A multi-stage scheduler that provides improved bandwidth utilization in the presence of processor intensive traffic is disclosed. Incoming traffic is separated into multiple traffic flows. Data blocks of the traffic flows are scheduled for access to a processor resource using a first scheduling algorithm, and processed by the processor resource as scheduled by the first scheduling algorithm. The processed data blocks of the traffic flows are scheduled for access to a bandwidth resource using a second scheduling algorithm, and provided to the bandwidth resource as scheduled by the second scheduling algorithm. The multi-stage scheduler in an illustrative embodiment may be implemented in a network processor integrated circuit or other processing device of a communication system.