This application provides a packet processing method, including: determining, by a first node, a first packet, where both a packet header and a segment routing header SRH of the first packet include a shared SID, the shared SID includes a first address identifier and a first function identifier, the first address identifier is used to identify address information of a terminating node, and the first function identifier is used to identify a same first function that needs to be performed by at least two nodes. If a plurality of nodes need to perform the same first function, the shared SID in the SRH can replace SIDs of all of the plurality of nodes. In this way, SID overheads can be reduced to save bandwidth resources, thereby helping improve system performance.