Azure Subnet Peering Explained

Last Updated on April 17, 2025 by Arnav Sharma

As cloud environments become more complex, so do the networking requirements of modern organizations. Traditional methods of connecting virtual networks, like Azure Virtual Network (VNet) Peering, are incredibly powerful — but they can sometimes be too broad for scenarios that require precision.

Azure Subnet Peering an evolution in Azure’s networking capabilities that allows you to peer specific subnets, rather than entire VNets. This feature offers granular control over network connectivity, supports overlapping address spaces, improves security posture, and provides unmatched flexibility for enterprise architectures.

Let’s explore what subnet peering is, how it works, its benefits, technical constraints, and real-world use cases.

What Is Azure Subnet Peering?

Subnet Peering enables the direct, private connection between specific subnets in different virtual networks, bypassing the need to connect entire VNets. In contrast to traditional VNet peering (which connects all subnets across VNets), subnet peering allows administrators to selectively define which subnets should be connected.

This is a game-changer for scenarios where:

• Only select workloads need to communicate.
• VNets share overlapping IP ranges.
• You want to minimize lateral movement risk between environments.
• Strict compliance or segmentation is required between services.

Subnet peering still uses Microsoft’s high-performance, low-latency backbone infrastructure and supports both IPv4 and IPv6 traffic (in dual-stack subnets), just like VNet peering.

Official Release Status

Azure Subnet Peering reached General Availability (GA) in March 2025, according to Microsoft’s official blog. However, as of April 2025, users may still need to register or allowlist their subscription to enable the feature, and some documentation remains in progress.

Keep in mind:

• Supported through CLI, ARM templates, REST API, PowerShell, and Terraform.
• It is currently available in all Azure regions, but may be subject to regional rollouts.

Key Benefits of Subnet Peering

• Granular Access Control: Unlike traditional peering, which connects all subnets in VNets, subnet peering lets you pick and choose exactly which subnets should communicate. This aligns well with least-privilege network design principles.
• Support for Overlapping Address Spaces: Subnet peering allows connections between VNets that may have overlapping address spaces, as long as the specific subnets being peered have unique, non-overlapping ranges.
• IPv4 Address Space Optimization: With IPv4 addresses in short supply, subnet peering enables reuse of address space across VNets — ideal for large-scale enterprises or post-merger cloud environments.
• Enhanced Network Segmentation: Perfect for multi-tenant or tiered architectures — keep public, backend, and admin subnets isolated while allowing selective connectivity, without relying on NAT or VPNs.
• Dual-Stack and IPv6-Only Support: In dual-stack environments, subnet peering allows IPv6-only peering — essential for future-proofing your infrastructure as IPv6 adoption increases.

Subnet Peering in Action: Visual Example

Here’s a visual representation of subnet peering across three virtual networks. This diagram shows how specific subnets in each VNet are selectively peered, even when address spaces overlap:

Explanation:

• VNet A has two address spaces: 10.1.0.0/16 and 10.0.0.0/16, with Subnets 1–4.
• VNet B uses the 10.2.0.0/16 range and includes Subnets 1–3.
• VNet C shares 10.1.0.0/16 with VNet A but also has 10.6.0.0/16.

Peering relationships:

• Subnets 1 and 2 in VNet A are peered with Subnets 1 and 2 in VNet B.
• Subnet 4 in VNet A peers with Subnet 5 in VNet C, even though VNet C shares an address space with VNet A — demonstrating overlapping address space flexibility.

This configuration achieves secure, controlled communication paths between very specific parts of the environment.

CLI Example: Creating Subnet Peering

Here’s a basic two-way subnet peering setup using Azure CLI:

# From VNet A to VNet B
az network vnet peering create 
  --name vnetA-to-vnetB 
  --resource-group myRG 
  --vnet-name vnetA 
  --remote-vnet vnetB-id 
  --allow-vnet-access 
  --peer-complete-vnet false 
  --local-subnet-names subnet1 subnet2 
  --remote-subnet-names subnet1 subnet2

# From VNet B to VNet A
az network vnet peering create 
  --name vnetB-to-vnetA 
  --resource-group myRG 
  --vnet-name vnetB 
  --remote-vnet vnetA-id 
  --allow-vnet-access 
  --peer-complete-vnet false 
  --local-subnet-names subnet1 subnet2 
  --remote-subnet-names subnet1 subnet2

Technical Limitations (As of GA)

Real-World Use Cases

• Overlapping IPs: Subsidiaries or merged companies with IP conflicts can now interconnect select workloads.
• Hub-and-Spoke: Selectively connect only app subnets in spokes to shared services in hub — no need to peer entire VNets.
• Hybrid Environments: Connect only required Azure subnets to on-premises networks via ExpressRoute/VPN while keeping others isolated.
• Tiered Applications: Allow frontend to talk to backend, but not to the admin subnet — enforced by subnet-level peering.

Pricing Overview

Azure Subnet Peering follows the same billing model as VNet Peering:

VNet Peering vs Subnet Peering: Key Differences