Quick Answer
The answer is MP-BGP with the VPNv4 address family, VRF, and LDP. These three components are required to deploy MPLS Layer 3 VPN because VRFs on the Provider Edge routers create isolated routing tables for each customer, allowing overlapping IP addresses without route leakage, while LDP establishes label-switched paths for MPLS forwarding, and MP-BGP with the VPNv4 address family distributes customer routes across the MPLS backbone with VPN labels to maintain separation. On the Cisco SPCOR 350-501 exam, this concept tests your understanding of the control plane versus data plane separation in service provider networks, and a common trap is confusing LDP with MP-BGP—remember that LDP handles label distribution for the core, while MP-BGP carries the VPN routes. A useful memory tip is the acronym “VLM”: VRF for isolation, LDP for labels, MP-BGP for VPN route exchange.
This 350-501 practice question tests your understanding of services. The scenario asks you to isolate a root cause — eliminate options that address a different problem before choosing. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
Which THREE components are required to deploy MPLS Layer 3 VPN?
VRFs on PE routers
VRFs provide per-customer routing separation.
GRE tunneling
Why wrong: GRE tunneling is not required; MPLS encapsulation is used.
OSPF
Why wrong: Any IGP (OSPF, IS-IS) can be used; not specifically required.
LDP
LDP distributes labels for MPLS forwarding.
MP-BGP with VPNv4 address family
MP-BGP carries VPN routes between PEs.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
VRFs on PE routers
VRFs (Virtual Routing and Forwarding) are required on PE routers to maintain separate, isolated routing tables for each customer VPN. This allows overlapping IP addresses between different customers and ensures that traffic from one VPN does not leak into another. Without VRFs, the PE router cannot distinguish between customer routes, making Layer 3 VPN operation impossible.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
VRFs on PE routers
Why this is correct
VRFs provide per-customer routing separation.
Related concept
Read the scenario before looking for a memorised answer.
GRE tunneling
Why it's wrong here
GRE tunneling is not required; MPLS encapsulation is used.
OSPF
Why it's wrong here
Any IGP (OSPF, IS-IS) can be used; not specifically required.
LDP
Why this is correct
LDP distributes labels for MPLS forwarding.
Related concept
Read the scenario before looking for a memorised answer.
MP-BGP with VPNv4 address family
Common exam traps
Cisco often tests the misconception that an IGP like OSPF is mandatory for MPLS Layer 3 VPN, when in fact the required components are VRFs, LDP (or another label distribution protocol), and MP-BGP with VPNv4 address family—the IGP is only needed to support LDP, not as a direct component of the VPN service.
Detailed technical explanation
MPLS Layer 3 VPN relies on a two-label stack: the inner label (assigned by LDP) is used for hop-by-hop forwarding across the MPLS core, while the outer label (assigned by MP-BGP) identifies the egress PE and the specific VRF. MP-BGP with the VPNv4 address family carries both the IPv4 prefix and the Route Distinguisher (RD), enabling unique global identification of customer routes even with overlapping addresses. In practice, the PE router must also support route target (RT) import/export policies to control which VRFs receive which routes.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A network engineer at a university connects two campus buildings via a fibre link. Both routers run OSPF, but no adjacency forms — even though both routers can ping each other. The engineer finds one router is in area 0 and the other in area 1. OSPF adjacency requires matching area numbers, hello/dead timers, and network type. IP reachability alone is not enough.
What to study next
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Services — study guide chapter
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FAQ
Services — This question tests Services — Read the scenario before looking for a memorised answer..
The correct answer is: VRFs on PE routers — VRFs (Virtual Routing and Forwarding) are required on PE routers to maintain separate, isolated routing tables for each customer VPN. This allows overlapping IP addresses between different customers and ensures that traffic from one VPN does not leak into another. Without VRFs, the PE router cannot distinguish between customer routes, making Layer 3 VPN operation impossible.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 25, 2026
This 350-501 practice question is part of Courseiva's free Cisco certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the 350-501 exam.
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