diff --git a/doc/guides/rel_notes/release_21_05.rst b/doc/guides/rel_notes/release_21_05.rst
index c9e9e2ec22..d71422c452 100644
--- a/doc/guides/rel_notes/release_21_05.rst
+++ b/doc/guides/rel_notes/release_21_05.rst
@@ -141,6 +141,11 @@ New Features
   * Added command to display Rx queue used descriptor count.
     ``show port (port_id) rxq (queue_id) desc used count``
 
+* **Updated ipsec-secgw sample application.**
+
+  * Updated the ``ipsec-secgw`` sample application with UDP encapsulation
+    support for NAT Traversal.
+
 
 Removed Items
 -------------
diff --git a/doc/guides/sample_app_ug/ipsec_secgw.rst b/doc/guides/sample_app_ug/ipsec_secgw.rst
index 176e292d3f..2dc39aa50a 100644
--- a/doc/guides/sample_app_ug/ipsec_secgw.rst
+++ b/doc/guides/sample_app_ug/ipsec_secgw.rst
@@ -500,7 +500,7 @@ The SA rule syntax is shown as follows:
 
     sa <dir> <spi> <cipher_algo> <cipher_key> <auth_algo> <auth_key>
     <mode> <src_ip> <dst_ip> <action_type> <port_id> <fallback>
-    <flow-direction> <port_id> <queue_id>
+    <flow-direction> <port_id> <queue_id> <udp-encap>
 
 where each options means:
 
@@ -709,6 +709,17 @@ where each options means:
    * *port_id*: Port ID of the NIC for which the SA is configured.
    * *queue_id*: Queue ID to which traffic should be redirected.
 
+ ``<udp-encap>``
+
+ * Option to enable IPsec UDP encapsulation for NAT Traversal.
+   Only *lookaside-protocol-offload* mode is supported at the moment.
+
+ * Optional: Yes, it is disabled by default
+
+ * Syntax:
+
+   * *udp-encap*
+
 Example SA rules:
 
 .. code-block:: console
@@ -1023,4 +1034,4 @@ Available options:
 *   ``-h`` Show usage.
 
 If <ipsec_mode> is specified, only tests for that mode will be invoked. For the
-list of available modes please refer to run_test.sh.
\ No newline at end of file
+list of available modes please refer to run_test.sh.
diff --git a/examples/ipsec-secgw/ipsec-secgw.c b/examples/ipsec-secgw/ipsec-secgw.c
index 20d69ba813..0555d6d00f 100644
--- a/examples/ipsec-secgw/ipsec-secgw.c
+++ b/examples/ipsec-secgw/ipsec-secgw.c
@@ -184,7 +184,8 @@ static uint64_t frag_ttl_ns = MAX_FRAG_TTL_NS;
 /* application wide librte_ipsec/SA parameters */
 struct app_sa_prm app_sa_prm = {
 			.enable = 0,
-			.cache_sz = SA_CACHE_SZ
+			.cache_sz = SA_CACHE_SZ,
+			.udp_encap = 0
 		};
 static const char *cfgfile;
 
@@ -360,6 +361,9 @@ prepare_one_packet(struct rte_mbuf *pkt, struct ipsec_traffic *t)
 	const struct rte_ether_hdr *eth;
 	const struct rte_ipv4_hdr *iph4;
 	const struct rte_ipv6_hdr *iph6;
+	const struct rte_udp_hdr *udp;
+	uint16_t ip4_hdr_len;
+	uint16_t nat_port;
 
 	eth = rte_pktmbuf_mtod(pkt, const struct rte_ether_hdr *);
 	if (eth->ether_type == rte_cpu_to_be_16(RTE_ETHER_TYPE_IPV4)) {
@@ -368,9 +372,28 @@ prepare_one_packet(struct rte_mbuf *pkt, struct ipsec_traffic *t)
 			RTE_ETHER_HDR_LEN);
 		adjust_ipv4_pktlen(pkt, iph4, 0);
 
-		if (iph4->next_proto_id == IPPROTO_ESP)
+		switch (iph4->next_proto_id) {
+		case IPPROTO_ESP:
 			t->ipsec.pkts[(t->ipsec.num)++] = pkt;
-		else {
+			break;
+		case IPPROTO_UDP:
+			if (app_sa_prm.udp_encap == 1) {
+				ip4_hdr_len = ((iph4->version_ihl &
+					RTE_IPV4_HDR_IHL_MASK) *
+					RTE_IPV4_IHL_MULTIPLIER);
+				udp = rte_pktmbuf_mtod_offset(pkt,
+					struct rte_udp_hdr *, ip4_hdr_len);
+				nat_port = rte_cpu_to_be_16(IPSEC_NAT_T_PORT);
+				if (udp->src_port == nat_port ||
+					udp->dst_port == nat_port){
+					t->ipsec.pkts[(t->ipsec.num)++] = pkt;
+					pkt->packet_type |=
+						RTE_PTYPE_TUNNEL_ESP_IN_UDP;
+					break;
+				}
+			}
+		/* Fall through */
+		default:
 			t->ip4.data[t->ip4.num] = &iph4->next_proto_id;
 			t->ip4.pkts[(t->ip4.num)++] = pkt;
 		}
@@ -403,9 +426,25 @@ prepare_one_packet(struct rte_mbuf *pkt, struct ipsec_traffic *t)
 			return;
 		}
 
-		if (next_proto == IPPROTO_ESP)
+		switch (iph6->proto) {
+		case IPPROTO_ESP:
 			t->ipsec.pkts[(t->ipsec.num)++] = pkt;
-		else {
+			break;
+		case IPPROTO_UDP:
+			if (app_sa_prm.udp_encap == 1) {
+				udp = rte_pktmbuf_mtod_offset(pkt,
+					struct rte_udp_hdr *, l3len);
+				nat_port = rte_cpu_to_be_16(IPSEC_NAT_T_PORT);
+				if (udp->src_port == nat_port ||
+					udp->dst_port == nat_port){
+					t->ipsec.pkts[(t->ipsec.num)++] = pkt;
+					pkt->packet_type |=
+						RTE_PTYPE_TUNNEL_ESP_IN_UDP;
+					break;
+				}
+			}
+		/* Fall through */
+		default:
 			t->ip6.data[t->ip6.num] = &iph6->proto;
 			t->ip6.pkts[(t->ip6.num)++] = pkt;
 		}
diff --git a/examples/ipsec-secgw/ipsec-secgw.h b/examples/ipsec-secgw/ipsec-secgw.h
index f2281e73cf..6887d752ab 100644
--- a/examples/ipsec-secgw/ipsec-secgw.h
+++ b/examples/ipsec-secgw/ipsec-secgw.h
@@ -47,6 +47,8 @@
 
 #define ETHADDR(a, b, c, d, e, f) (__BYTES_TO_UINT64(a, b, c, d, e, f, 0, 0))
 
+#define IPSEC_NAT_T_PORT 4500
+
 struct traffic_type {
 	const uint8_t *data[MAX_PKT_BURST * 2];
 	struct rte_mbuf *pkts[MAX_PKT_BURST * 2];
diff --git a/examples/ipsec-secgw/ipsec.c b/examples/ipsec-secgw/ipsec.c
index 6baeeb342f..2d35536f57 100644
--- a/examples/ipsec-secgw/ipsec.c
+++ b/examples/ipsec-secgw/ipsec.c
@@ -52,6 +52,7 @@ set_ipsec_conf(struct ipsec_sa *sa, struct rte_security_ipsec_xform *ipsec)
 	ipsec->esn_soft_limit = IPSEC_OFFLOAD_ESN_SOFTLIMIT;
 	ipsec->replay_win_sz = app_sa_prm.window_size;
 	ipsec->options.esn = app_sa_prm.enable_esn;
+	ipsec->options.udp_encap = sa->udp_encap;
 }
 
 int
@@ -556,6 +557,14 @@ ipsec_enqueue(ipsec_xform_fn xform_func, struct ipsec_ctx *ipsec_ctx,
 				continue;
 			}
 
+			if (unlikely((pkts[i]->packet_type &
+					RTE_PTYPE_TUNNEL_ESP_IN_UDP) ==
+					RTE_PTYPE_TUNNEL_ESP_IN_UDP &&
+					sa->udp_encap != 1)) {
+				free_pkts(&pkts[i], 1);
+				continue;
+			}
+
 			sym_cop = get_sym_cop(&priv->cop);
 			sym_cop->m_src = pkts[i];
 
diff --git a/examples/ipsec-secgw/ipsec.h b/examples/ipsec-secgw/ipsec.h
index 7031e28c46..ae5058de27 100644
--- a/examples/ipsec-secgw/ipsec.h
+++ b/examples/ipsec-secgw/ipsec.h
@@ -75,6 +75,7 @@ struct app_sa_prm {
 	uint32_t window_size; /* replay window size */
 	uint32_t enable_esn;  /* enable/disable ESN support */
 	uint32_t cache_sz;	/* per lcore SA cache size */
+	uint32_t udp_encap;   /* enable/disable UDP Encapsulation */
 	uint64_t flags;       /* rte_ipsec_sa_prm.flags */
 };
 
@@ -136,6 +137,7 @@ struct ipsec_sa {
 		struct rte_security_ipsec_xform *sec_xform;
 	};
 	enum rte_security_ipsec_sa_direction direction;
+	uint8_t udp_encap;
 	uint16_t portid;
 	uint8_t fdir_qid;
 	uint8_t fdir_flag;
diff --git a/examples/ipsec-secgw/sa.c b/examples/ipsec-secgw/sa.c
index cd1397531a..7bb9ef36c2 100644
--- a/examples/ipsec-secgw/sa.c
+++ b/examples/ipsec-secgw/sa.c
@@ -298,6 +298,7 @@ parse_sa_tokens(char **tokens, uint32_t n_tokens,
 	uint32_t portid_p = 0;
 	uint32_t fallback_p = 0;
 	int16_t status_p = 0;
+	uint16_t udp_encap_p = 0;
 
 	if (strcmp(tokens[0], "in") == 0) {
 		ri = &nb_sa_in;
@@ -757,6 +758,23 @@ parse_sa_tokens(char **tokens, uint32_t n_tokens,
 			}
 			continue;
 		}
+		if (strcmp(tokens[ti], "udp-encap") == 0) {
+			APP_CHECK(ips->type ==
+				RTE_SECURITY_ACTION_TYPE_LOOKASIDE_PROTOCOL,
+				status, "UDP encapsulation is allowed if the "
+				"session is of type lookaside-protocol-offload "
+				"only.");
+			if (status->status < 0)
+				return;
+			APP_CHECK_PRESENCE(udp_encap_p, tokens[ti], status);
+			if (status->status < 0)
+				return;
+
+			rule->udp_encap = 1;
+			app_sa_prm.udp_encap = 1;
+			udp_encap_p = 1;
+			continue;
+		}
 
 		/* unrecognizeable input */
 		APP_CHECK(0, status, "unrecognized input \"%s\"",
diff --git a/examples/ipsec-secgw/sad.h b/examples/ipsec-secgw/sad.h
index 473aaa938e..751cf7afae 100644
--- a/examples/ipsec-secgw/sad.h
+++ b/examples/ipsec-secgw/sad.h
@@ -77,6 +77,7 @@ sad_lookup(struct ipsec_sad *sad, struct rte_mbuf *pkts[],
 	uint32_t spi, cache_idx;
 	struct ipsec_sad_cache *cache;
 	struct ipsec_sa *cached_sa;
+	uint16_t udp_hdr_len = 0;
 	int is_ipv4;
 
 	cache  = &RTE_PER_LCORE(sad_cache);
@@ -85,8 +86,11 @@ sad_lookup(struct ipsec_sad *sad, struct rte_mbuf *pkts[],
 	for (i = 0; i < nb_pkts; i++) {
 		ipv4 = rte_pktmbuf_mtod(pkts[i], struct rte_ipv4_hdr *);
 		ipv6 = rte_pktmbuf_mtod(pkts[i], struct rte_ipv6_hdr *);
+		if ((pkts[i]->packet_type & RTE_PTYPE_TUNNEL_ESP_IN_UDP) ==
+				RTE_PTYPE_TUNNEL_ESP_IN_UDP)
+			udp_hdr_len = sizeof(struct rte_udp_hdr);
 		esp = rte_pktmbuf_mtod_offset(pkts[i], struct rte_esp_hdr *,
-				pkts[i]->l3_len);
+				pkts[i]->l3_len + udp_hdr_len);
 
 		is_ipv4 = pkts[i]->packet_type & RTE_PTYPE_L3_IPV4;
 		spi = rte_be_to_cpu_32(esp->spi);
