Sample code as follows:
--------Use it in your label's paint event
Graphics gLable = yourLabel.CreateGraphics();
StringFormat sfLabel = new StringFormat();
sfLabel.Alignment = StringAlignment.Near;
sfLabel.FormatFlags |= StringFormatFlags.FitBlackBox;//See it detail in msdn
// Draw string fit to your label bound.
gLabel.DrawString( yourLabel.Text,
yourLabel.Font,
new brush( yourLabel.BackColor),
new rectangle( 0, 0, yourLabel.Width, yourLabel.Height ),
sfLabel );