A data center network system and a packet forwarding method are provided. The data center network includes a management server and a plurality of machines containing physical machines and virtual machines. The management server configures a logical media access control (MAC) address for each of the machines, wherein most significant bytes of each of the logical MAC addresses are set as 0. When a data packet is about to be sent from a physical machine, the physical machine executes an encapsulation procedure on the data packet for forwarding the data packet to an intermediate node between a transmitter and a receiver of the data packet, and the intermediate node executes a decapsulation procedure on the data packet for forwarding the data packet to the true receiver. Accordingly, the number of virtual machines exposed to the forwarding table of Ethernet switches can be effectively reduced.