Full code after the jump.

View MXML

<?xml version="1.0" encoding="utf-8"?>
<!-- http://blog.flexexamples.com/2007/10/29/defining-a-custom-label-function-on-a-flex-tree-control/ -->
<mx:Application xmlns:mx="http://www.adobe.com/2006/mxml"
        layout="vertical"
        verticalAlign="middle"
        backgroundColor="white">

    <mx:Script>
        <![CDATA[
            private function tree_labelFunc(item:XML):String {
                var label:String;
                switch (item.localName()) {
                    case "league":
                        label = item.@title;
                        break;
                    case "team":
                        label = item.@name;
                        break;
                    case "stadium":
                        label = item.name;
                }
                return label;
            }
        ]]>
    </mx:Script>

    <mx:XML id="mlb" source="mlb.xml" />

    <mx:Tree id="tree"
            dataProvider="{mlb.league}"
            labelFunction="tree_labelFunc"
            width="300"
            rowCount="8" />

</mx:Application>

View mlb.xml

<?xml version="1.0" encoding="utf-8"?>
<!-- http://blog.flexexamples.com/2007/10/29/defining-a-custom-label-function-on-a-flex-tree-control/ -->
<mlb>
    <league id="al" title="American League">
        <team name="Baltimore Orioles" />
        <team name="Boston Red Sox" />
        <team name="Chicago White Sox" />
        <team name="Cleveland Indians" />
        <team name="Detroit Tigers" />
        <team name="Kansas City Royals" />
        <team name="Los Angeles Angels of Anaheim" />
        <team name="Minnesota Twins" />
        <team name="New York Yankees" />
        <team name="Oakland Athletics" />
        <team name="Seattle Mariners" />
        <team name="Tampa Bay Devil Rays" />
        <team name="Texas Rangers" />
        <team name="Toronto Blue Jays" />
    </league>
    <league id="nl" title="National League">
        <team name="Arizona Diamondbacks" />
        <team name="Atlanta Braves" />
        <team name="Chicago Cubs" />
        <team name="Cincinnati Reds" />
        <team name="Colorado Rockies" />
        <team name="Florida Marlins" />
        <team name="Houston Astros" />
        <team name="Los Angeles Dodgers" />
        <team name="Milwaukee Brewers" />
        <team name="New York Mets" />
        <team name="Philadelphia Phillies" />
        <team name="Pittsburgh Pirates" />
        <team name="San Diego Padres" />
        <team name="San Francisco Giants" />
        <team name="St. Louis Cardinals" />
        <team name="Washington Nationals" />
    </league>
</mlb>

View source is enabled in the following example.