
 }