diff --git a/ofproto/ofproto-dpif-xlate.c b/ofproto/ofproto-dpif-xlate.c
index 17800f3c8a3f..9c2f44784161 100644
--- a/ofproto/ofproto-dpif-xlate.c
+++ b/ofproto/ofproto-dpif-xlate.c
@@ -3410,6 +3410,19 @@ tnl_route_lookup_flow(const struct xlate_ctx *ctx,
             }
         }
     }
+
+    /* If tunnel IP isn't configured on bridges, then we search all ports. */
+    HMAP_FOR_EACH (xbridge, hmap_node, &ctx->xcfg->xbridges) {
+        struct xport *port;
+
+        HMAP_FOR_EACH (port, ofp_node, &xbridge->xports) {
+            if (!strncmp(netdev_get_name(port->netdev),
+                         out_dev, IFNAMSIZ)) {
+                *out_port = port;
+                return 0;
+            }
+        }
+    }
     return -ENOENT;
 }
 
@@ -3972,6 +3985,16 @@ is_nd_dst_correct(const struct flow *flow, const struct in6_addr *ipv6_addr)
             IN6_ARE_ADDR_EQUAL(&flow->ipv6_dst, ipv6_addr);
 }
 
+static bool
+is_neighbor_reply_matched(const struct flow *flow, struct in6_addr *ip_addr)
+{
+    return ((IN6_IS_ADDR_V4MAPPED(ip_addr) &&
+             flow->dl_type == htons(ETH_TYPE_ARP) &&
+             in6_addr_get_mapped_ipv4(ip_addr) == flow->nw_dst) ||
+            (!IN6_IS_ADDR_V4MAPPED(ip_addr) &&
+              is_nd_dst_correct(flow, ip_addr)));
+}
+
 /* Function verifies if the ARP reply or Neighbor Advertisement represented by
  * 'flow' addresses the 'xbridge' of 'ctx'. Returns true if the ARP TA or
  * neighbor discovery destination is in the list of configured IP addresses of
@@ -3986,11 +4009,7 @@ is_neighbor_reply_correct(const struct xlate_ctx *ctx, const struct flow *flow)
     /* Verify if 'nw_dst' of ARP or 'ipv6_dst' of ICMPV6 is in the list. */
     for (i = 0; xbridge_addr && i < xbridge_addr->n_addr; i++) {
         struct in6_addr *ip_addr = &xbridge_addr->addr[i];
-        if ((IN6_IS_ADDR_V4MAPPED(ip_addr) &&
-             flow->dl_type == htons(ETH_TYPE_ARP) &&
-             in6_addr_get_mapped_ipv4(ip_addr) == flow->nw_dst) ||
-            (!IN6_IS_ADDR_V4MAPPED(ip_addr) &&
-              is_nd_dst_correct(flow, ip_addr))) {
+        if (is_neighbor_reply_matched(flow, ip_addr)) {
             /* Found a match. */
             ret = true;
             break;
@@ -3998,20 +4017,35 @@ is_neighbor_reply_correct(const struct xlate_ctx *ctx, const struct flow *flow)
     }
 
     xbridge_addr_unref(xbridge_addr);
+
+    /* If not found in bridge's IPs, search in its ports. */
+    if (!ret) {
+        struct in6_addr *ip_addr, *mask;
+        struct xport *port;
+        int error, n_in6;
+
+        HMAP_FOR_EACH (port, ofp_node, &ctx->xbridge->xports) {
+            error = netdev_get_addr_list(port->netdev, &ip_addr,
+                                         &mask, &n_in6);
+            if (!error && is_neighbor_reply_matched(flow, ip_addr)) {
+                /* Found a match. */
+                ret = true;
+                break;
+            }
+        }
+    }
     return ret;
 }
 
 static bool
-terminate_native_tunnel(struct xlate_ctx *ctx, ofp_port_t ofp_port,
-                        struct flow *flow, struct flow_wildcards *wc,
-                        odp_port_t *tnl_port)
+terminate_native_tunnel(struct xlate_ctx *ctx, struct flow *flow,
+                        struct flow_wildcards *wc, odp_port_t *tnl_port)
 {
     *tnl_port = ODPP_NONE;
 
     /* XXX: Write better Filter for tunnel port. We can use in_port
      * in tunnel-port flow to avoid these checks completely. */
-    if (ofp_port == OFPP_LOCAL &&
-        ovs_native_tunneling_is_on(ctx->xbridge->ofproto)) {
+    if (ovs_native_tunneling_is_on(ctx->xbridge->ofproto)) {
         *tnl_port = tnl_port_map_lookup(flow, wc);
 
         /* If no tunnel port was found and it's about an ARP or ICMPv6 packet,
@@ -4155,7 +4189,7 @@ compose_output_action__(struct xlate_ctx *ctx, ofp_port_t ofp_port,
             native_tunnel_output(ctx, xport, flow, odp_port, truncate);
             flow->tunnel = flow_tnl; /* Restore tunnel metadata */
 
-        } else if (terminate_native_tunnel(ctx, ofp_port, flow, wc,
+        } else if (terminate_native_tunnel(ctx, flow, wc,
                                            &odp_tnl_port)) {
             /* Intercept packet to be received on native tunnel port. */
             nl_msg_put_odp_port(ctx->odp_actions, OVS_ACTION_ATTR_TUNNEL_POP,
diff --git a/tests/packet-type-aware.at b/tests/packet-type-aware.at
index e169709a906b..fb867860f369 100644
--- a/tests/packet-type-aware.at
+++ b/tests/packet-type-aware.at
@@ -697,7 +697,7 @@ AT_CHECK([
     ovs-ofctl del-flows br1 &&
     ovs-ofctl del-flows br2 &&
     ovs-ofctl add-flow br0 in_port=n0,actions=decap,output=p0 -OOpenFlow13 &&
-    ovs-ofctl add-flow br1 in_port=p1,actions=output=gre1 &&
+    ovs-ofctl add-flow br1 in_port=p1,actions=NORMAL &&
     ovs-ofctl add-flow br2 in_port=LOCAL,actions=output=n2
 ], [0])
 
@@ -708,7 +708,7 @@ AT_CHECK([ovs-ofctl -OOpenFlow13 dump-flows br0 | ofctl_strip | grep actions],
 
 AT_CHECK([ovs-ofctl -OOpenFlow13 dump-flows br1 | ofctl_strip | grep actions],
 [0], [dnl
- reset_counts in_port=20 actions=output:100
+ reset_counts in_port=20 actions=NORMAL
 ])
 
 AT_CHECK([ovs-ofctl -OOpenFlow13 dump-flows br2 | ofctl_strip | grep actions],
@@ -726,7 +726,7 @@ ovs-appctl time/warp 1000
 AT_CHECK([
     ovs-appctl dpctl/dump-flows --names dummy@ovs-dummy | strip_used | grep -v ipv6 | sort
 ], [0], [flow-dump from non-dpdk interfaces:
-recirc_id(0),in_port(n0),packet_type(ns=0,id=0),eth_type(0x0800),ipv4(tos=0/0x3,frag=no), packets:1, bytes:98, used:0.0s, actions:pop_eth,clone(tnl_push(tnl_port(gre_sys),header(size=38,type=3,eth(dst=de:af:be:ef:ba:be,src=aa:55:00:00:00:02,dl_type=0x0800),ipv4(src=10.0.0.1,dst=10.0.0.2,proto=47,tos=0,ttl=64,frag=0x4000),gre((flags=0x0,proto=0x800))),out_port(br2)),n2)
+recirc_id(0),in_port(n0),packet_type(ns=0,id=0),eth(src=3a:6d:d2:09:9c:ab,dst=1e:2c:e9:2a:66:9e),eth_type(0x0800),ipv4(tos=0/0x3,frag=no), packets:1, bytes:98, used:0.0s, actions:pop_eth,clone(tnl_push(tnl_port(gre_sys),header(size=38,type=3,eth(dst=de:af:be:ef:ba:be,src=aa:55:00:00:00:02,dl_type=0x0800),ipv4(src=10.0.0.1,dst=10.0.0.2,proto=47,tos=0,ttl=64,frag=0x4000),gre((flags=0x0,proto=0x800))),out_port(br2)),n2)
 ])
 
 AT_CHECK([
@@ -892,7 +892,7 @@ ovs-appctl time/warp 1000
 AT_CHECK([
     ovs-appctl dpctl/dump-flows --names dummy@ovs-dummy | strip_used | grep -v ipv6 | sort
 ], [0], [flow-dump from non-dpdk interfaces:
-recirc_id(0),in_port(n0),packet_type(ns=0,id=0),eth_type(0x0800),ipv4(tos=0/0x3,frag=no), packets:1, bytes:98, used:0.0s, actions:n1,pop_eth,clone(tnl_push(tnl_port(gre_sys),header(size=38,type=3,eth(dst=de:af:be:ef:ba:be,src=aa:55:00:00:00:02,dl_type=0x0800),ipv4(src=10.0.0.1,dst=10.0.0.2,proto=47,tos=0,ttl=64,frag=0x4000),gre((flags=0x0,proto=0x800))),out_port(br2)),n2)
+recirc_id(0),in_port(n0),packet_type(ns=0,id=0),eth(dst=1e:2c:e9:2a:66:9e),eth_type(0x0800),ipv4(tos=0/0x3,frag=no), packets:1, bytes:98, used:0.0s, actions:n1,pop_eth,clone(tnl_push(tnl_port(gre_sys),header(size=38,type=3,eth(dst=de:af:be:ef:ba:be,src=aa:55:00:00:00:02,dl_type=0x0800),ipv4(src=10.0.0.1,dst=10.0.0.2,proto=47,tos=0,ttl=64,frag=0x4000),gre((flags=0x0,proto=0x800))),out_port(br2)),n2)
 ])
 
 AT_CHECK([
diff --git a/tests/system-layer3-tunnels.at b/tests/system-layer3-tunnels.at
index db64e231da8b..1232964bb67c 100644
--- a/tests/system-layer3-tunnels.at
+++ b/tests/system-layer3-tunnels.at
@@ -97,3 +97,58 @@ NS_CHECK_EXEC([at_ns0], [ping -s 3200 -q -c 3 -i 0.3 -w 2 10.1.1.2 | FORMAT_PING
 
 OVS_TRAFFIC_VSWITCHD_STOP
 AT_CLEANUP
+
+AT_SETUP([layer3 - use non-local port as tunnel endpoint])
+
+OVS_VSWITCHD_START([add-port br0 p0 -- set Interface p0 type=dummy ofport_request=1])
+AT_CHECK([ovs-vsctl add-port br0 vtep0 -- set int vtep0 type=dummy], [0])
+AT_CHECK([ovs-vsctl add-br int-br -- set bridge int-br datapath_type=dummy], [0])
+AT_CHECK([ovs-vsctl add-port int-br t1 -- set Interface t1 type=gre \
+                    options:remote_ip=1.1.2.92 ofport_request=3], [0])
+
+AT_CHECK([ovs-appctl dpif/show], [0], [dnl
+dummy@ovs-dummy: hit:0 missed:0
+  br0:
+    br0 65534/100: (dummy-internal)
+    p0 1/1: (dummy)
+    vtep0 2/2: (dummy)
+  int-br:
+    int-br 65534/3: (dummy-internal)
+    t1 3/4: (gre: remote_ip=1.1.2.92)
+])
+
+AT_CHECK([ovs-appctl netdev-dummy/ip4addr vtep0 1.1.2.88/24], [0], [OK
+])
+AT_CHECK([ovs-appctl ovs/route/add 1.1.2.92/24 vtep0], [0], [OK
+])
+AT_CHECK([ovs-ofctl add-flow br0 action=normal])
+AT_CHECK([ovs-ofctl add-flow int-br action=normal])
+
+dnl Use arp request and reply to achieve tunnel next hop mac binding
+dnl By default, vtep0's MAC address is aa:55:aa:55:00:03
+AT_CHECK([ovs-appctl netdev-dummy/receive vtep0 'recirc_id(0),in_port(2),eth(dst=ff:ff:ff:ff:ff:ff,src=aa:55:aa:55:00:03),eth_type(0x0806),arp(tip=1.1.2.92,sip=1.1.2.88,op=1,sha=aa:55:aa:55:00:03,tha=00:00:00:00:00:00)'])
+AT_CHECK([ovs-appctl netdev-dummy/receive p0 'recirc_id(0),in_port(1),eth(src=f8:bc:12:44:34:b6,dst=aa:55:aa:55:00:03),eth_type(0x0806),arp(sip=1.1.2.92,tip=1.1.2.88,op=2,sha=f8:bc:12:44:34:b6,tha=aa:55:aa:55:00:03)'])
+
+AT_CHECK([ovs-appctl tnl/neigh/show | tail -n+3 | sort], [0], [dnl
+1.1.2.92                                      f8:bc:12:44:34:b6   br0
+])
+
+AT_CHECK([ovs-appctl ovs/route/show | tail -n+2 | sort], [0], [dnl
+User: 1.1.2.0/24 dev vtep0 SRC 1.1.2.88
+])
+
+dnl Check GRE tunnel pop
+AT_CHECK([ovs-appctl ofproto/trace ovs-dummy 'in_port(1),eth(src=f8:bc:12:44:34:b6,dst=aa:55:aa:55:00:03),eth_type(0x0800),ipv4(src=1.1.2.92,dst=1.1.2.88,proto=47,tos=0,ttl=64,frag=no)'], [0], [stdout])
+
+AT_CHECK([tail -1 stdout], [0],
+  [Datapath actions: tnl_pop(4)
+])
+
+dnl Check GRE tunnel push
+AT_CHECK([ovs-appctl ofproto/trace ovs-dummy 'in_port(3),eth(dst=f9:bc:12:44:34:b6,src=af:55:aa:55:00:03),eth_type(0x0800),ipv4(src=1.1.3.88,dst=1.1.3.92,proto=1,tos=0,ttl=64,frag=no)'], [0], [stdout])
+AT_CHECK([tail -1 stdout], [0],
+  [Datapath actions: clone(tnl_push(tnl_port(4),header(size=38,type=3,eth(dst=f8:bc:12:44:34:b6,src=aa:55:aa:55:00:03,dl_type=0x0800),ipv4(src=1.1.2.88,dst=1.1.2.92,proto=47,tos=0,ttl=64,frag=0x4000),gre((flags=0x0,proto=0x6558))),out_port(2)),1)
+])
+
+OVS_VSWITCHD_STOP
+AT_CLEANUP
