When Internet of Things (IoT) applications become a part of people’s daily life, security issues in IoT have caught significant attention in both academia and industry. Compared to traditional computing systems, IoT systems have more inherent vulnerabilities, and meanwhile, could have higher security requirements. However, the current design of IoT does not effectively address the higher security requirements posed by those vulnerabilities. Many recent attacks on IoT systems have shown that novel security solutions are needed to protect this emerging system. This paper aims to analyze security challenges resulted from the special characteristics of the IoT systems and the new features of the IoT applications. This could help pave the road to better security solution design. In addition, three architectural security designs are proposed and analyzed. Examples of how to implement these designs are discussed. Finally, for each layer in IoT architecture, open issues are also identified.