The technology disclosed herein enables a dynamic chain of service functions for processing network traffic. In a particular embodiment, a method includes, in a logical router for a logical network connecting service functions, receiving a network packet from a service function over the logical network after the network packet has been processed by the service function. The method further includes determining a new classification of the network packet and determining a next service function based on application of a service chain policy to the new classification. The method also includes directing the network packet to the next service function over the logical network.