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The Champagne winemaking community, under the auspices of the Comité Interprofessionnel du Vin de Champagne, has developed a comprehensive set of rules and regulations for all wine produced in the region to protect its economic interests. They include codification of the most suitable growing places; the most suitable grape types (most Champagne is a blend of up to three grape varieties, though other varieties are allowed); and a lengthy set of requirements specifying most aspects of viticulture. This includes pruning, vineyard yield, the degree of pressing, and the time that wine must remain on its lees before bottling. It can also limit the release of Champagne to market to maintain prices. Only when a wine meets these requirements may it be labeled Champagne. The rules agreed upon by the CIVC are submitted for the INAO's final approval.

The government organization that controls wine appellations in France, the Institut National des Appellations d'Origine, is preparing to make the largest revision of the region's legal boundaries since 1927, in response to economic pressures. With soaring demand and limited production of grapes, Champagne houses say the rising price could produce a consumer backlash that would harm the industry for years into the future. That, along with political pressure from villages that want to be included in the expanded boundaries, led to the move. Changes are subject to significant scientific review and are said to not impact Champagne produced grapes until 2020.

There are many sparkling wines produced worldwide, yet most legal structures reserve the term "champagne" exclusively for sparkling wines from the Champagne region, made in accordance with Comité Interprofessionel du Vin de Champagne regulations. In the European Union and many other countries, the name Champagne is legally protected by the Treaty of Madrid (1891) designating only the sparkling wine produced in the eponymous region and adhering to the standards defined for it as an Appellation d'origine contrôlée; the right was reaffirmed in the Treaty of Versailles after World War I. This legal protection has been accepted by numerous other countries worldwide. Most recently Canada, Australia and Chile signed agreements with Europe that will limit the use of the term "champagne" to only those products produced in the Champagne region. The United States acknowledges the exclusive nature of the "champagne" term and bans the use from all new US produced wines. Only those that had approval to use the term on labels before 2006 may continue to use it and only when it is accompanied by the wine's actual origin (e.g. California).

The majority of US produced sparkling wines do not use the term "champagne" on their labels. In the United States, name protection of wine growing place names is becoming more important. Several key U.S. wine regions such as those in California (Napa, Sonoma Valley, Paso Robles), Oregon, and Walla Walla, Washington now view the remaining semi-generic labels as harmful to their reputations. (c.f. Napa Declaration on Place).

Even the term méthode champenoise or champagne method was forbidden consequent to an EU court decision in 1994.[11] As of 2005, the description most often legally used for sparkling wines not from Champagne yet using the second fermentation in the bottle process is méthode traditionnelle. Sparkling wines are produced worldwide, and many producers use special terms to define them: Spain uses cava, Italy designates it spumante, and South Africa uses cap classique. An Italian sparkling wine made from the muscat grape uses the DOCG asti. In Germany, Sekt is a common sparkling wine. Other French wine regions cannot use the name Champagne, i.e. Burgundy and Alsace produce Crémant. Sparkling wines mislabeled Champagne can be and often are seized and destroyed by legal authorities.

Regardless of the legal requirements for labeling, extensive education efforts by the Champagne region and the use of alternative names by non-Champagne quality sparkling wine producers, some consumers and wine sellers continue to regard champagne as a generic term for white sparkling wines, regardless of origin. The laws described above were intended to reserve the term as a designation of origin.

The village of Champagne, Switzerland has traditionally made a still wine labeled as "champagne", the earliest records of viticulture dated to 1657. In an accord with the EU, the Swiss government conceded in 1999 that by 2004 the village would phase out use of the name. Sales dropped from 110,000 bottles a year to 32,000 after the change.