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GRE vs IPIP Tunneling

By stretch | Monday, February 27, 2012 at 3:51 a.m. UTC

Generic Routing Encapsulation (GRE) and IP-in-IP (IPIP) are two rather similar tunneling mechanisms which are often confused. In this article, we'll examine the operation of each, how they differ, and when each should be used.


IP-in-IP encapsulation is exactly what it sounds like: one IP packet encapsulated inside another. The protocol field of the outer header is set to 4 for IPv4 or 41 for IPv6.


Here's a sample capture of IPv4-in-IPv4, and here's IPv6-in-IPv4. All combinations of IPv4/IPv6 encapsulation are technically possible, though not all may be supported on a given platform. Three IPIP encapsulation methods are possible on IOS: IPv4/IPv4, IPv6/IPv6, and IPv6/IPv4.

Router(config)# interface tun0
Router(config-if)# tunnel mode ?
  aurp    AURP TunnelTalk AppleTalk encapsulation
  cayman  Cayman TunnelTalk AppleTalk encapsulation
  dvmrp   DVMRP multicast tunnel
  eon     EON compatible CLNS tunnel
  gre     generic route encapsulation protocol
  ipip    IP over IP encapsulation
  ipsec   IPSec tunnel encapsulation
  iptalk  Apple IPTalk encapsulation
  ipv6    Generic packet tunneling in IPv6
  ipv6ip  IPv6 over IP encapsulation
  mpls    MPLS encapsulations
  nos     IP over IP encapsulation (KA9Q/NOS compatible)
  rbscp   RBSCP in IP tunnel


GRE (defined in RFC 2784 and updated by RFC 2890) goes a step further than IP-in-IP, adding an additional header of its own between the inside and outside IP headers.


The GRE header is variable in length, from 4 to 16 bytes, depending on which optional features have been enabled.


  • C, K, and S: Bit flags which are set to one if the checksum, key, and sequence number fields are present, respectively
  • Ver: GRE version number (zero)
  • Protocol: Ethertype of the encapsulated protocol
  • Checksum: Packet checksum (optional)
  • Key: Tunnel key (optional)
  • Sequence Number: GRE sequence number (optional)

Here's a sample capture of GRE in action. Note that GRE can theoretically encapsulate any layer three protocol with a valid Ether type, unlike IPIP, which can only encapsulate IP.

GRE can be encapsulated by either IPv4 or IPv6 on IOS. (The multipoint option is used for Dynamic Multipoint VPN (DMVPN).)

Router(config)# interface tun0
Router(config-if)# tunnel mode gre ?
  ip          over IP
  ipv6        over IPv6
  multipoint  over IP (multipoint)

By default, only a minimal header of four bytes will be included. Additional GRE options can be turned on and off independently of one another:

Router(config-if)# tunnel ?
  bandwidth           Set tunnel bandwidth informational parameter
  checksum            enable end to end checksumming of packets
  destination         destination of tunnel
  flow                flow options
  key                 security or selector key
  mode                tunnel encapsulation method
  mpls                MPLS tunnel commands
  path-mtu-discovery  Enable Path MTU Discovery on tunnel
  protection          Enable tunnel protection
  rbscp               Set tunnel RBSCP parameters
  route-via           Select subset of routes for tunnel transport
  sequence-datagrams  drop datagrams arriving out of order
  source              source of tunnel packets
  tos                 set type of service byte
  ttl                 set time to live
  udlr                associate tunnel with unidirectional interface
  vrf                 set tunnel vrf membership

To summarize, GRE can:

  • Encapsulate any layer three protocol (versus just IP)
  • Add an additional checksum (which isn't useful for TCP/IPv4)
  • Specify a tunnel key
  • Enforce packet sequencing

Of course, these features come at a cost of additional overhead; in cases where the extra capabilities of GRE aren't needed, IPIP will do just fine.

Posted in VPN

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February 27, 2012 at 8:33 p.m. UTC

GRE on most platforms is in software right? How about IP IN IP?

Alexandra Stanovska
February 28, 2012 at 2:12 p.m. UTC

Kam, I think there is support for GRE on most router platforms and they don't have problems when it comes to speed. Only switches may have problems when dealing with GRE tunneling, I think on most lower level switches it's not even officially supported, and 6500s are not very recommended to be used as tunnel termination points either.

Ray Soucy
March 6, 2012 at 11:05 p.m. UTC

Yep IP-IP can be very useful. Surprised it doesn't get more use.

Don't forget to adjust MTU accordingly though. Most transport will expect an MTU of 1500. Since you have some overhead on your tunnel you need to bring down the MTU and adjust TCP MSS to account for the overhead of the tunnel. Otherwise you'll end up with some funky MTU issues to troubleshoot.

Example in IOS for an IP-IP tunnel interface:

ip mtu 1480
ip tcp adjust-mss 1440

May 21, 2013 at 1:12 p.m. UTC

I tested both, and ip over ip tunnel has not keepalive option. In fact, if you specify a wrong tunnel destination ip, the tunnel will be always up.
In gre setup, unless you enter a valid destination, the tunnel will not come up.

Arlester Christian
October 8, 2013 at 2:58 a.m. UTC

Thanks for the informative article.

I am wondering if you could direct me to some type of open source code that would allow me to encapsulate one packet type within another - either using GRE or IP-in-IP - I would like to look at both otpions. Ideally I would like a matrix:

For node 1 sending to node 2:
In - I pick any packet type to be encapsulated
Out - I pick what packet type 1 should be encapsulated in
At node 2:
Encapsulated packets reassembled as if they had been originally sent

Your response to this is appreciated in advance,


April 23, 2016 at 6:16 p.m. UTC

Question: what will be the structure of layers if I tunnel with GRE? Something like : ARP()/IP()/GRE()/IP()/TCP() ??

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