diff --git a/label-application-rule-config-service-impl/src/main/java/org/hypertrace/label/application/rule/config/service/LabelApplicationRuleConfigServiceImpl.java b/label-application-rule-config-service-impl/src/main/java/org/hypertrace/label/application/rule/config/service/LabelApplicationRuleConfigServiceImpl.java
index 321bf4b3..f5cc0328 100644
--- a/label-application-rule-config-service-impl/src/main/java/org/hypertrace/label/application/rule/config/service/LabelApplicationRuleConfigServiceImpl.java
+++ b/label-application-rule-config-service-impl/src/main/java/org/hypertrace/label/application/rule/config/service/LabelApplicationRuleConfigServiceImpl.java
@@ -1,12 +1,20 @@
 package org.hypertrace.label.application.rule.config.service;
 
+import com.google.protobuf.util.JsonFormat;
 import com.typesafe.config.Config;
 import io.grpc.Channel;
 import io.grpc.Status;
 import io.grpc.stub.StreamObserver;
+import java.util.ArrayList;
+import java.util.Collections;
+import java.util.HashSet;
 import java.util.List;
+import java.util.Map;
+import java.util.Set;
 import java.util.UUID;
+import java.util.function.Function;
 import java.util.stream.Collectors;
+import lombok.SneakyThrows;
 import org.hypertrace.config.objectstore.ConfigObject;
 import org.hypertrace.config.objectstore.IdentifiedObjectStore;
 import org.hypertrace.config.service.change.event.api.ConfigChangeEventGenerator;
@@ -31,10 +39,13 @@ public class LabelApplicationRuleConfigServiceImpl
       "label.application.rule.config.service";
   static final String MAX_DYNAMIC_LABEL_APPLICATION_RULES_PER_TENANT =
       "max.dynamic.label.application.rules.per.tenant";
+  private static final String SYSTEM_LABEL_APPLICATION_RULES =
+      "label.application.rule.config.service.system.label.application.rules";
   static final int DEFAULT_MAX_DYNAMIC_LABEL_APPLICATION_RULES_PER_TENANT = 100;
   private final IdentifiedObjectStore<LabelApplicationRule> labelApplicationRuleStore;
   private final LabelApplicationRuleValidator requestValidator;
   private final int maxDynamicLabelApplicationRulesAllowed;
+  private Map<String, LabelApplicationRule> systemLabelApplicationRuleIdToRuleMap;
 
   public LabelApplicationRuleConfigServiceImpl(
       Channel configChannel, Config config, ConfigChangeEventGenerator configChangeEventGenerator) {
@@ -56,6 +67,20 @@ public LabelApplicationRuleConfigServiceImpl(
     this.labelApplicationRuleStore =
         new LabelApplicationRuleStore(configServiceBlockingStub, configChangeEventGenerator);
     this.requestValidator = new LabelApplicationRuleValidatorImpl();
+
+    buildSystemLabelApplicationRuleConfigs(config);
+  }
+
+  private void buildSystemLabelApplicationRuleConfigs(Config config) {
+    if (!config.hasPath(SYSTEM_LABEL_APPLICATION_RULES)) {
+      systemLabelApplicationRuleIdToRuleMap = Collections.emptyMap();
+      return;
+    }
+
+    List<? extends com.typesafe.config.ConfigObject> systemLabelApplicationRuleObjects =
+        config.getObjectList(SYSTEM_LABEL_APPLICATION_RULES);
+    systemLabelApplicationRuleIdToRuleMap =
+        buildSystemLabelApplicationRuleIdRuleMap(systemLabelApplicationRuleObjects);
   }
 
   @Override
@@ -92,10 +117,16 @@ public void getLabelApplicationRules(
     try {
       RequestContext requestContext = RequestContext.CURRENT.get();
       this.requestValidator.validateOrThrow(requestContext, request);
-      List<LabelApplicationRule> labelApplicationRules =
+      List<LabelApplicationRule> userLabelApplicationRules =
           this.labelApplicationRuleStore.getAllObjects(requestContext).stream()
               .map(ConfigObject::getData)
               .collect(Collectors.toUnmodifiableList());
+
+      // reorder user label application rules and system label application rules as per expected
+      // priority
+      List<LabelApplicationRule> labelApplicationRules =
+          reorderLabelApplicationRules(userLabelApplicationRules);
+
       responseObserver.onNext(
           GetLabelApplicationRulesResponse.newBuilder()
               .addAllLabelApplicationRules(labelApplicationRules)
@@ -140,6 +171,12 @@ public void deleteLabelApplicationRule(
     try {
       RequestContext requestContext = RequestContext.CURRENT.get();
       this.requestValidator.validateOrThrow(requestContext, request);
+
+      // do not allow deleting system label application rules
+      if (systemLabelApplicationRuleIdToRuleMap.containsKey(request.getId())) {
+        throw Status.INVALID_ARGUMENT.asRuntimeException();
+      }
+
       this.labelApplicationRuleStore
           .deleteObject(requestContext, request.getId())
           .orElseThrow(Status.NOT_FOUND::asRuntimeException);
@@ -166,4 +203,56 @@ private void checkRequestForDynamicLabelsLimit(
       }
     }
   }
+
+  private Map<String, LabelApplicationRule> buildSystemLabelApplicationRuleIdRuleMap(
+      List<? extends com.typesafe.config.ConfigObject> configObjects) {
+    return configObjects.stream()
+        .map(this::buildLabelApplicationRuleFromConfig)
+        .collect(Collectors.toUnmodifiableMap(LabelApplicationRule::getId, Function.identity()));
+  }
+
+  @SneakyThrows
+  private LabelApplicationRule buildLabelApplicationRuleFromConfig(
+      com.typesafe.config.ConfigObject configObject) {
+    String jsonString = configObject.render();
+    LabelApplicationRule.Builder builder = LabelApplicationRule.newBuilder();
+    JsonFormat.parser().merge(jsonString, builder);
+    return builder.build();
+  }
+
+  private List<LabelApplicationRule> reorderLabelApplicationRules(
+      List<LabelApplicationRule> userLabelApplicationRules) {
+    // This method sets the priority of rules. User label application rules -> user overridden
+    // system
+    // label application rules -> non overridden system label application rules
+    List<LabelApplicationRule> labelApplicationRules = new ArrayList<>();
+    List<LabelApplicationRule> overriddenSystemLabelApplicationRules = new ArrayList<>();
+    Set<String> overriddenSystemLabelApplicationRuleIds = new HashSet<>();
+
+    for (LabelApplicationRule userLabelApplicationRule : userLabelApplicationRules) {
+      String id = userLabelApplicationRule.getId();
+      if (systemLabelApplicationRuleIdToRuleMap.containsKey(id)) {
+        // user overridden system label application rules
+        overriddenSystemLabelApplicationRules.add(userLabelApplicationRule);
+        overriddenSystemLabelApplicationRuleIds.add(id);
+      } else {
+        // user label application rules
+        labelApplicationRules.add(userLabelApplicationRule);
+      }
+    }
+
+    // non overridden system label application rules
+    List<LabelApplicationRule> nonOverriddenSystemLabelApplicationRules =
+        systemLabelApplicationRuleIdToRuleMap.entrySet().stream()
+            .filter(
+                labelApplicationRuleEntry ->
+                    !overriddenSystemLabelApplicationRuleIds.contains(
+                        labelApplicationRuleEntry.getKey()))
+            .map(Map.Entry::getValue)
+            .collect(Collectors.toUnmodifiableList());
+
+    labelApplicationRules.addAll(overriddenSystemLabelApplicationRules);
+    labelApplicationRules.addAll(nonOverriddenSystemLabelApplicationRules);
+    return Collections.unmodifiableList(labelApplicationRules);
+  }
 }