A system and method of managing virtual link state includes receiving, at a first device, a first status update associated with the virtual link from a second device. The first status update includes a first management status value (RM) and a first operational status value (RO). The system and method further includes determining a second management status value (LM) associated with the first device, determining a second operational status value (LO) based on the first status update and the RM, transmitting a second status update for the virtual link to the second device, the second status update including the LM and the LO, and determining a state of the virtual link based on the RM, the RO, the LM, and the LO. The first device is configured to be coupled to the second device using a physical network link partitioned into a plurality of first virtual links including the virtual link.