diff --git a/apps/openstackswitching/app/src/main/java/org/onosproject/openstackswitching/OpenstackArpHandler.java b/apps/openstackswitching/app/src/main/java/org/onosproject/openstackswitching/OpenstackArpHandler.java
new file mode 100644
index 0000000..f281e4a
--- /dev/null
+++ b/apps/openstackswitching/app/src/main/java/org/onosproject/openstackswitching/OpenstackArpHandler.java
@@ -0,0 +1,106 @@
+/*
+* Copyright 2015 Open Networking Laboratory
+*
+* Licensed under the Apache License, Version 2.0 (the "License");
+* you may not use this file except in compliance with the License.
+* You may obtain a copy of the License at
+*
+*     http://www.apache.org/licenses/LICENSE-2.0
+*
+* Unless required by applicable law or agreed to in writing, software
+* distributed under the License is distributed on an "AS IS" BASIS,
+* WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+* See the License for the specific language governing permissions and
+* limitations under the License.
+*/
+package org.onosproject.openstackswitching;
+
+import org.onlab.packet.ARP;
+import org.onlab.packet.Ethernet;
+import org.onlab.packet.Ip4Address;
+import org.onlab.packet.MacAddress;
+import org.onosproject.net.flow.DefaultTrafficTreatment;
+import org.onosproject.net.flow.TrafficTreatment;
+import org.onosproject.net.packet.DefaultOutboundPacket;
+import org.onosproject.net.packet.InboundPacket;
+import org.onosproject.net.packet.OutboundPacket;
+import org.onosproject.net.packet.PacketService;
+import org.slf4j.Logger;
+import org.slf4j.LoggerFactory;
+import java.nio.ByteBuffer;
+import java.util.Map;
+
+/**
+ * Handles ARP packet from VMs.
+ */
+public class OpenstackArpHandler {
+
+    private static Logger log = LoggerFactory
+            .getLogger(OpenstackArpHandler.class);
+    private PacketService packetService;
+    private Map<String, OpenstackPort> openstackPortMap;
+
+    /**
+     * Returns OpenstackArpHandler reference.
+     *
+     * @param openstackPortMap
+     * @param packetService
+     */
+    public OpenstackArpHandler(Map<String, OpenstackPort> openstackPortMap, PacketService packetService) {
+        this.openstackPortMap = openstackPortMap;
+        this.packetService = packetService;
+    }
+
+    /**
+     * Processes ARP packets.
+     *
+     * @param pkt ARP request packet
+     */
+    public void processPacketIn(InboundPacket pkt) {
+        Ethernet ethernet = pkt.parsed();
+        ARP arp = (ARP) ethernet.getPayload();
+
+        if (arp.getOpCode() == ARP.OP_REQUEST) {
+            byte[] srcMacAddress = arp.getSenderHardwareAddress();
+            byte[] srcIPAddress = arp.getSenderProtocolAddress();
+            byte[] dstIPAddress = arp.getTargetProtocolAddress();
+
+            //Searches the Dst MAC Address based on openstackPortMap
+            MacAddress macAddress = null;
+
+            OpenstackPort openstackPort = openstackPortMap.values().stream().filter(e -> e.fixedIps().
+                    containsValue(Ip4Address.valueOf(dstIPAddress))).findAny().orElse(null);
+
+            if (openstackPort != null) {
+                macAddress = openstackPort.macAddress();
+                log.debug("Found MACAddress: {}", macAddress.toString());
+            } else {
+                return;
+            }
+
+            //Creates a response packet
+            ARP arpReply = new ARP();
+            arpReply.setOpCode(ARP.OP_REPLY)
+                    .setHardwareAddressLength(arp.getHardwareAddressLength())
+                    .setHardwareType(arp.getHardwareType())
+                    .setProtocolAddressLength(arp.getProtocolAddressLength())
+                    .setProtocolType(arp.getProtocolType())
+                    .setSenderHardwareAddress(macAddress.toBytes())
+                    .setSenderProtocolAddress(dstIPAddress)
+                    .setTargetHardwareAddress(srcMacAddress)
+                    .setTargetProtocolAddress(srcIPAddress);
+
+            //Sends a response packet
+            ethernet.setDestinationMACAddress(srcMacAddress)
+                    .setSourceMACAddress(macAddress)
+                    .setEtherType(Ethernet.TYPE_ARP)
+                    .setPayload(arpReply);
+
+            TrafficTreatment.Builder builder = DefaultTrafficTreatment.builder();
+            builder.setOutput(pkt.receivedFrom().port());
+            OutboundPacket packet = new DefaultOutboundPacket(pkt.receivedFrom().deviceId(),
+                    builder.build(), ByteBuffer.wrap(ethernet.serialize()));
+            packetService.emit(packet);
+        }
+    }
+}