A system that can facilitate multicast forwarding via overlay multicast tunnels in a network is provided. The system can operate as a tunnel endpoint and form a first overlay tunnel with a peer tunnel endpoint. During operation, the system can receive a join request for a multicast group via the first overlay tunnel. The system can identify a local port of the system associated with the multicast group indicated by the join request. The system can then include the first overlay tunnel in a set of forwarding tunnels for multicast traffic of the multicast group based on the join request. Subsequently, the system can forward the multicast traffic of the multicast group received from a local port via the set of forwarding tunnels, thereby limiting forwarding of the multicast traffic to tunnel endpoints associated with the multicast group.