diff --git a/apps/openstacknode/src/main/java/org/onosproject/openstacknode/OpenstackNodeManager.java b/apps/openstacknode/src/main/java/org/onosproject/openstacknode/OpenstackNodeManager.java
index 5276c58..0bf78bf 100644
--- a/apps/openstacknode/src/main/java/org/onosproject/openstacknode/OpenstackNodeManager.java
+++ b/apps/openstacknode/src/main/java/org/onosproject/openstacknode/OpenstackNodeManager.java
@@ -15,6 +15,8 @@
  */
 package org.onosproject.openstacknode;
 
+import com.google.common.collect.ImmutableList;
+import com.google.common.collect.Lists;
 import com.google.common.collect.Sets;
 import org.apache.felix.scr.annotations.Activate;
 import org.apache.felix.scr.annotations.Component;
@@ -35,6 +37,7 @@
 import org.onosproject.cluster.NodeId;
 import org.onosproject.core.ApplicationId;
 import org.onosproject.core.CoreService;
+import org.onosproject.core.GroupId;
 import org.onosproject.event.ListenerRegistry;
 import org.onosproject.net.Device;
 import org.onosproject.net.DeviceId;
@@ -60,6 +63,10 @@
 import org.onosproject.net.device.DeviceEvent;
 import org.onosproject.net.device.DeviceListener;
 import org.onosproject.net.device.DeviceService;
+import org.onosproject.net.driver.DriverService;
+import org.onosproject.net.group.Group;
+import org.onosproject.net.group.GroupKey;
+import org.onosproject.net.group.GroupService;
 import org.onosproject.openstacknode.OpenstackNodeEvent.NodeState;
 import org.onosproject.ovsdb.controller.OvsdbClientService;
 import org.onosproject.ovsdb.controller.OvsdbController;
@@ -113,6 +120,7 @@
     private static final int DPID_BEGIN = 3;
 
     private static final String APP_ID = "org.onosproject.openstacknode";
+
     private static final Class<OpenstackNodeConfig> CONFIG_CLASS = OpenstackNodeConfig.class;
 
     @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
@@ -139,6 +147,12 @@
     @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
     protected LeadershipService leadershipService;
 
+    @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
+    protected DriverService driverService;
+
+    @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
+    protected GroupService groupService;
+
     @Property(name = OVSDB_PORT, intValue = DEFAULT_OVSDB_PORT,
             label = "OVSDB server listen port")
     private int ovsdbPort = DEFAULT_OVSDB_PORT;
@@ -164,6 +178,7 @@
 
     private ConsistentMap<String, OpenstackNode> nodeStore;
 
+    private SelectGroupHandler selectGroupHandler;
     private ApplicationId appId;
     private NodeId localNodeId;
 
@@ -187,6 +202,8 @@
         configRegistry.addListener(configListener);
         componentConfigService.registerProperties(getClass());
 
+        selectGroupHandler = new SelectGroupHandler(groupService, deviceService, driverService, appId);
+
         readConfiguration();
         log.info("Started");
     }
@@ -275,12 +292,25 @@
     @Override
     public void processCompleteState(OpenstackNode node) {
         process(new OpenstackNodeEvent(COMPLETE, node));
+        switch (node.type()) {
+            case COMPUTE:
+                selectGroupHandler.createGatewayGroup(node.intBridge(), gatewayNodes());
+                break;
+            case GATEWAY:
+                updateGatewayGroup(node, true);
+                break;
+            default:
+                break;
+        }
         log.info("Finished init {}", node.hostname());
     }
 
     @Override
     public void processIncompleteState(OpenstackNode node) {
         process(new OpenstackNodeEvent(INCOMPLETE, node));
+        if (node.type().equals(NodeType.GATEWAY)) {
+            updateGatewayGroup(node, false);
+        }
     }
 
     @Override
@@ -331,6 +361,65 @@
                 .map(Port::number).findFirst();
     }
 
+    @Override
+    public OpenstackNode gatewayNode(DeviceId deviceId) {
+        OpenstackNode gatewayNode = nodeByDeviceId(deviceId);
+        if (gatewayNode == null) {
+            log.warn("Gateway with device ID {} does not exist");
+            return null;
+        }
+        return gatewayNode;
+    }
+
+    @Override
+    public synchronized GroupId gatewayGroupId(DeviceId srcDeviceId) {
+        GroupKey groupKey = selectGroupHandler.getGroupKey(srcDeviceId);
+        Group group = groupService.getGroup(srcDeviceId, groupKey);
+        if (group == null) {
+            log.info("Created gateway group for {}", srcDeviceId);
+            return selectGroupHandler.createGatewayGroup(srcDeviceId, gatewayNodes());
+        } else {
+            return group.id();
+        }
+    }
+
+    @Override
+    public List<OpenstackNode> gatewayNodes() {
+        return nodeStore.values()
+                .stream()
+                .map(Versioned::value)
+                .filter(node -> node.type().equals(NodeType.GATEWAY))
+                .filter(node -> node.state().equals(COMPLETE))
+                .collect(Collectors.toList());
+    }
+
+    @Override
+    public List<DeviceId> gatewayDeviceIds() {
+        List<DeviceId> deviceIdList = Lists.newArrayList();
+
+        nodeStore.values()
+                .stream()
+                .map(Versioned::value)
+                .filter(node -> node.type().equals(NodeType.GATEWAY))
+                .filter(node -> node.state().equals(COMPLETE))
+                .forEach(node -> deviceIdList.add(node.intBridge()));
+        return deviceIdList;
+    }
+
+    private void updateGatewayGroup(OpenstackNode gatewayNode, boolean isInsert) {
+        nodeStore.values()
+                .stream()
+                .map(Versioned::value)
+                .filter(node -> node.type().equals(NodeType.COMPUTE))
+                .filter(node -> node.state().equals(COMPLETE))
+                .forEach(node -> {
+                    selectGroupHandler.updateGatewayGroupBuckets(node.intBridge(),
+                            ImmutableList.of(gatewayNode),
+                            isInsert);
+                    log.trace("Updated gateway group on {}", node.intBridge());
+                });
+    }
+
     private void initNode(OpenstackNode node) {
         NodeState state = node.state();
         state.process(this, node);
@@ -675,6 +764,7 @@
                         eventExecutor.execute(() -> handler.connected(device));
                     } else {
                         eventExecutor.execute(() -> handler.disconnected(device));
+                        log.warn("OpenstackNode with device ID {} is disconnected", device.id());
                     }
                     break;
                 default:
diff --git a/apps/openstacknode/src/main/java/org/onosproject/openstacknode/OpenstackNodeService.java b/apps/openstacknode/src/main/java/org/onosproject/openstacknode/OpenstackNodeService.java
index f7c16ba..0fb6e77 100644
--- a/apps/openstacknode/src/main/java/org/onosproject/openstacknode/OpenstackNodeService.java
+++ b/apps/openstacknode/src/main/java/org/onosproject/openstacknode/OpenstackNodeService.java
@@ -16,6 +16,7 @@
 package org.onosproject.openstacknode;
 
 import org.onlab.packet.IpAddress;
+import org.onosproject.core.GroupId;
 import org.onosproject.event.ListenerService;
 import org.onosproject.net.DeviceId;
 import org.onosproject.net.PortNumber;
@@ -127,4 +128,34 @@
      * @return port number; or empty value
      */
     Optional<PortNumber> externalPort(DeviceId intBridgeId);
+    /**
+     * Returns gateway node with the given device identifier.
+     *
+     * @param deviceId The gateway node deviceId
+     * @return The gateway node information
+     */
+    OpenstackNode gatewayNode(DeviceId deviceId);
+
+    /**
+     * Returns group id for gateway load balance.
+     * If the group does not exist in the supplied source device, creates one.
+     *
+     * @param srcDeviceId source device id
+     * @return The group id
+     */
+    GroupId gatewayGroupId(DeviceId srcDeviceId);
+
+    /**
+     * Returns the list of gateway node information with the given device identifier.
+     *
+     * @return The list of gateway node information
+     */
+    List<OpenstackNode> gatewayNodes();
+
+    /**
+     * Returns the list of gateway`s device identifiers.
+     *
+     * @return The list of device identifier]
+     */
+    List<DeviceId> gatewayDeviceIds();
 }
diff --git a/apps/openstacknode/src/main/java/org/onosproject/openstacknode/SelectGroupHandler.java b/apps/openstacknode/src/main/java/org/onosproject/openstacknode/SelectGroupHandler.java
new file mode 100644
index 0000000..df963db
--- /dev/null
+++ b/apps/openstacknode/src/main/java/org/onosproject/openstacknode/SelectGroupHandler.java
@@ -0,0 +1,206 @@
+/*
+ * Copyright 2017-present 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.openstacknode;
+
+import com.google.common.collect.Lists;
+import org.onlab.packet.Ip4Address;
+import org.onosproject.core.ApplicationId;
+import org.onosproject.core.GroupId;
+import org.onosproject.net.DeviceId;
+import org.onosproject.net.Port;
+import org.onosproject.net.PortNumber;
+import org.onosproject.net.behaviour.ExtensionTreatmentResolver;
+import org.onosproject.net.device.DeviceService;
+import org.onosproject.net.driver.DefaultDriverData;
+import org.onosproject.net.driver.DefaultDriverHandler;
+import org.onosproject.net.driver.Driver;
+import org.onosproject.net.driver.DriverHandler;
+import org.onosproject.net.driver.DriverService;
+import org.onosproject.net.flow.DefaultTrafficTreatment;
+import org.onosproject.net.flow.TrafficTreatment;
+import org.onosproject.net.flow.instructions.ExtensionPropertyException;
+import org.onosproject.net.flow.instructions.ExtensionTreatment;
+import org.onosproject.net.flow.instructions.ExtensionTreatmentType;
+import org.onosproject.net.group.DefaultGroupDescription;
+import org.onosproject.net.group.DefaultGroupKey;
+import org.onosproject.net.group.GroupBucket;
+import org.onosproject.net.group.GroupBuckets;
+import org.onosproject.net.group.GroupDescription;
+import org.onosproject.net.group.GroupKey;
+import org.onosproject.net.group.GroupService;
+import org.slf4j.Logger;
+import org.slf4j.LoggerFactory;
+
+import java.util.List;
+
+import static org.onosproject.net.AnnotationKeys.PORT_NAME;
+import static org.onosproject.net.group.DefaultGroupBucket.createSelectGroupBucket;
+
+/**
+ * Handles group generation request from OpenstackNode.
+ */
+public class SelectGroupHandler {
+    private final Logger log = LoggerFactory.getLogger(getClass());
+
+    private static final String TUNNEL_DESTINATION = "tunnelDst";
+    private static final String PORTNAME_PREFIX_TUNNEL = "vxlan";
+
+    private final GroupService groupService;
+    private final DeviceService deviceService;
+    private final DriverService driverService;
+    private final ApplicationId appId;
+
+    /**
+     * Default constructor.
+     *
+     * @param targetGroupService group service
+     * @param targetDeviceService device service
+     * @param targetDriverService driver service
+     * @param appId application id for group service
+     */
+    public SelectGroupHandler(GroupService targetGroupService, DeviceService targetDeviceService,
+                              DriverService targetDriverService, ApplicationId appId) {
+        groupService = targetGroupService;
+        deviceService = targetDeviceService;
+        driverService = targetDriverService;
+        this.appId = appId;
+    }
+
+    /**
+     * Creates select type group description according to given deviceId.
+     *
+     * @param srcDeviceId target device id for group description
+     * @param gatewayNodeList gateway node list for bucket action
+     * @return created select type group description
+     */
+    public GroupId createGatewayGroup(DeviceId srcDeviceId, List<OpenstackNode> gatewayNodeList) {
+        List<GroupBucket> bucketList = generateBucketsForSelectGroup(srcDeviceId, gatewayNodeList);
+        GroupId groupId = getGroupId(srcDeviceId);
+        GroupDescription groupDescription = new DefaultGroupDescription(
+                srcDeviceId,
+                GroupDescription.Type.SELECT,
+                new GroupBuckets(bucketList),
+                getGroupKey(srcDeviceId),
+                groupId.id(),
+                appId);
+
+        groupService.addGroup(groupDescription);
+        return groupId;
+    }
+
+    /**
+     * Returns unique group key with supplied source device ID as a hash.
+     *
+     * @param srcDeviceId source device id
+     * @return group key
+     */
+    public GroupKey getGroupKey(DeviceId srcDeviceId) {
+        return new DefaultGroupKey(srcDeviceId.toString().getBytes());
+    }
+
+    private GroupId getGroupId(DeviceId srcDeviceId) {
+        return new GroupId(srcDeviceId.toString().hashCode());
+    }
+
+    /**
+     * Updates groupBuckets in select type group.
+     *
+     * @param deviceId target device id to update the group
+     * @param gatewayNodeList updated gateway node list for bucket action
+     * @param isInsert update type(add or remove)
+     */
+    public void updateGatewayGroupBuckets(DeviceId deviceId,
+                                          List<OpenstackNode> gatewayNodeList,
+                                          boolean isInsert) {
+        List<GroupBucket> bucketList = generateBucketsForSelectGroup(deviceId, gatewayNodeList);
+        GroupKey groupKey = getGroupKey(deviceId);
+        if (groupService.getGroup(deviceId, groupKey) == null) {
+            log.error("There's no group in compute node {}", deviceId);
+            return;
+        }
+
+        if (isInsert) {
+            groupService.addBucketsToGroup(
+                    deviceId,
+                    groupKey,
+                    new GroupBuckets(bucketList),
+                    groupKey, appId);
+        } else {
+            groupService.removeBucketsFromGroup(
+                    deviceId,
+                    groupKey,
+                    new GroupBuckets(bucketList),
+                    groupKey, appId);
+        }
+    }
+
+    private List<GroupBucket> generateBucketsForSelectGroup(DeviceId deviceId, List<OpenstackNode> gatewayNodeList) {
+        List<GroupBucket> bucketList = Lists.newArrayList();
+        gatewayNodeList.forEach(node -> {
+            TrafficTreatment tBuilder = DefaultTrafficTreatment.builder()
+                    .extension(buildNiciraExtenstion(deviceId, node.dataIp().get().getIp4Address()), deviceId)
+                    .setOutput(getTunnelPort(deviceId))
+                    .build();
+            bucketList.add(createSelectGroupBucket(tBuilder));
+        });
+        return bucketList;
+    }
+
+    /**
+     * Builds Nicira extension for tagging remoteIp of vxlan.
+     *
+     * @param id device id of vxlan source device
+     * @param hostIp remote ip of vxlan destination device
+     * @return NiciraExtension Treatment
+     */
+    private ExtensionTreatment buildNiciraExtenstion(DeviceId id, Ip4Address hostIp) {
+        Driver driver = driverService.getDriver(id);
+        DriverHandler driverHandler = new DefaultDriverHandler(new DefaultDriverData(driver, id));
+        ExtensionTreatmentResolver resolver = driverHandler.behaviour(ExtensionTreatmentResolver.class);
+
+        ExtensionTreatment extensionInstruction =
+                resolver.getExtensionInstruction(
+                        ExtensionTreatmentType.ExtensionTreatmentTypes.NICIRA_SET_TUNNEL_DST.type());
+
+        try {
+            extensionInstruction.setPropertyValue(TUNNEL_DESTINATION, hostIp);
+        } catch (ExtensionPropertyException e) {
+            log.error("Error setting Nicira extension setting {}", e);
+        }
+
+        return extensionInstruction;
+    }
+
+    /**
+     * Returns port number of vxlan tunnel.
+     *
+     * @param deviceId target Device Id
+     * @return portNumber
+     */
+    private PortNumber getTunnelPort(DeviceId deviceId) {
+        Port port = deviceService.getPorts(deviceId).stream()
+                .filter(p -> p.annotations().value(PORT_NAME).equals(PORTNAME_PREFIX_TUNNEL))
+                .findAny().orElse(null);
+
+        if (port == null) {
+            log.error("No TunnelPort was created.");
+            return null;
+        }
+        return port.number();
+
+    }
+}