A system and method for chaining one or more services in a service provider network. A service chaining policy and associated Service Path Identifier (SPID) are determined at an ingress node with respect to a particular data packet flow. If the service chaining policy involves one or more service nodes to be traversed by the data packet flow, each service node's EIDs and RLOCs are determined. A sequential data exchange process with the service nodes is effectuated using encapsulation of data packets based on the EIDs and RLOCs for obtaining services in accordance with the order of services set forth in the chaining policy.