diff --git a/public/app/plugins/datasource/prometheus/components/VariableQueryEditor.test.tsx b/public/app/plugins/datasource/prometheus/components/VariableQueryEditor.test.tsx
index 407023c24d3..28325ff4d7b 100644
--- a/public/app/plugins/datasource/prometheus/components/VariableQueryEditor.test.tsx
+++ b/public/app/plugins/datasource/prometheus/components/VariableQueryEditor.test.tsx
@@ -29,6 +29,23 @@ describe('PromVariableQueryEditor', () => {
     expect(migration).toEqual(expected);
   });
 
+  test('Allows for use of variables to interpolate label names in the label values query type.', () => {
+    const query: StandardPromVariableQuery = {
+      query: 'label_values($label_name)',
+      refId: 'StandardVariableQuery',
+    };
+
+    const migration: PromVariableQuery = variableMigration(query);
+
+    const expected: PromVariableQuery = {
+      qryType: PromVariableQueryType.LabelValues,
+      label: '$label_name',
+      refId: 'PrometheusDatasource-VariableQuery',
+    };
+
+    expect(migration).toEqual(expected);
+  });
+
   test('Migrates from jsonnet grafana as code variable to custom variable query', () => {
     const query = 'label_names()';
 
diff --git a/public/app/plugins/datasource/prometheus/migrations/variableMigration.ts b/public/app/plugins/datasource/prometheus/migrations/variableMigration.ts
index 17c44fb850a..f10987118c2 100644
--- a/public/app/plugins/datasource/prometheus/migrations/variableMigration.ts
+++ b/public/app/plugins/datasource/prometheus/migrations/variableMigration.ts
@@ -1,7 +1,7 @@
 import { PromVariableQuery, PromVariableQueryType as QueryType } from '../types';
 
 const labelNamesRegex = /^label_names\(\)\s*$/;
-const labelValuesRegex = /^label_values\((?:(.+),\s*)?([a-zA-Z_][a-zA-Z0-9_]*)\)\s*$/;
+const labelValuesRegex = /^label_values\((?:(.+),\s*)?([a-zA-Z_$][a-zA-Z0-9_]*)\)\s*$/;
 const metricNamesRegex = /^metrics\((.+)\)\s*$/;
 const queryResultRegex = /^query_result\((.+)\)\s*$/;