A system and method that automatically, transparently and securely controls software execution by identifying and classifying software, and locating a rule and associated security level for executing executable software. The security level may disallow the software's execution, restrict the execution to some extent, or allow unrestricted execution. To restrict software, a restricted access token may be computed that reduces software's access to resources, and/or removes privileges, relative to a user's normal access token. The rules that control execution for a given machine or user may be maintained in a restriction policy, e.g., locally maintained and/or in a group policy object distributable over a network. Software may be identified/classified by a hash of its content, by a digital signature, by its file system or network path, and/or by its URL zone. For software having multiple classifications, a precedence mechanism is provided to establish the applicable rule/security level.