One embodiment of the present invention facilitates address resolution protocol (ARP) resolution in an extended subnet. A gateway of a first segment of the extended subnet can determine that a layer-2 address corresponding to a layer-3 destination address of a packet is locally unavailable. The gateway can then determine whether a respective egress interface of an ARP request for the layer-3 destination address is associated with a layer-2 subnet extension from the first segment to a second segment of the extended subnet. The extension can provide a common layer-2 broadcast domain comprising the first and second segments with a same default gateway layer-3 address. If the egress interface is associated with the extension, the gateway can insert a layer-3 address of a first endpoint associated with the extension as a source protocol address in the ARP request. The gateway can send the modified ARP request via the egress interface.