diff --git a/ovn/northd/ovn-northd.c b/ovn/northd/ovn-northd.c
index 411de8e..13260e6 100644
--- a/ovn/northd/ovn-northd.c
+++ b/ovn/northd/ovn-northd.c
@@ -6163,6 +6163,20 @@ build_lrouter_flows(struct hmap *datapaths, struct hmap *ports,
                  * from different chassis. */
                 ds_put_format(&match, " && is_chassis_resident(%s)",
                               op->od->l3redirect_port->json_key);
+            } else if (op->peer &&
+                       op->peer->od->network_type == DP_NETWORK_VLAN) {
+
+               /* For a vlan backed router port, we will always have the
+                * is_chassis_resident check. This is because there could be
+                * vm/server on vlan network, but not on OVN chassis and could
+                * end up arping for router port ip.
+                *
+                * This check works on the assumption that for OVN chassis VMs,
+                * logical switch ARP responder will respond to ARP requests
+                * for router port IP.
+                */
+               ds_put_format(&match, " && is_chassis_resident(\"cr-%s\")",
+                             op->key);
             }
 
             ds_clear(&actions);
@@ -7184,18 +7198,23 @@ build_lrouter_flows(struct hmap *datapaths, struct hmap *ports,
             ovn_lflow_add(lflows, od, S_ROUTER_IN_GW_REDIRECT, 300,
                           REGBIT_DISTRIBUTED_NAT" == 1", "next;");
 
-            /* For traffic with outport == l3dgw_port, if the
-             * packet did not match any higher priority redirect
-             * rule, then the traffic is redirected to the central
-             * instance of the l3dgw_port. */
-            ds_clear(&match);
-            ds_put_format(&match, "outport == %s",
-                          od->l3dgw_port->json_key);
-            ds_clear(&actions);
-            ds_put_format(&actions, "outport = %s; next;",
-                          od->l3redirect_port->json_key);
-            ovn_lflow_add(lflows, od, S_ROUTER_IN_GW_REDIRECT, 50,
-                          ds_cstr(&match), ds_cstr(&actions));
+           /* For VLAN backed networks, default match will not redirect to
+            * chassis redirect port. */
+           if (od->l3dgw_port->peer &&
+               od->l3dgw_port->peer->od->network_type == DP_NETWORK_OVERLAY) {
+              /* For traffic with outport == l3dgw_port, if the
+               * packet did not match any higher priority redirect
+               * rule, then the traffic is redirected to the central
+               * instance of the l3dgw_port. */
+              ds_clear(&match);
+              ds_put_format(&match, "outport == %s",
+                            od->l3dgw_port->json_key);
+              ds_clear(&actions);
+              ds_put_format(&actions, "outport = %s; next;",
+                            od->l3redirect_port->json_key);
+              ovn_lflow_add(lflows, od, S_ROUTER_IN_GW_REDIRECT, 50,
+                            ds_cstr(&match), ds_cstr(&actions));
+           }
 
             /* If the Ethernet destination has not been resolved,
              * redirect to the central instance of the l3dgw_port.
diff --git a/tests/ovn.at b/tests/ovn.at
index 8da145c..c0c5523 100644
--- a/tests/ovn.at
+++ b/tests/ovn.at
@@ -13808,6 +13808,7 @@ test_ip() {
 echo "------ OVN dump ------"
 ovn-nbctl show
 ovn-sbctl show
+ovn-sbctl list port_binding
 
 echo "------ hv1 dump ------"
 as hv1 ovs-vsctl show
@@ -13936,3 +13937,206 @@ AT_CHECK([as hv2 ovs-appctl fdb/show br-phys | grep 00:00:01:01:02:07 | grep 100
 OVN_CLEANUP([hv1],[hv2])
 
 AT_CLEANUP
+
+
+AT_SETUP([ovn -- 2 HVs, 2 lports/HV, localnet ports, DVR N-S Ping])
+ovn_start
+
+# In this test cases we create 3 switches, all connected to same
+# physical network (through br-phys on each HV). LS1 and LS2 have
+# 1 VIF each. Each HV has 1 VIF port. The first digit
+# of VIF port name indicates the hypervisor it is bound to, e.g.
+# lp23 means VIF 3 on hv2.
+#
+# All the switches are connected to a logical router "router".
+#
+# Each switch's VLAN tag and their logical switch ports are:
+#   - ls1:
+#       - tagged with VLAN 101
+#       - ports: lp11
+#   - ls2:
+#       - tagged with VLAN 201
+#       - ports: lp22
+#   - ls-underlay:
+#       - tagged with VLAN 1000
+# Note: a localnet port is created for each switch to connect to
+# physical network.
+
+for i in 1 2; do
+    ls_name=ls$i
+    ovn-nbctl ls-add $ls_name vlan
+    ln_port_name=ln$i
+    if test $i -eq 1; then
+        ovn-nbctl lsp-add $ls_name $ln_port_name "" 101
+    elif test $i -eq 2; then
+        ovn-nbctl lsp-add $ls_name $ln_port_name "" 201
+    fi
+    ovn-nbctl lsp-set-addresses $ln_port_name unknown
+    ovn-nbctl lsp-set-type $ln_port_name localnet
+    ovn-nbctl lsp-set-options $ln_port_name network_name=phys
+done
+
+# lsp_to_ls LSP
+#
+# Prints the name of the logical switch that contains LSP.
+lsp_to_ls () {
+    case $1 in dnl (
+        lp?[[11]]) echo ls1 ;; dnl (
+        lp?[[12]]) echo ls2 ;; dnl (
+        *) AT_FAIL_IF([:]) ;;
+    esac
+}
+
+vif_to_hv () {
+    case $1 in dnl (
+        vif[[1]]?) echo hv1 ;; dnl (
+        vif[[2]]?) echo hv2 ;; dnl (
+        vif?[[north]]?) echo hv4 ;; dnl (
+        *) AT_FAIL_IF([:]) ;;
+    esac
+}
+
+ip_to_hex() {
+       printf "%02x%02x%02x%02x" "$@"
+}
+
+net_add n1
+for i in 1 2; do
+    sim_add hv$i
+    as hv$i
+    ovs-vsctl add-br br-phys
+    ovs-vsctl set open . external-ids:ovn-bridge-mappings=phys:br-phys
+    ovs-vsctl set open . external-ids:ovn-chassis-mac-mappings="phys:aa:bb:cc:dd:ee:$i$i"
+    ovn_attach n1 br-phys 192.168.0.$i
+
+    ovs-vsctl add-port br-int vif$i$i -- \
+        set Interface vif$i$i external-ids:iface-id=lp$i$i \
+                              options:tx_pcap=hv$i/vif$i$i-tx.pcap \
+                              options:rxq_pcap=hv$i/vif$i$i-rx.pcap \
+                              ofport-request=$i$i
+
+    lsp_name=lp$i$i
+    ls_name=$(lsp_to_ls $lsp_name)
+
+    ovn-nbctl lsp-add $ls_name $lsp_name
+    ovn-nbctl lsp-set-addresses $lsp_name "f0:00:00:00:00:$i$i 192.168.$i.$i"
+    ovn-nbctl lsp-set-port-security $lsp_name f0:00:00:00:00:$i$i
+
+    OVS_WAIT_UNTIL([test x`ovn-nbctl lsp-get-up $lsp_name` = xup])
+
+done
+
+ovn-nbctl ls-add ls-underlay vlan
+ovn-nbctl lsp-add ls-underlay ln3 "" 1000
+ovn-nbctl lsp-set-addresses ln3 unknown
+ovn-nbctl lsp-set-type ln3 localnet
+ovn-nbctl lsp-set-options ln3 network_name=phys
+
+ovn-nbctl ls-add ls-north vlan
+ovn-nbctl lsp-add ls-north ln4 "" 1000
+ovn-nbctl lsp-set-addresses ln4 unknown
+ovn-nbctl lsp-set-type ln4 localnet
+ovn-nbctl lsp-set-options ln4 network_name=phys
+
+# Add a VM on ls-north
+ovn-nbctl lsp-add ls-north lp-north
+ovn-nbctl lsp-set-addresses lp-north "f0:f0:00:00:00:11 172.31.0.10"
+ovn-nbctl lsp-set-port-security lp-north f0:f0:00:00:00:11
+
+# Add 3rd hypervisor
+sim_add hv3
+as hv3 ovs-vsctl add-br br-phys
+as hv3 ovs-vsctl set open . external-ids:ovn-bridge-mappings=phys:br-phys
+as hv3 ovs-vsctl set open . external-ids:ovn-chassis-mac-mappings="phys:aa:bb:cc:dd:ee:33"
+as hv3 ovn_attach n1 br-phys 192.168.0.3
+
+# Add 4th hypervisor
+sim_add hv4
+as hv4 ovs-vsctl add-br br-phys
+as hv4 ovs-vsctl set open . external-ids:ovn-bridge-mappings=phys:br-phys
+as hv4 ovs-vsctl set open . external-ids:ovn-chassis-mac-mappings="phys:aa:bb:cc:dd:ee:44"
+as hv4 ovn_attach n1 br-phys 192.168.0.4
+
+as hv4 ovs-vsctl add-port br-int vif-north -- \
+        set Interface vif-north external-ids:iface-id=lp-north \
+                              options:tx_pcap=hv4/vif-north-tx.pcap \
+                              options:rxq_pcap=hv4/vif-north-rx.pcap \
+                              ofport-request=44
+
+ovn-nbctl lr-add router
+ovn-nbctl lrp-add router router-to-ls1 00:00:01:01:02:03 192.168.1.3/24
+ovn-nbctl lrp-add router router-to-ls2 00:00:01:01:02:05 192.168.2.3/24
+ovn-nbctl lrp-add router router-to-underlay 00:00:01:01:02:07 172.31.0.1/24
+
+ovn-nbctl lsp-add ls1 ls1-to-router -- set Logical_Switch_Port ls1-to-router type=router \
+          options:router-port=router-to-ls1 -- lsp-set-addresses ls1-to-router router
+ovn-nbctl lsp-add ls2 ls2-to-router -- set Logical_Switch_Port ls2-to-router type=router \
+          options:router-port=router-to-ls2 -- lsp-set-addresses ls2-to-router router
+ovn-nbctl lsp-add ls-underlay underlay-to-router -- set Logical_Switch_Port \
+                              underlay-to-router type=router \
+                              options:router-port=router-to-underlay \
+                              -- lsp-set-addresses underlay-to-router router
+
+ovn-nbctl lrp-set-gateway-chassis router-to-underlay hv3
+
+ovn-nbctl --wait=sb sync
+
+sleep 2
+
+OVN_POPULATE_ARP
+
+test_ip() {
+    # This packet has bad checksums but logical L3 routing doesn't check.
+    local inport=$1 src_mac=$2 dst_mac=$3 src_ip=$4 dst_ip=$5
+    local packet=${dst_mac}${src_mac}08004500001c0000000040110000${src_ip}${dst_ip}0035111100080000
+    shift; shift; shift; shift; shift
+    hv=`vif_to_hv $inport`
+    as $hv ovs-appctl netdev-dummy/receive $inport $packet
+}
+
+# Dump a bunch of info helpful for debugging if there's a failure.
+
+echo "------ OVN dump ------"
+ovn-nbctl show
+ovn-sbctl show
+ovn-sbctl list port_binding
+ovn-sbctl list mac_binding
+
+echo "------ hv1 dump ------"
+as hv1 ovs-vsctl show
+as hv1 ovs-vsctl list Open_Vswitch
+
+echo "------ hv2 dump ------"
+as hv2 ovs-vsctl show
+as hv2 ovs-vsctl list Open_Vswitch
+
+echo "Send traffic"
+sip=`ip_to_hex 192 168 1 1`
+dip=`ip_to_hex 172 31 0 10`
+test_ip vif11 f00000000011  000001010203 $sip $dip vif-north
+
+sleep 1
+
+echo "----------- Post Traffic hv1 dump -----------"
+as hv1 ovs-ofctl -O OpenFlow13 dump-flows br-int
+as hv1 ovs-appctl fdb/show br-phys
+
+echo "----------- Post Traffic hv2 dump -----------"
+as hv2 ovs-ofctl -O OpenFlow13 dump-flows br-int
+as hv2 ovs-appctl fdb/show br-phys
+
+echo "----------- Post Traffic hv3 dump -----------"
+as hv3 ovs-ofctl -O OpenFlow13 dump-flows br-int
+as hv3 ovs-appctl fdb/show br-phys
+
+echo "----------- Post Traffic hv4 dump -----------"
+as hv4 ovs-ofctl -O OpenFlow13 dump-flows br-int
+as hv4 ovs-appctl fdb/show br-phys
+
+# Confirm that HV1 chassis mac is never seen on Gateway chassis, i.e HV3
+AT_CHECK([as hv3 ovs-appctl fdb/show br-phys | grep aa:bb:cc:dd:ee:11 | wc -l], [0], [[0
+]])
+
+OVN_CLEANUP([hv1],[hv2],[hv3],[hv4])
+
+AT_CLEANUP
