Scalable and segregated network virtualization

One embodiment of the present invention provides a switch 101, 102, 103, 104, 105 in a network 100. The switch includes a virtual network module and a forwarding module. The virtual network module includes a global virtual local area network (VLAN) tag in a packet. The global VLAN tag is mapped to an edge VLAN tag in the packet and is associated with a datacenter domain 172, 174, wherein a VLAN 152, 154 associated with a packet received from an edge port of the switch can be referred to as an edge VLAN and a corresponding identifier or tag can be referred to as an edge VLAN tag. The datacenter domain indicates a set of ports associated with a datacenter 120 130. The forwarding module identifies an egress edge port for the packet based on the global VLAN tag. Preferably, the global VLAN tag is mapped to an internal virtual identifier (IVID), which is internal and local to the switch. Moreover, the forwarding module preferably is further adapted to identify the egress edge port based on a mapping between the eg