A method and apparatus are disclosed from the perspective of a first UE (User Equipment) to support multiple services on a one-to-one sidelink communication link between the first UE and a second UE. In one embodiment, the first UE initiates a first service. The first UE also establishes the one-to-one sidelink communication link for the first service. Furthermore, the first UE negotiates a security configuration with the second UE for encrypting or decrypting data from the first service. In addition, the first UE initiates a second service. The first UE also encrypts or decrypts data from the second service with the security configuration used by the first service.