The increasing complexity and dynamics of grid environments have posed great challenges for secure and privacy-preserving collaboration in a virtual organization. In this paper, we propose PEACE-VO, a secure policy-enabled collaboration framework for virtual organizations. PEACE-VO employs role mapping to define trust relationships across autonomous domains. Nevertheless, a critical issue emerges when the system applies role mapping, which is potential policy conflict in a local domain. We first develop two concepts to depict such possible conflicts within the collaboration policy. Next, we propose a fully distributed evaluation algorithm to detect potential policy conflicts, which does not require domains to disclose their full local security policies and therefore preserves critical domain privacy. Finally, we design two dedicated protocols for virtual organization management and authorization services, respectively. We have successfully implemented the PEACE-VO framework with two f...