A method and system for virtual networking is provided. The method includes receiving logical service chain data describing a source virtual network ID (VNID) for a source virtual network, a destination VNID for a destination virtual network, and a group of intermediate waypoints. The logical service chain data defines a logical service chain. A set of networked virtual environments (NVE) is selected to support the group of intermediate waypoints and the logical service chain is deployed and mapped to a physical service chain implemented on the set of NVEs. The logical service chain data is transmitted to a network virtual authority (NVA) and a packet forwarding mechanism is introduced when a packet is received from an overlay port or an underlay port. An associated IP address is requested and the first packet is analyzed.