So what is vNet peering? Well, basically it is a way to connect two vNets over the backbone of Azure’s network rather than creating an Azure VPN Gateway between the two. Some good points about using vNet peering over a Gateway is the cost saving, bandwidth limitations and latency. vNet peering also fully supports, NSG (Network Security Groups), NVA (Network Virtual Appliances), UDR (User defined Routes), Internal Load Balancers, and probably more.
Now to the good bit, the step by step guide to setting it up.

Before you can setup the vNet peer you need to have at least two networks and they can even be in different subscriptions. You can even do vNet peering across Azure regions. This is called Global vNet Peering. The basic rule of thumb is as long as each vNet has different subnets, then you are all good.

For this step by Step guide, I have two VM’s in two different networks and they are:

VM 1: Pixel1
Network 1: Pixel1
Subnet: 192.168.100.0/24
Location: UK South

VM 2: Pixel2
Network 2: Pixel2
Subnet: 10.2.0.0/24
Location: East US

Configure vNet peering using the Azure Portal

First vNet

If you log in to one of the VM’s and try to ping the other you will get Request timed out

Now Navigate to your first vNet in the Azure portal.

Now click on Peerings on the left hand side.

Click Add

In the new blade enter a Name for this peering, select the Subscription that the other vNet is in. Then Select the Virtual Network.

Under the Configuration section make sure Enabled is selected if you want to allow communication between the two vNets. This allows the peer virtual network address space to be included as part of the Virtual_Network tag in NSG’s.

The next three checkboxes do the following.

Allow forwarded traffic – This allows the peer’s forwarded traffic (traffic not originating from inside the peer virtual network) into your virtual network.
Allow gateway transit – This allows the peer virtual network to use your virtual network gateway. The peer network cannot already have a gateway configured, and must select use remote gateway in its peering settings.
Use remote gateway – You will need to select this option if you wish to use your peer’s virtual network gateway. The peer virtual network must have a gateway already configured and have Allow gateway transit ticked. You can not use this setting if you already have a gateway ticked.

Once you have configured as you require, click OK

You will now see that the peering has been created and is in the Initiated status.

You have now set up the first part of the peering. You will need to set up the other vNet in order for the peering to connect.

Second vNet

Navigate to your second vNet and click Peerings.

Click Add

In the new blade enter a Name for this peering, select the Subscription that the other vNet is in. Then Select the Virtual Network.

Under the Configuration section make sure Enabled is selected if you want to allow communication between the two vNets. This allows the peer virtual network address space to be included as part of the Virtual_Network tag in NSG’s.

Once you have configured as you require, click OK

After a short while, you will see that the Perring Status now says Connected

If you jump back to your virtual machine you should now be able to ping the other one after you have allowed it through the firewall. To do that use the following PowerShell command.

The PowerShell Way

Open up the Cloud Shell making sure it’s running in the PowerShell mode and use the following PowerShell commands. Just make sure you change the names to yours.

As you can see the PowerShell method is rather easy.

I hope you found this article helpful. If you have any questions please let me know by the usual methods.