diff --git a/NEWS b/NEWS
index 58a7b58..77c2b43 100644
--- a/NEWS
+++ b/NEWS
@@ -20,7 +20,8 @@ Post-v2.9.0
      * implemented icmp4/icmp6/tcp_reset actions in order to drop the packet
        and reply with a RST for TCP or ICMPv4/ICMPv6 unreachable message for
        other IPv4/IPv6-based protocols whenever a reject ACL rule is hit.
-     * ACL match conditions can now match on Port_Groups.
+     * ACL match conditions can now match on Port_Groups as well as address
+       sets that are automatically generated by Port_Groups.
 
 v2.9.0 - 19 Feb 2018
 --------------------
diff --git a/ovn/northd/ovn-northd.c b/ovn/northd/ovn-northd.c
index 607fc75..b55f5f8 100644
--- a/ovn/northd/ovn-northd.c
+++ b/ovn/northd/ovn-northd.c
@@ -6179,9 +6179,32 @@ build_lflows(struct northd_context *ctx, struct hmap *datapaths,
     hmap_destroy(&mcgroups);
 }
 
-/* OVN_Northbound and OVN_Southbound have an identical Address_Set table.
- * We always update OVN_Southbound to match the current data in
- * OVN_Northbound, so that the address sets used in Logical_Flows in
+static void
+sync_address_set(struct northd_context *ctx, const char *name,
+                 const char **addrs, size_t n_addrs,
+                 struct shash *sb_address_sets)
+{
+    const struct sbrec_address_set *sb_address_set;
+    sb_address_set = shash_find_and_delete(sb_address_sets,
+                                           name);
+    if (!sb_address_set) {
+        sb_address_set = sbrec_address_set_insert(ctx->ovnsb_txn);
+        sbrec_address_set_set_name(sb_address_set, name);
+    }
+
+    sbrec_address_set_set_addresses(sb_address_set,
+                                    addrs, n_addrs);
+}
+
+/* OVN_Southbound Address_Set table contains same records as in north
+ * bound, plus the records generated from Port_Group table in north bound.
+ *
+ * There are 2 records generated from each port group, one for IPv4, and
+ * one for IPv6, named in the format: <port group name>_ip4 and
+ * <port group name>_ip6 respectively. MAC addresses are ignored.
+ *
+ * We always update OVN_Southbound to match the Address_Set and Port_Group
+ * in OVN_Northbound, so that the address sets used in Logical_Flows in
  * OVN_Southbound is checked against the proper set.*/
 static void
 sync_address_sets(struct northd_context *ctx)
@@ -6193,19 +6216,67 @@ sync_address_sets(struct northd_context *ctx)
         shash_add(&sb_address_sets, sb_address_set->name, sb_address_set);
     }
 
-    const struct nbrec_address_set *nb_address_set;
-    NBREC_ADDRESS_SET_FOR_EACH (nb_address_set, ctx->ovnnb_idl) {
-        sb_address_set = shash_find_and_delete(&sb_address_sets,
-                                               nb_address_set->name);
-        if (!sb_address_set) {
-            sb_address_set = sbrec_address_set_insert(ctx->ovnsb_txn);
-            sbrec_address_set_set_name(sb_address_set, nb_address_set->name);
+    /* sync port group generated address sets first */
+    const struct nbrec_port_group *nb_port_group;
+    NBREC_PORT_GROUP_FOR_EACH (nb_port_group, ctx->ovnnb_idl) {
+        char **ipv4_addrs = xcalloc(1, sizeof *ipv4_addrs);
+        size_t n_ipv4_addrs = 0;
+        size_t n_ipv4_addrs_buf = 1;
+        char **ipv6_addrs = xcalloc(1, sizeof *ipv6_addrs);
+        size_t n_ipv6_addrs = 0;
+        size_t n_ipv6_addrs_buf = 1;
+        for (size_t i = 0; i < nb_port_group->n_ports; i++) {
+            for (size_t j = 0; j < nb_port_group->ports[i]->n_addresses; j++) {
+                struct lport_addresses laddrs;
+                extract_lsp_addresses(nb_port_group->ports[i]->addresses[j],
+                                     &laddrs);
+                while (n_ipv4_addrs_buf < n_ipv4_addrs + laddrs.n_ipv4_addrs) {
+                    n_ipv4_addrs_buf *= 2;
+                    ipv4_addrs = xrealloc(ipv4_addrs,
+                            n_ipv4_addrs_buf * sizeof *ipv4_addrs);
+                }
+                for (size_t k = 0; k < laddrs.n_ipv4_addrs; k++) {
+                    ipv4_addrs[n_ipv4_addrs++] =
+                        xstrdup(laddrs.ipv4_addrs[k].addr_s);
+                }
+                while (n_ipv6_addrs_buf < n_ipv6_addrs + laddrs.n_ipv6_addrs) {
+                    n_ipv6_addrs_buf *= 2;
+                    ipv6_addrs = xrealloc(ipv6_addrs,
+                            n_ipv6_addrs_buf * sizeof *ipv6_addrs);
+                }
+                for (size_t k = 0; k < laddrs.n_ipv6_addrs; k++) {
+                    ipv6_addrs[n_ipv6_addrs++] =
+                        xstrdup(laddrs.ipv6_addrs[k].addr_s);
+                }
+                destroy_lport_addresses(&laddrs);
+            }
+        }
+        char *ipv4_addrs_name = xasprintf("%s_ip4", nb_port_group->name);
+        char *ipv6_addrs_name = xasprintf("%s_ip6", nb_port_group->name);
+        sync_address_set(ctx, ipv4_addrs_name, (const char **)ipv4_addrs,
+                         n_ipv4_addrs, &sb_address_sets);
+        sync_address_set(ctx, ipv6_addrs_name, (const char **)ipv6_addrs,
+                         n_ipv6_addrs, &sb_address_sets);
+        free(ipv4_addrs_name);
+        free(ipv6_addrs_name);
+        for (size_t i = 0; i < n_ipv4_addrs; i++) {
+            free(ipv4_addrs[i]);
+        }
+        free(ipv4_addrs);
+        for (size_t i = 0; i < n_ipv6_addrs; i++) {
+            free(ipv6_addrs[i]);
         }
+        free(ipv6_addrs);
+    }
 
-        sbrec_address_set_set_addresses(sb_address_set,
-                /* "char **" is not compatible with "const char **" */
-                (const char **) nb_address_set->addresses,
-                nb_address_set->n_addresses);
+    /* sync user defined address sets, which may overwrite port group
+     * generated address sets if same name is used */
+    const struct nbrec_address_set *nb_address_set;
+    NBREC_ADDRESS_SET_FOR_EACH (nb_address_set, ctx->ovnnb_idl) {
+        sync_address_set(ctx, nb_address_set->name,
+            /* "char **" is not compatible with "const char **" */
+            (const char **)nb_address_set->addresses,
+            nb_address_set->n_addresses, &sb_address_sets);
     }
 
     struct shash_node *node, *next;
diff --git a/ovn/ovn-nb.xml b/ovn/ovn-nb.xml
index 291ae1a..62d5a07 100644
--- a/ovn/ovn-nb.xml
+++ b/ovn/ovn-nb.xml
@@ -936,6 +936,24 @@
       db="OVN_Southbound"/> database.
     </p>
 
+    <p>
+      For each port group, there are two address sets generated to the
+      <ref table="Address_Set" db="OVN_Southbound"/> table of the
+      <ref db="OVN_Southbound"/> database, containing the IP addresses
+      of the group of ports, one for IPv4, and the other for IPv6, with
+      <ref column="name" table="Address_Set" db="OVN_Southbound"/> being
+      the <ref column="name" table="Port_Group" db="OVN_Northbound"/>
+      of the <ref table="Port_Group" db="OVN_Northbound"/> followed by
+      a suffix <code>_ip4</code> for IPv4 and <code>_ip6</code> for IPv6.
+      The generated address sets can be used in the same way as regular
+      address sets in the <ref column="match" table="ACL"/> column
+      of the <ref table="ACL"/> table. For syntax information, see the details
+      of the expression language used for the <ref column="match"
+      table="Logical_Flow" db="OVN_Southbound"/> column in the <ref
+      table="Logical_Flow" db="OVN_Southbound"/> table of the <ref
+      db="OVN_Southbound"/> database.
+    </p>
+
     <column name="name">
       A name for the port group.  Names are ASCII and must match
       <code>[a-zA-Z_.][a-zA-Z_.0-9]*</code>.
diff --git a/ovn/ovn-sb.xml b/ovn/ovn-sb.xml
index 92ec193..5d23774 100644
--- a/ovn/ovn-sb.xml
+++ b/ovn/ovn-sb.xml
@@ -368,9 +368,17 @@
 
   <table name="Address_Set" title="Address Sets">
     <p>
-      See the documentation for the <ref table="Address_Set"
+      This table contains address sets synced from the <ref table="Address_Set"
       db="OVN_Northbound"/> table in the <ref db="OVN_Northbound"/> database
-      for details.
+      and address sets generated from the <ref table="Port_Group"
+      db="OVN_Northbound"/> table in the <ref db="OVN_Northbound"/> database.
+    </p>
+
+    <p>
+      See the documentation for the <ref table="Address_Set"
+      db="OVN_Northbound"/> table and <ref table="Port_Group"
+      db="OVN_Northbound"/> table in the <ref db="OVN_Northbound"/>
+      database for details.
     </p>
 
     <column name="name"/>
@@ -790,6 +798,17 @@
         <code>@port_group1</code>.
       </p>
 
+      <p>
+        Additionally, you may refer to the set of addresses belonging to a
+        group of logical switch ports stored in the <ref table="Port_Group"/>
+        table by its <ref column="name" table="Port_Group"/> followed by
+        a suffix '_ip4'/'_ip6'.  The IPv4 address set of a
+        <ref table="Port_Group"/> with a name of <code>port_group1</code>
+        can be referred to as <code>$port_group1_ip4</code>, and the IPv6
+        address set of the same <ref table="Port_Group"/> can be referred to
+        as <code>$port_group1_ip6</code>
+      </p>
+
       <p><em>Miscellaneous</em></p>
 
       <p>
diff --git a/tests/ovn.at b/tests/ovn.at
index 7ae6640..d9cb9cf 100644
--- a/tests/ovn.at
+++ b/tests/ovn.at
@@ -9572,3 +9572,229 @@ done
 
 OVN_CLEANUP([hv1], [hv2], [hv3])
 AT_CLEANUP
+
+AT_SETUP([ovn -- Port Groups])
+AT_KEYWORDS([ovnpg])
+AT_SKIP_IF([test $HAVE_PYTHON = no])
+ovn_start
+
+# Logical network:
+#
+# Three logical switches ls1, ls2, ls3.
+# One logical router lr0 connected to ls[123],
+# with nine subnets, three per logical switch:
+#
+#    lrp11 on ls1 for subnet 192.168.11.0/24
+#    lrp12 on ls1 for subnet 192.168.12.0/24
+#    lrp13 on ls1 for subnet 192.168.13.0/24
+#    ...
+#    lrp33 on ls3 for subnet 192.168.33.0/24
+#
+# 27 VIFs, 9 per LS, 3 per subnet: lp[123][123][123], where the first two
+# digits are the subnet and the last digit distinguishes the VIF.
+#
+# This test will create two port groups and uses them in ACL.
+
+get_lsp_uuid () {
+    ovn-nbctl lsp-list ls${1%??} | grep lp$1 | awk '{ print $1 }'
+}
+
+pg1_ports=
+pg2_ports=
+for i in 1 2 3; do
+    ovn-nbctl ls-add ls$i
+    for j in 1 2 3; do
+        for k in 1 2 3; do
+            ovn-nbctl \
+                -- lsp-add ls$i lp$i$j$k \
+                -- lsp-set-addresses lp$i$j$k "f0:00:00:00:0$i:$j$k \
+                   192.168.$i$j.$k"
+            # logical ports lp[12]?1 belongs to port group pg1
+            if test $i != 3 && test $k == 1; then
+                pg1_ports="$pg1_ports `get_lsp_uuid $i$j$k`"
+            fi
+            # logical ports lp[23]?2 belongs to port group pg2
+            if test $i != 1 && test $k == 2; then
+                pg2_ports="$pg2_ports `get_lsp_uuid $i$j$k`"
+            fi
+        done
+    done
+done
+
+ovn-nbctl lr-add lr0
+for i in 1 2 3; do
+    for j in 1 2 3; do
+        ovn-nbctl lrp-add lr0 lrp$i$j 00:00:00:00:ff:$i$j 192.168.$i$j.254/24
+        ovn-nbctl \
+            -- lsp-add ls$i lrp$i$j-attachment \
+            -- set Logical_Switch_Port lrp$i$j-attachment type=router \
+                             options:router-port=lrp$i$j \
+                             addresses='"00:00:00:00:ff:'$i$j'"'
+    done
+done
+
+ovn-nbctl create Port_Group name=pg1 ports="$pg1_ports"
+ovn-nbctl create Port_Group name=pg2 ports="$pg2_ports"
+
+# create ACLs on all lswitches to drop traffic from pg2 to pg1
+ovn-nbctl acl-add ls1 to-lport 1001 'outport == @pg1 && ip4.src == $pg2_ip4' drop
+ovn-nbctl acl-add ls2 to-lport 1001 'outport == @pg1 && ip4.src == $pg2_ip4' drop
+ovn-nbctl acl-add ls3 to-lport 1001 'outport == @pg1 && ip4.src == $pg2_ip4' drop
+
+# Physical network:
+#
+# Three hypervisors hv[123].
+# lp?1[123] spread across hv[123]: lp?11 on hv1, lp?12 on hv2, lp?13 on hv3.
+# lp?2[123] spread across hv[23]: lp?21 and lp?22 on hv2, lp?23 on hv3.
+# lp?3[123] all on hv3.
+
+# Given the name of a logical port, prints the name of the hypervisor
+# on which it is located.
+vif_to_hv() {
+    case $1 in dnl (
+        ?11) echo 1 ;; dnl (
+        ?12 | ?21 | ?22) echo 2 ;; dnl (
+        ?13 | ?23 | ?3?) echo 3 ;;
+    esac
+}
+
+# Given the name of a logical port, prints the name of its logical router
+# port, e.g. "vif_to_lrp 123" yields 12.
+vif_to_lrp() {
+    echo ${1%?}
+}
+
+# Given the name of a logical port, prints the name of its logical
+# switch, e.g. "vif_to_ls 123" yields 1.
+vif_to_ls() {
+    echo ${1%??}
+}
+
+net_add n1
+for i in 1 2 3; do
+    sim_add hv$i
+    as hv$i
+    ovs-vsctl add-br br-phys
+    ovn_attach n1 br-phys 192.168.0.$i
+done
+for i in 1 2 3; do
+    for j in 1 2 3; do
+        for k in 1 2 3; do
+            hv=`vif_to_hv $i$j$k`
+                as hv$hv ovs-vsctl \
+                -- add-port br-int vif$i$j$k \
+                -- set Interface vif$i$j$k \
+                    external-ids:iface-id=lp$i$j$k \
+                    options:tx_pcap=hv$hv/vif$i$j$k-tx.pcap \
+                    options:rxq_pcap=hv$hv/vif$i$j$k-rx.pcap \
+                    ofport-request=$i$j$k
+        done
+    done
+done
+
+# Pre-populate the hypervisors' ARP tables so that we don't lose any
+# packets for ARP resolution (native tunneling doesn't queue packets
+# for ARP resolution).
+OVN_POPULATE_ARP
+
+# Allow some time for ovn-northd and ovn-controller to catch up.
+# XXX This should be more systematic.
+sleep 1
+
+# test_ip INPORT SRC_MAC DST_MAC SRC_IP DST_IP OUTPORT...
+#
+# This shell function causes a packet to be received on INPORT.  The packet's
+# content has Ethernet destination DST and source SRC (each exactly 12 hex
+# digits) and Ethernet type ETHTYPE (4 hex digits).  The OUTPORTs (zero or
+# more) list the VIFs on which the packet should be received.  INPORT and the
+# OUTPORTs are specified as logical switch port numbers, e.g. 123 for vif123.
+for i in 1 2 3; do
+    for j in 1 2 3; do
+        for k in 1 2 3; do
+            : > $i$j$k.expected
+        done
+    done
+done
+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=hv`vif_to_hv $inport`
+    as $hv ovs-appctl netdev-dummy/receive vif$inport $packet
+    #as $hv ovs-appctl ofproto/trace br-int in_port=$inport $packet
+    in_ls=`vif_to_ls $inport`
+    in_lrp=`vif_to_lrp $inport`
+    for outport; do
+        out_ls=`vif_to_ls $outport`
+        if test $in_ls = $out_ls; then
+            # Ports on the same logical switch receive exactly the same packet.
+            echo $packet
+        else
+            # Routing decrements TTL and updates source and dest MAC
+            # (and checksum).
+            out_lrp=`vif_to_lrp $outport`
+            echo f00000000${outport}00000000ff${out_lrp}08004500001c00000000"3f1101"00${src_ip}${dst_ip}0035111100080000
+        fi >> $outport.expected
+    done
+}
+
+as hv1 ovs-vsctl --columns=name,ofport list interface
+as hv1 ovn-sbctl list port_binding
+as hv1 ovn-sbctl list datapath_binding
+as hv1 ovn-sbctl list port_group
+as hv1 ovn-sbctl list address_set
+as hv1 ovn-sbctl dump-flows
+as hv1 ovs-ofctl dump-flows br-int
+
+# Send IP packets between all pairs of source and destination ports,
+# packets matches ACL (pg2 to pg1) should be dropped
+ip_to_hex() {
+    printf "%02x%02x%02x%02x" "$@"
+}
+for is in 1 2 3; do
+  for js in 1 2 3; do
+    for ks in 1 2 3; do
+      bcast=
+      s=$is$js$ks
+      smac=f00000000$s
+      sip=`ip_to_hex 192 168 $is$js $ks`
+      for id in 1 2 3; do
+          for jd in 1 2 3; do
+              for kd in 1 2 3; do
+                d=$id$jd$kd
+                dip=`ip_to_hex 192 168 $id$jd $kd`
+                if test $is = $id; then dmac=f00000000$d; else dmac=00000000ff$is$js; fi
+                if test $d != $s; then unicast=$d; else unicast=; fi
+
+                # packets matches ACL should be dropped
+                if test $id != 3 && test $kd == 1; then
+                    if test $is != 1 && test $ks == 2; then
+                        unicast=
+                    fi
+                fi
+                test_ip $s $smac $dmac $sip $dip $unicast #1
+              done
+          done
+        done
+      done
+  done
+done
+
+# Allow some time for packet forwarding.
+# XXX This can be improved.
+sleep 1
+
+# Now check the packets actually received against the ones expected.
+for i in 1 2 3; do
+    for j in 1 2 3; do
+        for k in 1 2 3; do
+            OVN_CHECK_PACKETS([hv`vif_to_hv $i$j$k`/vif$i$j$k-tx.pcap],
+                              [$i$j$k.expected])
+        done
+    done
+done
+
+# Gracefully terminate daemons
+OVN_CLEANUP([hv1], [hv2], [hv3])
+AT_CLEANUP
