Biomedical image analysis algorithm validation depends on high-quality annotation of reference datasets, for which labeling instructions are key. Despite the importance of these instructions, their optimization remains largely unexplored. Here, we present the first systematic study of labeling instructions and their impact on annotation quality in the field. Through comprehensive examination of professional practice and international competitions registered at the MICCAI Society, we uncovered a discrepancy between annotators’ needs for labeling instructions and their current quality and availability. Based on an analysis of 14,040 images annotated by 156 annotators from four professional companies and 708 Amazon Mechanical Turk (MTurk) crowdworkers using instructions with different information density levels, we further found that including exemplary images significantly boosts annotation performance compared to text-only descriptions, while solely extending text descriptions does not. Finally, professional annotators constantly outperform MTurk crowdworkers. Our study raises awareness for the need of quality standards in biomedical image analysis labeling instructions.