Need for robust and high performance XML database systems increased due to growing XML data produced by today’s applications. Like indexes in relational databases, XML labeling is the key to XML querying. Assigning unique labels to nodes of a dynamic XML tree in which the labels encode all structural relationships between the nodes is a challenging problem. Early labeling schemes designed for static XML document generate short labels; however, their performance degrades in update intensive environments due to the need for relabeling. On the other hand, dynamic labeling schemes achieve dynamicity at the cost of large label size or complexity which results in poor query performance. This thesis presents OrderBased labeling scheme which is dynamic, simple and compact yet able to identify structural relationships among nodes. A set of performance tests show promising labeling, querying, update performance and optimum label size.