A multicast processing method, apparatus and system. A Virtual eXtensible Local Area Network (VXLAN) tunnel end point (VTEP) receives configuration information sent by a management layer; and receives a multicast packet sent by a VM managed by the VTEP; when performing VXLAN encapsulation on the multicast packet after determining that the virtual machine (VM) matches the VM tenant identifier, the VTEP encapsulates a destination address of the multicast packet into the multicast address on a layer 3 network according to a mapping relationship between a VM multicast address and a multicast address on the layer 3 network, and encapsulates a VXLAN source address of the multicast packet into a layer 3 network multicast source address according to a mapping relationship between a VM multicast source address and a layer 3 network multicast source address; and sends an encapsulated multicast packet to the layer 3 network.