Republic Records will no longer use the term "urban" to describe music produced by black artists.
The label, which is owned by the world's largest record label company Universal Music Group, said it was erasing the "outdated" tag from all parts of its business with immediate effect.
The company, which represents stars including Drake, Ariana Grande, Stevie Wonder and Taylor Swift, is urging all others in the music business to do the same.
Republic posted the announcement on its official Instagram page, saying: "Republic Records will remove 'Urban' from out verbiage in describing departments, employee titles and music genres."
It went on: "We encourage the rest of the music industry to follow suit as it is important to shape the future of what we want it to look like, and not adhere to the outdated structures of the past."
The term "urban" has frequently been applied as a catch-all to describe music genres including hip-hop, grime, R&B, soul and rap.
While the term "urban contemporary" was first used in a positive way the mid-1970s by black New York radio DJ Frankie Crocker, the generalisation has since taken on negative undertones.
The label has also formed an action committee to specifically address social justice issues.
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Artist management company Milk & Honey has also said it will be "eliminating" the word.
"We will no longer be using the term as we believe it's an important step forward, and an outdated word, which has no place in 2020 onwards," the firm said on social media.
Telling followers "change starts at home", the post signed off with the Dr Martin Luther King Jr quote: "The time is always right, to do what's right".
Both companies are just the latest to show their support for the Black Lives Matter movement, following the death of George Floyd.
Floyd, 46, was killed on 25 May in Minneapolis after white police officer Derek Chauvin was filmed kneeling on his neck for at least eight minutes while arresting him for allegedly using a counterfeit $20 note in a shop.
Last week the music industry paused work for a day as "an urgent step of action to provoke accountability and change".
Rihanna, Jamie Foxx, Drake, Nile Rodgers and music mogul Quincy Jones were among the stars to post black squares on their Instagram accounts as part of #BlackoutTuesday.