A new and improved index divider label application kit for helping to segregate and identify groups of different types and kinds of documents. The index divider label application kit includes at least one set of precut, pressure sensitive divider tab labels disposed on a backing sheet and at least one set of divider sheets, each having outwardly extending tabs vertically offset from one another for receiving the divider tab labels. The labels are spaced from one another in the same offset manner as the divider tabs and the labels are attached removably to a precut strip that is secured removably of the backing sheet. A set of ties hold the pre-cut labels to the strip. According to the novel method of label application, the precut strip is pulled from the backing sheet, along with the offset labels. The strip with labels is then aligned over a set of stacked divider sheets so that the labels and divider sheet tabs are in corresponding alignment with one another. The strip is then laid in engagement with the divider sheet tabs and then, using finger pressure, each label is pressed into engagement with its corresponding tab. The strip is then pulled away from the divider sheets, hesitating slightly at each divider tab allowing the ties to tear leaving each label perfectly positioned on its corresponding tab.