Deploying an L2TP/IPsec VPN in Azure requires careful planning because Azure’s managed Virtual Network Gateway does not natively provide L2TP/IPsec as a first-class P2S option. For administrators, developers and site owners who must support legacy clients or specific L2TP workflows, the recommended approach is to deploy a Network Virtual Appliance (NVA) or a VM-based VPN server inside the Virtual Network and route traffic through it. This article provides a step-by-step technical guide for implementing L2TP/IPsec on Azure, including configuration options, required Azure components, detailed Linux configuration (StrongSwan + xl2tpd), network routing, and security best practices.

Overview and architectural choices

Before you begin, choose one of two approaches depending on your constraints and goals:

• Use Azure managed VPN Gateway (recommended where possible) — Azure supports IKEv2 and OpenVPN for point-to-site; if your clients can use these modern protocols, prefer them for better native integration and support.
• Use a VM-based NVA for L2TP/IPsec — When you must support L2TP/IPsec specifically (for legacy clients or compliance), deploy a hardened VM (Linux or Windows RRAS) as a gateway and configure IP forwarding, routing and NAT properly.

Why not use Azure Virtual Network Gateway for L2TP?

Azure’s managed Virtual Network Gateway focuses on modern VPN protocols. L2TP/IPsec is not a supported P2S protocol through the managed gateway offerings. Attempting to use L2TP through the Azure managed gateway is unsupported and will likely fail for client connectivity or management scenarios. The NVA method gives full control at the cost of more operational responsibility.

Prerequisites and Azure resource planning

Gather the following before provisioning resources:

• An Azure subscription with rights to create VMs, public IPs, network interfaces, NSGs, and route tables.
• A Virtual Network (VNet) and at least one dedicated subnet to host the NVA (recommendation: a dedicated “GatewaySubnet-like” subnet, not shared with app servers).
• A static public IP for the NVA (optionally a public load balancer for HA).
• Network Security Group (NSG) rules to allow required UDP/TCP traffic: UDP 500, UDP 4500, UDP 1701 (L2TP), and any management ports (SSH/RDP) limited to admin addresses.
• Familiarity with Linux networking, StrongSwan and xl2tpd, or Windows RRAS if using a Windows-based solution.

Step 1 — Create a VNet, subnet and NVA VM

1. Create a Virtual Network and a subnet for workloads, plus a dedicated subnet for the VPN NVA (call it vpn-gateway-subnet). Keep IP addressing simple and document allocation.

2. Provision a VM for the NVA. For production, choose a size with sufficient network bandwidth and CPU (e.g., D-series). Select an image (Ubuntu LTS is common for StrongSwan + xl2tpd).

3. Assign a static public IP to the NVA. This will be the endpoint clients connect to.

4. On the VM NIC settings, enable IP forwarding (this is critical for routing traffic from clients into the VNet).

5. Open ports on the NSG attached to the VM/subnet for UDP 500, UDP 4500 and UDP 1701, plus SSH (port 22) for management. Limit admin access by source IP when possible.

Step 2 — Enable IP forwarding and OS kernel settings

On the Azure side:

• Enable IP forwarding on the network interface and, if using a custom image, on the VM settings in the Azure Portal.
• Create a User-Defined Route (UDR) if you want to force VNet egress for certain subnets through the NVA.

On the Linux VM, set kernel forwarding and disable IP restrictions:

Example (Ubuntu):

• Edit /etc/sysctl.conf and set: net.ipv4.ip_forward=1
• Apply with sudo sysctl -p

Step 3 — Install StrongSwan and xl2tpd (Linux example)

Install required packages:

• Ubuntu/Debian: sudo apt update && sudo apt install strongswan xl2tpd ppp iptables

Enable necessary kernel modules (if required) and ensure system updates applied.

StrongSwan configuration

Edit /etc/ipsec.conf with a configuration supporting L2TP/IPsec (transport mode with NAT-Traversal):

Example ipsec.conf snippet (conceptual):


config setup
charondebug="ike 1, knl 1, cfg 0"

conn L2TP-PSK
authby=psk
pfs=no
auto=add
keyingtries=3
rekey=no
type=transport
left=%any
leftprotoport=17/1701
right=%any
rightprotoport=17/1701
ike=aes256-sha1-modp1024!
esp=aes256-sha1!
ikelifetime=8h
keylife=1h
dpdaction=clear
dpddelay=30s
compress=no


Store the pre-shared key in /etc/ipsec.secrets (replace with a strong PSK):


: PSK "your-strong-pre-shared-key"


xl2tpd and PPP configuration

Configure /etc/xl2tpd/xl2tpd.conf with a basic L2TP listener and point to a chap-secrets for authentication:

Example xl2tpd.conf snippet:


[global] ipsec saref = yes

Configure /etc/ppp/options.xl2tpd to enable IP forwarding, DNS and login behavior:


ipcp-accept-local
ipcp-accept-remote
ms-dns 8.8.8.8
ms-dns 1.1.1.1
noccp
auth
crtscts
idle 1800
mtu 1410
mru 1410
nodefaultroute
debug
lock
proxyarp
connect-delay 5000


Populate /etc/ppp/chap-secrets for user authentication:

vpnuser strongpassword


Step 4 — NAT and iptables

To allow VPN clients to access the internet and the VNet, set up MASQUERADE rules:

Example commands:


sudo iptables -t nat -A POSTROUTING -s 10.10.10.0/24 -o eth0 -j MASQUERADE
sudo iptables -A FORWARD -s 10.10.10.0/24 -j ACCEPT
sudo iptables -A FORWARD -d 10.10.10.0/24 -j ACCEPT


Persist iptables rules using iptables-persistent or a systemd service so they survive reboots.

Step 5 — Start services and verify

Restart services:

• sudo systemctl restart strongswan
• sudo systemctl restart xl2tpd

Monitor logs during client connection attempts:

• StrongSwan logs: /var/log/syslog (or /var/log/charon.log depending on distro)
• xl2tpd/ppp logs: /var/log/syslog with ppp debug enabled

Typical debug steps:

• Confirm IPsec SA establishment (Ike and ESP) and that NAT-T is negotiated if client is behind NAT.
• Ensure xl2tpd is assigning client IPs from the configured pool, and PPP names/passwords match.
• Validate traffic forwarding and NAT by pinging internal VNet resources from the client and checking iptables counters.

Step 6 — Routing in the VNet and optional forced tunneling

If you want all VNet traffic or certain subnets to route through the NVA, create a Route Table with a 0.0.0.0/0 (or selected prefix) route that points to the VPN NVA’s NIC IP as the next hop (virtual appliance). Associate that route table with the subnets that should use the gateway.

Note: If you use the NVA as the default gateway for other Azure subnets, ensure its instance size and throughput are sufficient and consider HA options (Azure Load Balancer + multiple NVAs) to avoid a single point of failure.

High availability and scale considerations

For production deployments you should:

• Deploy at least two NVAs in different availability zones or sets and put them behind an Azure internal load balancer for traffic distribution.
• Use health probes and autoscaling patterns where appropriate.
• Consider accelerated networking-enabled VM SKUs for higher packet throughput and lower CPU overhead.
• Monitor metrics (CPU, network throughput, packet drops) to detect saturation.

Security best practices

Follow these security recommendations:

• Use strong pre-shared keys and, where possible, certificate-based authentication for IPsec connections.
• Limit VPN user privileges and use multi-factor authentication for administrative access to the NVA.
• Harden the VM image (disable unused services, apply latest patches, enable audit logging).
• Lock down management ports (SSH/RDP) to corporate IP ranges or use a jump host.
• Use Network Security Groups (NSGs) to restrict inbound traffic and Azure Firewall for advanced filtering and logging.

Troubleshooting checklist

If clients fail to connect, check the following:

• NSG rules — UDP 500, UDP 4500, UDP 1701 must be allowed on the public-facing NIC.
• IP forwarding — enabled on NIC and VM and net.ipv4.ip_forward set to 1.
• IPsec SA and IKE logs — verify Phase 1 and Phase 2 negotiation success.
• PPP authentication — confirm chap-secrets or user database entries match client credentials.
• NAT and forwarding rules — ensure iptables MASQUERADE and FORWARD rules are present and correct.
• Client-side settings — pre-shared key, username/password, correct server public IP, NAT traversal enabled on client where applicable.

When to prefer IKEv2/OpenVPN instead

If you can choose protocols, prefer IKEv2 or OpenVPN for modern clients. These are supported by Azure managed gateways and are simpler to integrate, manage and scale. L2TP/IPsec is useful only for compatibility with legacy devices that lack IKEv2/OpenVPN support.

Summary

Implementing L2TP/IPsec on Azure requires deploying a VM-based VPN gateway (NVA), enabling IP forwarding, configuring StrongSwan and xl2tpd (or Windows RRAS), creating appropriate NAT/route rules, and securing the deployment with NSGs, hardened OS configurations and monitoring. While this approach adds operational overhead compared to Azure’s managed VPN Gateway, it gives you the flexibility to support legacy L2TP endpoints and custom routing scenarios. For most modern deployments, consider Azure native P2S options (IKEv2, OpenVPN), but when L2TP is a strict requirement, the steps above outline a repeatable and secure architecture for production use.

For more practical guides and setup examples tailored to production environments, visit Dedicated-IP-VPN at https://dedicated-ip-vpn.com/.