Designing secure and scalable inter-VPC connectivity is one of the most important parts of AWS networking architecture. With multiple VPCs across different accounts and Regions, choosing the right option can significantly influence performance, cost, and operational complexity. The three most popularly evaluated services are AWS Transit Gateway, VPC Peering, and AWS PrivateLink.
This deep technical comparison will help you understand Transit Gateway vs VPC Peering vs PrivateLink in a simple and interview-ready manner. We will explore how they work, ideal use cases, limitations, performance considerations, and how to choose the right option for network design AWS scenarios.
Why Do We Need Inter-VPC Connectivity?
As workloads grow, organizations adopt microservices, multi-account strategies, or hybrid connectivity. These require secure communication between:
- Multiple VPCs within a Region
- Cross-Region VPCs
- SaaS providers and customer VPCs
- Centralized shared services
This is where AWS VPC connectivity options come into play — each solving connectivity challenges differently.
Understanding VPC Peering
What is VPC Peering?
VPC Peering is a point-to-point network connection between two VPCs that allows private communication using each VPC’s IP addresses. It’s one of the simplest ways to enable inter-VPC connectivity.
Key Characteristics
| Attribute | Details |
|---|---|
| Connectivity | One-to-one VPC connection |
| Routing | Must update route tables manually |
| Transitive routing | Not supported |
| Cross-Region support | Yes |
| Traffic flow | Over AWS backbone (private) |
| Cost | Data transfer costs only |
When to Use VPC Peering
- Small number of VPCs with predictable communication
- Low complexity, direct communication required
- VPCs belonging to the same team or trust boundary
Limitations
- No transitive routing (VPC A cannot route to C through B)
- Can get complex with many VPCs (full mesh explosion)
- Route table maintenance becomes operationally heavy
VPC Peering is best for simple, direct connections but doesn’t scale well.
Understanding AWS Transit Gateway
What is AWS Transit Gateway?
Transit Gateway acts as a cloud router enabling centralized connectivity for thousands of VPCs, on-prem networks, and VPN connections with simplified management.
Key Characteristics
| Attribute | Details |
|---|---|
| Connectivity | One-to-many and many-to-many |
| Transitive routing | Supported |
| Cross-Region support | Yes, with TGW peering |
| Routing | Centralized route management |
| Performance | Scales up to large network topologies |
| Cost | Attachment + data processing charges |
Transit Gateway greatly simplifies inter-VPC connectivity, reducing the need for numerous VPC peering connections.
When to Use Transit Gateway
- Large multi-VPC architectures with complex routing
- Hub-and-spoke network design AWS patterns
- Centralized shared services (DNS, Active Directory, inspection stack)
- Hybrid workloads with Direct Connect and VPN
Limitations
- Higher cost compared to VPC peering
- Requires design for route domain segmentation (route tables)
- Not ideal for exposing SaaS-type private services directly
Transit Gateway is the enterprise-scale option with high flexibility and centralized governance.
Understanding AWS PrivateLink
What is PrivateLink?
AWS PrivateLink enables private access to specific services (not the entire VPC) using Interface Endpoints exposed to consumer VPCs. It is ideal for secure, controlled service sharing.
Key Characteristics
| Attribute | Details |
|---|---|
| Connectivity | Service-to-consumer model |
| Transitive routing | Not supported |
| Cross-Account | Supported |
| Cross-Region | Supported via service endpoints |
| Traffic flow | Through ENIs in the consumer VPC |
| Cost | Endpoint + data processing costs |
When to Use PrivateLink
- Offering private SaaS services to customers
- Accessing AWS-managed services like S3, SSM, DynamoDB (via Gateway/Interface endpoints)
- Fine-grained network access control over specific service endpoints
- Avoiding VPC CIDR/routing dependencies
Limitations
- Not suitable for full VPC-to-VPC connectivity
- Routing not directly possible between entire networks
- Can increase cost if many endpoints are needed
PrivateLink is focused on service exposure rather than network-wide communication.
Transit Gateway vs VPC Peering vs PrivateLink: Comparison Overview
Feature Comparison Table
| Criteria | Transit Gateway | VPC Peering | PrivateLink |
|---|---|---|---|
| Connectivity Type | Many-to-many | One-to-one | Service-specific |
| Transitive Routing | Yes | No | No |
| Cross-Region | Yes (TGW peering) | Yes | Yes |
| Typical Architecture | Hub-and-spoke | Mesh | Producer-consumer |
| Routing Complexity | Moderate | High (as VPCs grow) | Low |
| Security | Centralized control | Trust-based | Strong isolation |
| Performance | High | High | Depends on ENIs |
| Operational Scalability | Very high | Low at scale | Moderate |
| Best For | Enterprise multi-VPC designs | Simple connectivity | Private SaaS or AWS services |
Architecture Use Case Comparisons
Scenario 1: Multiple VPCs in a growing environment
→ Transit Gateway
Because of centralized routing, easier governance, and support for hybrid connectivity.
Scenario 2: Two applications that need direct communication
→ VPC Peering
Simple and cost-effective.
Scenario 3: Offering services to multiple customer accounts securely
→ PrivateLink
Consumers do not need IP access to your VPC, enhancing zero-trust security.
Interview-Focused Understanding of Connectivity Flow
| How Does Traffic Flow? | Transit Gateway | VPC Peering | PrivateLink |
|---|---|---|---|
| Path | Via TGW attachments | Direct between VPCs | Through interface endpoints |
| Control | TGW route tables | Individual VPC route tables | Endpoint policies |
| Security | Centralized segmentation | Limited by security groups/NACLs | Service-level isolation |
This helps prepare for inter-VPC connectivity interview questions where routing and security control differences matter greatly.
Cost Considerations
- Transit Gateway costs the most but reduces operational overhead
- VPC Peering has no per-connection cost — only data transfer
- PrivateLink may incur high charges per endpoint and data transfer
Final cost depends heavily on traffic patterns and scale.
Best Practices for Choosing the Right Connectivity Option
- Start with VPC Peering for small environments
- Move to Transit Gateway as the number of VPCs increases
- Use PrivateLink to publish private services securely and at scale
- Avoid overlapping CIDR blocks for VPC Peering and Transit Gateway
- Use multi-account AWS Organizations strategy for shared networks
- Evaluate traffic inspection needs — TGW integrates best with firewalls
Conclusion
Choosing the right inter-VPC connectivity service depends heavily on your network design AWS strategy, scale, and type of communication required. Transit Gateway vs VPC Peering vs PrivateLink should not be seen as competitors but complementary tools.
- Transit Gateway simplifies and scales multi-VPC communication
- VPC Peering is best for simple and direct private connectivity
- PrivateLink is ideal for secure, private service sharing without network-level exposure
With a clear understanding of how these technologies align with business needs, you can build reliable, scalable, and secure AWS networking architecture.
