A method and apparatus for setting up a Point-to-Point Protocol (PPP) link between a Terminal Equipment (TE) and a Mobile Terminal (MT), and between the MT and a Base Station Interworking Function (IWF). A method for setting up a PPP link for transmitting a packet between a TE and an IWF, which connects the TE and a packet network to each other, includes determining first option information to be used for a PPP link on a Um interface between an MT and the IWF, determining second option information to be used for a PPP link on an Rm interface between the MT and the TE, to make the second option information identical to the first option information; and transmitting, by the MT, frames transmitted/received through the PPP links between the TE and the IWF in a pseudo network mode, when the first and second option information have been determined.