This disclosure provides examples of a packet processing method, apparatus, and system. An example method includes: a first network device receives a first packet, determines a second packet based on the first packet and a first segment identifier SID, and forwards the second packet based on a label forwarding path. The second packet is an IPv6 packet, and includes a data packet and the first SID. The first SID includes a first prefix and at least one MPLS label. The first prefix indicates that the first SID carries the at least one MPLS label, and the at least one MPLS label indicates to use a label forwarding path determined by using the at least one MPLS label to implement IPv6 forwarding. According to the technical solution provided in this application, MPLS forwarding can be implemented on an IPv6 path.