Nodes on a link state protocol controlled Ethernet network implement a link state routing protocol such as IS-IS. Nodes assign an IP address or I-SID value per VRF and then advertise the IP addresses or I-SID values in IS-IS LSAs. When a packet is to be forwarded on the VPN, the ingress node identifies the VRF for the packet and performs an IP lookup in customer address space in the VRF to determine the next hop and the IP address or I-SID value of the VRF on the egress node. The ingress node prepends an I-SID or IP header to identify the VRFs and then creates a MAC header to allow the packet to be forwarded to the egress node on the link state protocol controlled Ethernet network. When the packet is received at the egress node, the MAC header is stripped from the packet and the appended I-SID or IP header is used to identify the egress VRF. A customer address space IP lookup is then performed in the identified VRF on the egress node using the information in the client IP header to determine how to forward the packet. Customer reachability information within a VPN may be exchanged between VRFs using iBGP, or directly by using link state protocol LSAs tagged with the relevant I-SID.