Language not only reflects but also shapes how individuals perceive and respond to marginalized social groups. The present study investigates whether person-centered labels (e.g., “people who experience housing insecurity”) reduce stigma and promote supportive behavior toward homeless individuals compared to conventional labels (e.g., “the homeless”). Drawing on theories of linguistic framing, we test two competing accounts: the label-as-framing account, which predicts that language alters perception and behavior, and the label-as-reference account, which suggests that labels are inert referents to an already stigmatized group. In a between-subjects experiment (N = 390), participants were randomly assigned to one of two label conditions and completed measures of stigma, stereotype endorsement, and a donation-based behavioral task. Results showed that person-centered labels significantly reduced stigma and stereotypes, supporting the label-as-framing account. However, label conditions did not directly influence donation behavior. Instead, stigma partially mediated the relationship between labels and donations, and the effect of labeling on perception was moderated by participants’ perceived similarity between the two labels. These findings suggest that while person-centered language can shift attitudes, its ability to influence behavior may depend on deeper interpretive and motivational processes. Implications for stigma reduction and social policy are discussed.