A system for dispensing adhesive-backed labels includes a housing assembly defining a first dispensing outlet, a system for conveying a supply of label material along a feed path and a peeler bar, positionable from a first position to a second position, to effect an abrupt directional change in the feed path thereof, and cause the face material to separate from the liner material. A processor is employed to control the bi-directional displacement of the conveyance system and position the peeler bar within the housing such that the label material is: (i) conveyed downstream of the peeler bar when the peeler bar is in the first position, and (ii) drawn back across the peeler bar to cause a trailing edge of the face material to separate form the liner material when the peeler bar is in the second position.