A label paper processing apparatus includes a paper supply unit for supplying and feeding label paper, a digital printing unit for printing the label paper, a laser processing unit, and a pair of loop forming unit disposed between the paper supply unit and the digital printing unit, and between the digital printing unit and the laser processing unit, respectively, each forming a loop of the label paper. The laser processing unit is designed to half-cut the printed label paper and to form cutouts of a shape along a printed cutting locus with a laser beam so as to scan and trace the printed cutting locus, thereby facilitating control in half-cutting of the label paper. The loop forming unit is designed to form a loop of the label paper and to hold a length of the loop substantially constant so as to control feeding of the label paper.