diff --git a/cluster-autoscaler/cloudprovider/gce/templates.go b/cluster-autoscaler/cloudprovider/gce/templates.go
index 678d8002cf02..d54c876c527d 100644
--- a/cluster-autoscaler/cloudprovider/gce/templates.go
+++ b/cluster-autoscaler/cloudprovider/gce/templates.go
@@ -438,14 +438,39 @@ func extractExtendedResourcesFromKubeEnv(kubeEnv KubeEnv) (apiv1.ResourceList, e
 		klog.Warningf("error while obtaining extended_resources from AUTOSCALER_ENV_VARS; %v", err)
 		return nil, err
 	}
-
-	if !found {
-		return apiv1.ResourceList{}, nil
+	var extendedResourcesMap map[string]string
+	if found {
+		extendedResourcesMap, err = parseKeyValueListToMap(extendedResourcesAsString)
+		if err != nil {
+			return apiv1.ResourceList{}, err
+		}
+	} else {
+		extendedResourcesMap = make(map[string]string)
 	}
-
-	extendedResourcesMap, err := parseKeyValueListToMap(extendedResourcesAsString)
+	nodeLabelsAsString, found, err := extractAutoscalerVarFromKubeEnv(kubeEnv, "node_labels")
 	if err != nil {
-		return apiv1.ResourceList{}, err
+		klog.Warningf("error while obtaining node_labels from AUTOSCALER_ENV_VARS; %v", err)
+		return nil, err
+	}
+	if found {
+		nodeLabelsMap, err := parseKeyValueListToMap(nodeLabelsAsString)
+		if err != nil {
+			return apiv1.ResourceList{}, err
+		}
+		const extendedResourcesKeyPrefix = "clusterautoscaler-nodetemplate-resources."
+		for key, value := range nodeLabelsMap {
+			if strings.HasPrefix(key, extendedResourcesKeyPrefix) {
+				key = strings.TrimPrefix(key, extendedResourcesKeyPrefix)
+				if _, existsBefore := extendedResourcesMap[key]; existsBefore {
+					klog.Warningf("extended resource %s defined twice in template", key)
+				}
+				extendedResourcesMap[key] = value
+			}
+		}
+	}
+
+	if len(extendedResourcesMap) == 0 {
+		return apiv1.ResourceList{}, nil
 	}
 
 	extendedResources := apiv1.ResourceList{}
@@ -453,7 +478,7 @@ func extractExtendedResourcesFromKubeEnv(kubeEnv KubeEnv) (apiv1.ResourceList, e
 		if q, err := resource.ParseQuantity(quantity); err == nil && q.Sign() >= 0 {
 			extendedResources[apiv1.ResourceName(name)] = q
 		} else if err != nil {
-			klog.Warningf("ignoring invalid value in extended_resources defined in AUTOSCALER_ENV_VARS; %v", err)
+			klog.Warningf("ignoring invalid value in extended_resources or node_labels defined in AUTOSCALER_ENV_VARS; %v", err)
 		}
 	}
 	return extendedResources, nil
diff --git a/cluster-autoscaler/cloudprovider/gce/templates_test.go b/cluster-autoscaler/cloudprovider/gce/templates_test.go
index 4fa96f407e38..ebaf2eaa1ab9 100644
--- a/cluster-autoscaler/cloudprovider/gce/templates_test.go
+++ b/cluster-autoscaler/cloudprovider/gce/templates_test.go
@@ -1304,6 +1304,18 @@ func TestExtractExtendedResourcesFromKubeEnv(t *testing.T) {
 			expectedExtendedResources: apiv1.ResourceList{},
 			expectedErr:               true,
 		},
+		{
+			name: "two valid values one of them defined in node labels",
+			kubeEnvValue: "AUTOSCALER_ENV_VARS: node_labels=a=b,c=d,clusterautoscaler-nodetemplate-resources.test.co/test-resource=3,cloud.google.com/gke-nodepool=pool-3,cloud.google.com/gke-preemptible=true;" +
+				"node_taints='dedicated=ml:NoSchedule,test=dev:PreferNoSchedule,a=b:c';" +
+				"kube_reserved=cpu=1000m,memory=300000Mi;" +
+				"extended_resources=foo=bar,baz=10G",
+			expectedExtendedResources: apiv1.ResourceList{
+				apiv1.ResourceName("baz"):                   *resource.NewQuantity(10*units.GB, resource.DecimalSI),
+				apiv1.ResourceName("test.co/test-resource"): *resource.NewQuantity(3, resource.DecimalSI),
+			},
+			expectedErr: false,
+		},
 	}
 
 	for _, tc := range testCases {