A system and method can support a scalable packet forwarding mechanism in a middleware machine environment. The middleware machine environment can comprise one or more network switch instances, wherein each network switch instance is associated with one or more external ports that are adapted to receive data packets from an external network. Furthermore, the middleware machine environment can comprise a plurality of packet dispatching components, each of which is responsible for forwarding a data packet to a virtual machine on a host server that operates to process the data packet. Additionally, a link aggregation component can combine multiple external ports into a logical port, and wherein the bandwidth of the logical port is linearly scaled accordingly to a total number of the multiple external ports.