diff --git a/.changeset/fix-action-button-label-slotchange.md b/.changeset/fix-action-button-label-slotchange.md
new file mode 100644
index 00000000000..88060681fdd
--- /dev/null
+++ b/.changeset/fix-action-button-label-slotchange.md
@@ -0,0 +1,7 @@
+---
+'@adobe/spectrum-wc': patch
+---
+
+**fix(action-button):** `<swc-action-button>` now tracks label content added or removed after the initial render.
+
+The default slot wasn't bound to `SlotTextController`'s `handleSlotChange`, so `hasLabel` only reflected content present at connect. Dynamically clearing or setting the label in a consumer app (e.g. a framework re-render) left the `swc-ActionButton--iconOnly` class and its spacing stale until an unrelated property change forced a re-render.
diff --git a/2nd-gen/packages/swc/components/action-button/ActionButton.ts b/2nd-gen/packages/swc/components/action-button/ActionButton.ts
index 35cb0c5f2b3..cf8c18820e8 100644
--- a/2nd-gen/packages/swc/components/action-button/ActionButton.ts
+++ b/2nd-gen/packages/swc/components/action-button/ActionButton.ts
@@ -184,7 +184,7 @@ export class ActionButton extends PendingMixin(ButtonBase) {
       >
         <slot name="icon"></slot>
         <span class="swc-ActionButton-label">
-          <slot></slot>
+          <slot @slotchange=${this.slotText.handleSlotChange}></slot>
         </span>
         ${this.renderPendingState()}
       </button>
diff --git a/2nd-gen/packages/swc/components/action-button/test/action-button.test.ts b/2nd-gen/packages/swc/components/action-button/test/action-button.test.ts
index 937a6ce4ed4..928cf2aca96 100644
--- a/2nd-gen/packages/swc/components/action-button/test/action-button.test.ts
+++ b/2nd-gen/packages/swc/components/action-button/test/action-button.test.ts
@@ -614,6 +614,69 @@ export const PendingBehaviorTest: Story = {
   },
 };
 
+export const DynamicLabelBehaviorTest: Story = {
+  render: () => html`
+    <swc-action-button>
+      <svg
+        slot="icon"
+        xmlns="http://www.w3.org/2000/svg"
+        viewBox="0 0 36 36"
+        aria-hidden="true"
+        focusable="false"
+      >
+        <path
+          d="M33.567 8.2L27.8 2.432a1.215 1.215 0 0 0-1.717 0L23 5.516 30.485 13l3.082-3.083a1.215 1.215 0 0 0 0-1.717zM21.586 7l-3.805 3.805 7.414 7.415 3.805-3.805zM3 29.788V37h7.212L23.414 23.8l-7.414-7.415zM6 32v-1.591l9.914-9.914 1.591 1.591L7.591 32z"
+        />
+      </svg>
+      Edit
+    </swc-action-button>
+  `,
+  play: async ({ canvasElement, step }) => {
+    const button = await getComponent<ActionButton>(
+      canvasElement,
+      'swc-action-button'
+    );
+    const internalButton = button.renderRoot.querySelector('button');
+    const labelNode = [...button.childNodes].find(
+      (node) => node.textContent?.trim() === 'Edit'
+    ) as ChildNode;
+
+    await step('starts icon+label, not icon-only', async () => {
+      expect(
+        internalButton?.classList.contains('swc-ActionButton--iconOnly'),
+        'icon-only class is absent while a label is slotted'
+      ).toBe(false);
+    });
+
+    await step(
+      'removing the label after first render adds icon-only',
+      async () => {
+        labelNode.remove();
+        // slotchange dispatches asynchronously after the assignment.
+        await Promise.resolve();
+        await button.updateComplete;
+
+        expect(
+          internalButton?.classList.contains('swc-ActionButton--iconOnly'),
+          'icon-only class is added once the label is removed'
+        ).toBe(true);
+      }
+    );
+
+    await step('re-adding a label removes icon-only', async () => {
+      button.append('Edit');
+      await Promise.resolve();
+      await button.updateComplete;
+
+      expect(
+        internalButton?.classList.contains('swc-ActionButton--iconOnly'),
+        'icon-only class is removed once a label is slotted again'
+      ).toBe(false);
+    });
+  },
+};
+DynamicLabelBehaviorTest.storyName = 'Dynamic label behavior';
+
 export const IconOnlyAriaTest: Story = {
   render: () => html`
     <swc-action-button accessible-label="Edit" pending>