Example methods are provided for a host to implement distributed network emulation in a virtualized computing environment. The method may comprise detecting one or more packets from a source network address associated with a source virtualized computing instance to a destination network address associated with a destination virtualized computing instance. The method may also comprise, in response to determination that a network emulation rule configured for the source virtualized computing instance and destination virtualized computing instance is applicable to the one or more packets, determining a physical network condition associated with a path between the source virtualized computing instance and destination virtualized computing instance. The method may further comprise emulating a desired network condition specified by the network emulation rule by performing an emulation action on the one or more packets.