A method includes receiving a packet from a first virtual machine (VM) in a distributed overlay virtual Ethernet (DOVE) network. A first virtual switch appends the packet with a tunnel header that is addressed for a second virtual switch. The first virtual switch acts as a virtual default gateway based on replacement of a first destination address for the virtual default gateway with a second destination address for a second VM. Multiple virtual gateways in the DOVE network share a same media access control (MAC) address.