Every distributed system requires a secure environment for its users. Security becomes even more important if users exchange sensitive information and value, across the network. An e-commerce environment is an example of a distributed system in which security is of a high priority. It is important that messages are confidential and tamper proof; users cannot repudiate transactions, and only authorized and properly authenticated users can access resources. These functionalities require proper security layer to provide access and sharing functions between the e-commerce systems and their respective customers. A Distributed Security Management System (DSMS) provides these services/functionalities. The DSMS is a security middleware for e-commerce servers, which coordinates secure... communication, access and sharing of resources between the distributed applications, objects, databases and entities that make up the system. It is designed to provide an interface between clients and the databases of the merchants in a secure way, such that authorized clients can retrieve and send information to the system securely. It is required to have high quality and high tolerance for errors since the server is required to be always available continually. It must also have a user-friendly interface and feature set. The DSMS design discussed in this paper provides these requirements using public and private key systems, data encryption standard encryption, log files and a secure hashing algorithm. A prototype of the system was implemented using the Java security platform.