diff --git a/backend/infrahub/core/schema/schema_branch.py b/backend/infrahub/core/schema/schema_branch.py
index 35f514d870..280367397f 100644
--- a/backend/infrahub/core/schema/schema_branch.py
+++ b/backend/infrahub/core/schema/schema_branch.py
@@ -793,17 +793,17 @@ def validate_display_label(self) -> None:
                 if len(node_schema.display_labels) == 1:
                     # If the previous display_labels consist of a single attribute convert
                     # it to an attribute based display label
-                    converted_display_label = node_schema.display_labels[0]
-                    if "__" not in converted_display_label:
-                        # Previously we allowed defining a raw attribute name as a component of a
-                        # display_label, if this is the case we need to append '__value'
-                        converted_display_label = f"{converted_display_label}__value"
-                    update_candidate.display_label = converted_display_label
+                    update_candidate.display_label = _format_display_label_component(
+                        component=node_schema.display_labels[0]
+                    )
                 else:
                     # If the previous display label consists of multiple attributes
                     # convert it to a Jinja2 based display label
                     update_candidate.display_label = " ".join(
-                        [f"{{{{ {display_label} }}}}" for display_label in node_schema.display_labels]
+                        [
+                            f"{{{{ {_format_display_label_component(component=display_label)} }}}}"
+                            for display_label in node_schema.display_labels
+                        ]
                     )
                 self.set(name=name, schema=update_candidate)
 
@@ -2592,3 +2592,16 @@ def manage_object_template_schemas(self) -> None:
                 updated_used_by_node = set(chain(template_schema_kinds, set(core_node_schema.used_by)))
                 core_node_schema.used_by = sorted(updated_used_by_node)
                 self.set(name=InfrahubKind.NODE, schema=core_node_schema)
+
+
+def _format_display_label_component(component: str) -> str:
+    """Return correct format for display_label.
+
+    Previously both the format of 'name' and 'name__value' was
+    supported this function ensures that the proper 'name__value'
+    format is used
+    """
+    if "__" in component:
+        return component
+
+    return f"{component}__value"
diff --git a/backend/tests/unit/core/schema/schema_branch/test_schema_convert_display_labels.py b/backend/tests/unit/core/schema/schema_branch/test_schema_convert_display_labels.py
new file mode 100644
index 0000000000..029fc692d0
--- /dev/null
+++ b/backend/tests/unit/core/schema/schema_branch/test_schema_convert_display_labels.py
@@ -0,0 +1,103 @@
+from dataclasses import dataclass
+
+import pytest
+
+from infrahub.core.schema import AttributeSchema, NodeSchema, SchemaRoot
+from infrahub.core.schema.schema_branch import SchemaBranch
+
+
+@dataclass
+class DisplayLabelTestCase:
+    name: str
+    schema_root: SchemaRoot
+    display_label: str
+
+
+DISPLAY_LABEL_TEST_CASES: list[DisplayLabelTestCase] = [
+    DisplayLabelTestCase(
+        name="single_attribute_label_no_value",
+        schema_root=SchemaRoot(
+            nodes=[
+                NodeSchema(
+                    name="Widget",
+                    namespace="Test",
+                    attributes=[AttributeSchema(name="name", kind="Text"), AttributeSchema(name="status", kind="Text")],
+                    display_labels=["name"],
+                )
+            ]
+        ),
+        display_label="name__value",
+    ),
+    DisplayLabelTestCase(
+        name="single_attribute_label_with_value",
+        schema_root=SchemaRoot(
+            nodes=[
+                NodeSchema(
+                    name="Widget",
+                    namespace="Test",
+                    attributes=[AttributeSchema(name="name", kind="Text"), AttributeSchema(name="status", kind="Text")],
+                    display_labels=["name__value"],
+                )
+            ]
+        ),
+        display_label="name__value",
+    ),
+    DisplayLabelTestCase(
+        name="dual_attribute_label_no_value",
+        schema_root=SchemaRoot(
+            nodes=[
+                NodeSchema(
+                    name="Widget",
+                    namespace="Test",
+                    attributes=[AttributeSchema(name="name", kind="Text"), AttributeSchema(name="status", kind="Text")],
+                    display_labels=["name", "status"],
+                )
+            ]
+        ),
+        display_label="{{ name__value }} {{ status__value }}",
+    ),
+    DisplayLabelTestCase(
+        name="dual_attribute_label_mixed_value",
+        schema_root=SchemaRoot(
+            nodes=[
+                NodeSchema(
+                    name="Widget",
+                    namespace="Test",
+                    attributes=[AttributeSchema(name="name", kind="Text"), AttributeSchema(name="status", kind="Text")],
+                    display_labels=["name__value", "status"],
+                )
+            ]
+        ),
+        display_label="{{ name__value }} {{ status__value }}",
+    ),
+    DisplayLabelTestCase(
+        name="defined_display_label",
+        schema_root=SchemaRoot(
+            nodes=[
+                NodeSchema(
+                    name="Widget",
+                    namespace="Test",
+                    attributes=[AttributeSchema(name="name", kind="Text"), AttributeSchema(name="status", kind="Text")],
+                    display_labels=["name__value", "status"],
+                    display_label="{{ name__value|upper }}: {{ status__value|lower }}",
+                )
+            ]
+        ),
+        display_label="{{ name__value|upper }}: {{ status__value|lower }}",
+    ),
+]
+
+
+@pytest.mark.parametrize(
+    "test_case",
+    [pytest.param(tc, id=tc.name) for tc in DISPLAY_LABEL_TEST_CASES],
+)
+async def test_expected_final_display_label(
+    test_case: DisplayLabelTestCase,
+) -> None:
+    """Test that the final computed display label matches the expected value."""
+    schema_branch = SchemaBranch(cache={}, name="test")
+    schema_branch.load_schema(schema=test_case.schema_root)
+    schema_branch.process()
+    node = schema_branch.get_node(name="TestWidget", duplicate=False)
+    assert node.display_label == test_case.display_label