One embodiment of the present invention provides a system that facilitates managing security policies for databases in a distributed system. During operation, the system creates multiple label security policies. The system stores these security policies in a directory and automatically propagates them from the directory to each database within the distributed system. In doing so, the system allows for applying policies to individual tables and schema in any database in the distributed system. The system facilitates centralized administration of security policies and removes the need for replicating policies, since the policy information is available in the directory.