Disclosed is a packet forwarding apparatus and method for a virtualization switch, applicable to switch environments built by Internet Small Computer System Interface (iSCSI) connections. The packet forwarding apparatus comprises a header extractor, a dispatcher, and a forwarding unit. After completion of the authorization for iSCSI session connections, the header extractor receives iSCSI packets and extracts the headers for the iSCSI packets. The dispatcher decides the flow directions for the received packets. The forwarding unit forwards the packets between the client-side connection and the storage-side connection of the virtualization switch, including converting virtual addresses into physical addresses for the received iSCSI packets, building the mapping between the client-side interface and the storage-side interface, and delivering the payload associated with the connections.