A system and method can provide switch based subnet management packet (SMP) traffic protection in a middleware machine environment. The middleware machine environment includes a network switch that operates to receive at least one SMP destined for a subnet management agent (SMA). The network switch can check whether the at least one SMP includes a correct management key, and prevent the at least one SMP from being forwarded to the destined SMA when at least one SMP does not include the correct management key. Furthermore, the network switch can specify a different management key for each external port and can enforce separate restrictions on ingress and egress SMP traffic at a particular external port.