A system and method can support master negotiation in a network environment. A subnet manager (SM) can perform subnet discovery on a subnet in the network environment via a subnet manager (SM) in the subnet, wherein the subnet includes a plurality of SMs. Furthermore, the SM can communicate with the other SMs in the subnet to check for a number of known secret keys, and select a SM from the plurality of SMs as a master SM, wherein the master SM has the highest number of known keys.